Can You Say Off the Charts? Nashville Real Estate Report - June 2013
In order to be successful, buyers and their Realtors need to adjust to the new market dynamics. Timing is very important as the most popular homes do not stay on the market for very long. Pricing is another key. If your analysis is not in tune with the local market, your offers will be ignored. I am not suggesting that you overpay for a home, but that you understand the local dynamics so that your offers will be priced appropriately.
It is all too common for buyers and sellers to be stuck in a Real Estate Reality that no longer exists. It is not enough to listen to the news to understand the market. It is imperative to connect with a Realtor who truly understands the market and is willing to share his knowledge with you.
I have been telling you for a few months that this is both a great time to buy and sell in Nashville. This scenario is quickly coming to an end. Rising home prices and the end of the Federal Reserve Bond Purchase Program could spell bad news for buyers.
May 2013 – Nashville Real Estate Sales
Residential real estate sales in Nashville are at levels we have not seen since March 2007. Sales are up 22% over May 2012 and are trending 9% higher than the previous month. In addition, we have nearly doubled sales since January 2013. This is amazing!
At the beginning of the year, I predicted sales would eclipse 3,000 units this summer. Now that we have hit that mark, I expect to have sales above this level for the next three months. Sales are expected to continue growing as long as interest rates remain near record low levels.
May 2013 – Nashville Real Estate Inventory
Nashville’s inventory levels remain flat which is good for our market. It seems that homes are flying off the shelves as soon as they are listed. This is especially true in areas where the inventory in limited.
Nashville’s currently has 5.5 months of inventory on hand which is slightly less than last month and significantly less than previous years. Inventory typically peaks this time of year and slowly declines through the end of the year. This indicates that we are still in a balanced market, however, the rising sales numbers and expected decline in inventory would suggest that the market may be leaning towards sellers at an ever increasing rate.
May’s inventory is 14% below the same month in 2012.
May 2013 – Nashville Real Estate Average Price
The year of price appreciation continues strong into May 2013. Prices rose another 5% in May which gives Nashville two months in a row of huge price increases. We are up almost 15% over the median price of January 2013. I do not expect this level of appreciation to last for long, but it will be interesting to see where we are in August. Median price tends to drop or remain flat in the final quarter of the year.
The average Days on Market has decreased again in the last month to 73 days. This time last year Nashville averaged 84 days on the market and we have shaved off more than a week since the beginning of the year. This is another testament to the quick movement of homes in the market.
Continued Outlook for the Nashville Real Estate
I expect the Nashville market to continue gains throughout the summer and start tapering off in the fall. However, there are a few dark clouds on the horizon that we need to watch. These scenarios have potential to significantly affect the Nashville Real Estate Market and economy.
· Lending: Previously, the Federal Reserve stated that they would take steps to keep interest rates low through the end of 2014. However, their most recent announcement claims they will end their bond buying program later this year. This resulted in a significant sell off last week on Wall Street and could create rising interest rates. Rising rates significantly affect buying power. Every 1% increase in rate equals 10% less buying power.
· Government: Investigations into the recent scandals in Washington DC could sidetrack Congress for more than one year. Debt Ceiling battle, Budget fights, and a push to eliminate the mortgage interest deduction could be coming to a Congress near you soon.
· National Economy: Thankfully, the sequester woes did not play out as they were portrayed by our elected officials. The GPD has not been expanding at an acceptable rate for some time. The rollout of the Affordable Health Care Act will be in full swing later this year. All of these could have a significant impact on jobs and the economy.
My Best Advice
Homeowners: If you are considering selling your Nashville home soon, I would recommend that you get it on the market immediately. We will soon be at the end of summer selling season in Nashville. With inventory levels low and prices rising, this may be the best opportunity in years to sell your home. There are too many unknowns to predict with any certainty the real estate market in 2014 and beyond.
Home Buyers: If you are serious about purchasing a home this year, it is imperative that you connect with a Realtor who has the heart of a teacher and really understands your local market. There are still great opportunities for those who can move quickly and with confidence.
The real estate data was provided by the Greater Nashville Association of Realtors, Middle Tennessee’s largest trade association for Real Estate Professionals.