Rising costs, fewer sales predicted for 2016

Friday, January 1, 2016, Vol. 40, No. 1

With 2015 in the rear view mirror, I shall gaze into my looking glass to predict what 2016 will provide those in real estate.

As the slight increase in interest rates did not spawn cataclysmic events, there will be two more interest rate increases, one in the first half of the year and one in the second. These will continue until rates hit about 7 percent in 2017, maybe even 7.5.

Then there will be another sharp dip, this time down to six percent, and we will experience 2013-2015 again in 2018-2019. After that, you are on your own.

Unit sales in the area will dip slightly – about six to seven percent – but prices will increase as inventory will become more and more of an issue as buyers flock to the market with rates climbing.

Infill developers that have somehow made feasts of the famine-like infill inventory will see less opportunities as the citizenry fights for stricter zoning. With a five – count ’em, five – new at-large council members and the usual slate of baby ducks swimming with the lame ducks in the Metro Council, there will be mixed emotions and votes on rezoning.

John Lennon once wrote “Got a good reason for taking the easy way out,’’ which could make “Day Tripper” the new theme song for zoning in 2016. Fortunately, the former Beatles and the heirs of the dearly departed mop tops recently agreed to allow their music to be streamed, so the song is readily available.

Sellers will see significant increases in the values of HPRs (Horizontal Property Regimes). For example, 4152 Outer Drive sold for $650,000 in 2013 and $768,500 last week. This residence has 3,644 square feet with four bedrooms, three full baths and one half bath.

There were hundreds, maybe even a couple of thousand, of these built around town and, try as they may, there are not enough lots to build that many more lots or teardowns to replicate the feat.

Traffic will worsen, and many will tire of being “it.’’ Living in an “It City” does not come without its share of problems.

There is no real solution to this issue – certainly not an affordable one – as this is not a problem caused solely by those living in the city, yet many of those elected to the General Assembly feel that the state should not be involved in funding roads within certain cities, especially Nashville, so their own constituents can flock into Nashville to work and play.

Some of the houses built in 2014 and early 2015 by inexperienced builders will begin to crack and crumble. Structural engineers and firms that perform structural repairs will flourish. There are builders that have no supervision experience hiring the cheapest, most available sub-contractors to perform the erection of complex buildings.

Michael Marchetti, owner of the Marchetti Company, actually is an architect, structural engineer and contractor. Years ago, I accompanied him to a job, and he was greeted by his superintendent – soon to be ex-superintendent – who greeted Marchetti with the following, “Lookie here college boy. Look, how I made this house tons better than your fancy plans.”

Marchetti’s response: ‘‘The only problem is that the house will fall down now,” he said upon examination. “Now tear everything out that you did and build it back according to the plans.” Some newcomers possess his knowledge.

Get ready. 2016 will be a bumpy ride.

Sale of the Week

There were 10 closed sales documented by Village Real Estate Services in the new Richland Station neighborhood last week, bringing the grand total to 20 properties closed this year in the development with another couple of sales pending. Richland Station is located off of Murphy Road and Elkins Ave.

All of the homes were listed by visionary Realtor/ developer Mark Deutschmann, and one of those sales could be found at 704 Centerpoint Lane North.

The house has 1,872 square feet and includes three bedrooms, three full baths, a half bath and a two-car garage. With 1,872 square feet, the $354,900 building sold for $189 per square foot – a great deal for the Jake Griffin’s buyer, as later units sold for as much as $202.

A slightly larger home has 2,022 square feet that has three baths, a half bath, three bedrooms and a two-car garage. All are Energy Star V3 certified and have all the modern requirements for coolness such as open floor plans, granite countertops, and stainless steel appliances.

Michael Dyer of Fridrich and Clark Realty represented the buyer who was the beneficiary of the last 2,022 square footers in the development, these selling for $409,300, or $202 per square foot.

All of the homes found in Richland Station allow the buyers to “walk or bike to greenways” according to Deutschmann’ s description of the properties.

Richard Courtney is a real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at Richard@richardcourtney.com.