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VOL. 36 | NO. 10 | Friday, March 9, 2012




Renting becomes less attractive

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The rent-versus-own debate has recently resurfaced in residential real estate. Such arguments had been dormant from 1992 though 2007 as the real estate market in this area experienced its longest term of continued gains. Over that period, prices increased from 3 percent to 5 percent per year.

When the recession descended upon the country, or world, the area was unable to sustain its growth. Now, with the sales increasing and banks lending, prices are following along and sellers are seeing their property values rise for the first time in years. In many areas around Nashville, values are over the pre-recession prices.

If a person had rented from 2008 until now, there was safe haven. As sales slowed and buyers were eliminated from the market, rental rates increased. Anecdotally, residential leasing agents have been giddy, saying that they cannot find a number high enough to keep people from renting. Occupancy for rental units has climbed to nearly 100 percent.

413 Bramblewood Drive is one of my "Sales of the Week."

The demand for rentals has driven prices through the roof. During the same period that rental rates have increased, interest rates and home prices have dropped, making this the best time to purchase in history. The last time prices were at today’s levels – 2003 through 2007 – rates were higher. Never has home ownership been this affordable. And, rental rates have never been this high.

The low cost of money combined with the low prices and high rental rates continues to pull investors out of the stock market and into the real estate market, with many of those investors utilizing cash as a means of acquiring property. The real estate market does not experience the volatility of the stock market and dividends are paid monthly in the form of rent, while the asset now is appreciating.

Sales of the Week

This week we travel to the area known as Area 1 in Realtracs, or Crieve Hall and the properties around Edmondson Pike and Old Hickory Boulevard. The first is in the Villages of Brentwood community and was listed for $145,000 and sold for $145,000 as a foreclosure. Prior to this sale, the house had been purchased in 2006 for $194,999. As is the case with most foreclosures, the home was purchased with the buyer obtaining a first mortgage for $155,999 (80%) and a second mortgage for $38,999 (20%), or a 1000% loan.

A home on Bramblewood in traditional Crieve Hall sold for $195,000 after having been listed for $210,000 and spending 46 days on the market. This home was purchased in 2003 for $156,906. So, in this case, the seller had a decent return on the original investment even withstanding the worst economic times since the Great Depression.

Richard Courtney is a residential real estate broker with Pilkerton Realtors and the co-author of Come Together: The Business Wisdom of the Beatles. He can be reached at richard@richardcourtney.com.

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TNLedger.com Knoxville Editon
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0