'Collapse' of Home Values?

I heard a news report the other day that mentioned how people are afraid because of the ‘collapse’ of home values. I thought about this for a moment, but honestly, our home values have NOT collapsed, especially here in the Nashville area.

I guess we have to begin by defining what a collapse would be. I’m not sure I want to think about that, but through 2007 most areas around Nashville were still seeing home prices increase. It’s only been in the past few months that prices have actually decreased.

I’ve noticed the recent change because before the market shifted we would value properties based on the recent sales in the neighborhood. Now, it’s more accurate to look at what’s currently for sale and price the home competitively because prices have generally decreased since those homes sold 3-6 months ago.

So, I admit that prices are less in Nashville, but we’re talking about a few percentage points- nothing like a ‘collapse’. The people that are experiencing the most pain are those who bought at the top of the market and are now faced with a need to sell. It’s similar to those who invested in the stock market when the Dow was 14000 and are now selling.

However, you don’t actually lose money in the market until you sell. If you bought at the top of the market, hang on to that investment. Don’t buy high and sell low if you can help it.

The market will come back. I’m not sure when, but historically it always does. It also always goes up much more than it comes down. If you see your home as a long-term investment, you’ll be fine.

Okay, so there’s no collapse. I’m glad we cleared that up.

-Peter

P.S. Another myth is that the supply of homes is way up. Not true for single family homes. Read more here.

www.NashvilleCityHomes.com

Get Your Pumpkins In Inglewood

It'’s that time of the year when the air gets cooler and leaves start piling in my yard. It’s also about the time my wife pulls out all the cinnamon candles and we start thinking about the holidays. With three kids under 4 years old, getting pumpkins has become a yearly outing.

Last year we went to a huge pumpkin farm south of Franklin that had a petting zoo and lots of kid’s activities. It was great fun, but this year we wanted to stay closer to home.

We found a great place over at Dalewood United Methodist Church in Inglewood near the intersection of Stratford and McGavock. My kids ran all over the place and we got some nice pictures. The church gets their pumpkins from a Navaho tribe in New Mexico, supposedly the “best in Nashville”.

I’m not sure my kids care that much, but they do look like nice pumpkins. I mean, most of them were round and orange…

They’re only available for a couple of weeks so go check them out!

-Peter

www.NashvilleCityHomes.com

Less Homes on Market Than Last Year?

I saw some interesting stats today. The Greater Nashville Association of Realtors (GNAR), reports that 15,053 residential properties for sale at the end of September 2008, compared to 15,438 at the same time last year. So there are actually less homes for sale this year. (This figure doesn't include condos or multi-family.)

This really surprised me because homes are taking longer to sell. GNAR also reports that around 250 less homes sold in September 2008 compared to a year ago.

The major increases in inventory have been in the farms/land/lots category where there are 38% more to choose from this year. Generally, more inventory (or supply) means that prices fall due to overstock.

So what does this mean? Why are things taking longer to sell, but yet the inventory isn’t piling up? Here’s my opinion: people that don’t have to sell, aren’t. Instead of leaving their homes on the market or dropping the prices to get them sold, people are just waiting. It seems that the majority of homes for sale out there today are owned by sellers that have to sell them- banks, developers, builders and people relocating or facing foreclosure.

The difficulty in this ‘buyers’ market is that many buyers are waiting too! They are watching the news and scared to make any moves that might put them at risk. I tend to believe that there is quite a bit of pent-up demand out there- people that would really prefer to buy or sell but are waiting for one reason or another.

The housing market tends to move slowly compared to the yo-yo stock market. It’s often hard to know what’s going on until it’s behind us. Once confidence is restored and people feel like there is some solid ground to stand on, I think they’ll jump off the fence they are waiting on.

Thinking about jumping? Give me a call! :)
-Peter

www.NashvilleCityHomes.com

Walden Open For Business in East Nashville

I got a chance to see some of the condos in the new Walden Development the other day and I was quite impressed. They advertise it as a 'true mixed-use' development and that's what makes it so cool. They are building a live/work community and already have the requisite coffeeshop, Ugly Mugs Coffee and Tea, and the Fresh Blends Smoothie and Juice Bar with more to come.

Walden is located on Eastland Avenue at Chapel Ave between the Lockeland Springs and Eastwood Neighborhoods. There is a main entrance for business patrons, but condo residents will like the more private second entrance which allows you to park a few steps from your front door on the back of the building. Even though they are on the second floor, there isn't an long flight of steps to get to your unit.

Having seen many of the condo projects around town, this one will really appeal to someone wanting to live in a pedestrian friendly neighborhood, close to restaurants like the Rosepepper or Eastland Cafe and still be only a few minutes from downtown, universities or music row.

The units themselves are high-quality with polished concrete floors, high-end quartz countertops and designer everything. It's not like some of the other condos around town that might have a great location, but the cabinets are low-grade. These are consistent from the impressive glass-tiled backsplashes to the marble topped vanities.

The prices start at $184,900 for a 712 sq. ft. 1 bedroom to the incredible corner residence above the coffeeshop with 1518 sq. ft. and 2 bedrooms for $339,900.

East Nashville has made some major progress over the past 5-10 years, but with projects like this and Martin Corner underway, it appears that things are just beginning for this growing neighborhood. March Egerton, the developer for Walden, has many more plans for the site, beginning with the adjacent building that may soon be overhauled to become home to more commercial space.

If you are looking for your place in Nashville give me a call.

-Peter

www.NashvilleCityHomes.com

Funny Way to Sell A Home

I saw this picture yesterday on a new listing and just had to share it. It made me laugh out loud:

The caption:

"Iron bars on windows for safety, and they also look great!"

I'm not sure I know anyone who truly appreciates the beauty of iron bars covering your windows. It seems that most people overlook this simple improvement that could make your home more secure as well as beautiful and attractive... :)

-Peter

www.NashvilleCityHomes.com

What are They Doin’ With My Money Now?

The government is trying to come up with some kind of plan to rescue (or bail out) failing mortgage banks and investment firms with billions of dollars of taxpayer's money.

I hesitate to write this because I’m neither an economist nor a politician, however, the banking problems on Wall Street are on everyone’s minds and there is a lot of confusion and misunderstanding. I’ve been trying to read up on it because, as a Realtor, I’m expected to know what’s going on, right? I try… The news is changing so rapidly right now that it’s hard to keep up. Let me give a couple views of what’s happening…

BACKGROUND
Throughout the ‘good times’ of the last decade there were a couple trends going on. It became politically correct to encourage broader home ownership. The Community Reinvestment Act was revised in 1995 to require Fannie Mae & Freddie Mac to devote a percentage of their lending to support affordable housing. In effect, these new rules loosened loan qualifications to allow more people to become homeowners. This was supported by nearly everyone involved because it meant that more homes were selling, more loans were made, and more people were buying homes. It worked as long as home prices continued to rise.

Once housing markets began to slow down and prices started to fall, many of these homes were no longer worth what was owed for them. If the homeowners didn’t keep paying, then the banks were stuck with homes that they could not sell. What was an asset became a liability.

The core of a bank’s business is loaning money, and when their assets are worthless, their ability to loan funds is gone. Therefore, some of these banks are failing. When this happens in large numbers, the government gets very nervous and wants to do something.

BAILOUT TIME?
So, Congress is trying to come up with a plan. The most recent proposal was a $700 Billion ‘bail out’ that would buy up these ‘assets’ that the banks cannot sell to anyone else. This is the core purpose- to take these lousy home loans off of lender’s books. The loans are no longer liquid and no one knows what they are really worth.

Some people are saying that the government could make a profit down the road by buying up these assets and selling them later. This is a possibility, but there aren’t many people that would say that we want the government investing our tax dollars in this. The real goal of the bail out is to stabilize the financial ‘crisis’ so that consumer confidence can be restored- a key factor in the recovery of the housing market or stock market.

If the government does buy these questionable mortgages, it is likely that they will also initiate some kind of ‘work out’ plan to help reduce the number of foreclosures and get homeowners set up with payments that they can afford. After doing this, they hope that the number of mortgages headed toward default would decrease.

ANOTHER VIEW
Some economists say that the banks should be allowed to file bankruptcy. Jeffrey A. Miron, writing for CNN, shares this point of view. He writes, “Bankruptcy does not mean that the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a business that remains profitable.”

Miron also calls the talk about the economy collapsing “ridiculous scare-mongering”. He contends that if these ailing banks go under, then some other company will step up to make the loans as long as there is profit to be made.

FEAR DRIVING DECISIONS
Dave Ramsey, personal finance guru and syndicated talk show host, has his own plan that he’s calling the “Common Sense Fix”. He says that fear is driving a lot of decision-making going on and this is only heightened because of the election and current political climate.

Ramsey’s one page plan includes three things: 1. Provide government-backed insurance for sub-prime mortgages (with strings attached to help restructure delinquent loans), 2. Change the Mark to Market accounting rules and 3. Remove the capital gains tax completely- flooding the market with investor funds, not taxpayer dollars.

It’s clear that there is a lot of fear out there. It appears that our financial systems were built on shaky ground, which is a good reason to be a little skeptical right now. Who do we trust in a time when everyone seems to have political motives or a company to save? Can the same people that guided us into the mess now fix it?

CLEANING HOUSE
Hopefully, the net result of this complex situation is that we do find a solid footing for our markets and restoration of our confidence. Whenever you clean house, it usually gets messy before things get organized again. That may be what we’re experiencing right now.

-Peter

www.NashvilleCityHomes.com