Housing Leads the Way

The housing market defines the economy, so how's Murfreesboro housing market?  Comparing May 2008 to May 2012, the average price per square foot of existing homes has fallen from $99/sft to $80/sft, but sales have increased from 58 to 95. The lowest price per square foot was last fall, when homes were selling in the mid $70's/sft.  It would appear we're heading out of the housing slump...

2011 Sales vs 2005 Sales

Almost 2 months into 2012 and the real estate market in Rutherford County, TN is "a movin' and shakin'"!  Interest rates are still very low and prices have not started to rise yet, so it could not be a better time to buy a home.  Sellers, too, should take heed since the inventory of homes is very low.  Fewer homes on the market means less competition for sellers, and a better chance that their home will sell.

Businesses in middle Tennessee are hiring (Nissan's production of the new Leaf) and new companies are moving or expanding (Bridgestone and Amazon.)  As a result, the city of Murfreesboro has fared better during this economic downturn than many other areas across the country.  However, I did find the following sales statistics of the past few years very sobering:

    Year                   Total homes sold                      Year            Total homes sold     
    2011                         2072                                  2004                   3584
    2010                         2184                                  2003                   3291
    2009                         2338                                  2002                   2814
    2008                         2485                                  2001                   2540
    2007                         3489                                  2000                   2419
    2006                         3832                                  1999                   2472
    2005                         3970                                  1998                   2452

In 2011, 2072 total homes sold.  In 2005 (our market peak), 3970 homes sold.  Read that again....  Last year half as many homes sold than at the height of the market.  It is no wonder so many agents, builders, and title companies could not weather the storm.  In 1998, 13 years ago, the total number of sales was almost 2500.  That is 25% more than last year. 

It is still too soon to tell if the rush of activity since January 1 is just a blip on the downward trend or a true reflection of the housing market's crawl out of the hole.  January 2012 saw the exact same number of sales as January 2011, 129, which by itself does not sound encouraging, however that is an increase over the past 4 years.  And since I'm one who sees the glass half full, I'll venture to say the market is getting stronger every day.

Sellers--NOW is the time to list!

Are you ready to test the real estate waters?  Well, jump on in!  The graph below shows there's no better time!  Sales have been steady overall since March 2011 and THAT'S something to get excited about!  No big peaks or valleys like we saw with the stimulas package and recession reports.  Just steady sales, like the little engine that could.

On top of that, the graph shows the number of new listings coming on the market is still declining, which takes us right back to the number one rule of economics-- supply and demand.  Fewer homes to choose from, great news for sellers.  Sellers still have to clean, paint, declutter, and make their home shine, but there's a better chance they won't get lost in a sea of homes.

Ready?  Call me, and let's go for a swim!

2010 Versus 2011

     Rutherford County's home prices have gone up the past 3 months, but are down from last year.  The first graph below shows the price per square foot ranged from $79 to $84 during the first 8 months of this year. When compared to the same time last year, the high was $90 with an average of $86.  The average price per square foot for 2011 is $81.  The good news is that the trend is up.

2010 Price per Square Ft

2011 Price per Square Ft

 

    

    

     When comparing the months of inventory from Jan to Aug of 2010 to 2011, we have more good news.  While the market peaked in February with over 12 months of inventory, it has steadily declined since then.  Currently, the absorption rate is 7.4.  The second graph below illustrates the months of inventory for 2010.  During April, May and June we had a steady, or even, market-- not favorable to buyers or sellers since the absorption rate was about 6 months.  By July 2010, however, the rate steadily increased until Feb. of this year, making it a buyers' market.  The bottom line, with the price per square foot going up and the inventory going down, sellers can breath easy for the time being. 



2011 Months of Inventory

 

2010 Months of Inventory



6 Month Price Trend

Although it would be grand to declare Rutherford County, TN is headed out of the housing slump, I think that would be painting too rosy a picture of the market.  The 4  following graphs  will show that overall prices are trending up, however looking closer you'll see we have just regained ground we lost since January 2011. 

Each graph shows, consecutively,  existing home sales (no new construction figures) for $0 to 199,999; $200,000 to 300,000; $300,000 to 400,000; and $400,000 and above. The highest number of homes sold is represented in the first graph-- 80 to 112 depending on the month.  With the price per square foot averaging 75 for those sales, I would say the market for that price point is pretty steady.  I think when we see this group showing an increase over several months then we'll be on our way out of the "housing hole" we're currently in.

The last 2 graphs of high-end homes are not as consistent in pricing.  However, it's important to keep in mind that very few homes are sold in these prices on a monthly basis-- anywhere from 1 to a maximum of 6 homes.  So one good sale could skew the results. 

I think the important lessons here are, 1.) Buyers, make sure your purchase price is consistent with similar sales; and 2.) Sellers, be realistic--if homes are selling at $75 per square foot it just doesn't matter that you bought your home at $85 per square foot--if you want to sell, price it right.
   

New Construction Trends

New construction home sales in Rutherford County, TN, have decreased by 50% over the past 3 years. To those of us selling real estate in Murfreesboro, this figure is startling but not surprising.  The graph on the right shows the number of homes for sale since April 2008 (light green), homes pended (red line), and homes sold (dark green). 

If the trend of the graph is taken as a whole, then potentially we have not hit bottom yet in all three categories. November 2010 saw the lowest number of pended and closed sales (19 and 20 respectively.) Last month the pending and sales figures did increase, but only to a similar spike seen in September 2010.  And while it is good for sellers of existing homes to have fewer properties on the market, for builders,  the workers they employ, and the local economy, it would be better if more homes were under construction. 

As you might expect, prices have also fallen, but to a much lesser degree.  The highest average price per square foot was $100, which we saw in November 2008 and July 2010.  However, the low came in at $88/sq ft. just two months ago, in January 2011.  Last month it was back up to $95 per square foot, but only time will tell if that was just another spike in a downward trend, or the beginning of a long-awaited turnaround in the market.

March 2011 Trends

March 2011 did see a decline in the number of pendings when compared to the shorter month of February 2011. The chart to the right is for existing homes in Rutherford County, priced between $100,000 and $400,000.

Since pendings were up for February, it would make sense that closings would also show an increase in March, which indeed the graph displays. The good news I would take from these figures, however, is that most of those closings were the result of transactions that took 4 weeks or less.

In other words, your average short sale or HUD foreclosure that pended in February would not be reflected in the March number of closings, since they often take longer than a month to close (if they close at all.) Therefore, the rise in closings for March are more reflective of a recovering economy-- one not dependent upon short sales and foreclosures.

It is also important to keep in mind that the figures for February, March, April, and even May and June 2010, are reflecting the Federal government's tax credit that was a part of the stimulus package. One could reasonably say the chart's rise in pendings and sales during that time period is a false echo since the economy wasn't able to sustain that growth. Any current increase in sales should be more reflective of recovering economic conditions and confidence in stabilizing real estate values.

Next time we'll look at how new construction is faring this first quarter of 2011.