Nashville home sales rise for first time in 3 years
Incentives push Nashville-area market to first gains in 3 years
By Naomi Snyder
Nashville-area real estate agents applauded last week when Congress extended a series of tax incentives designed to boost home sales, and on Monday, the latest monthly numbers showed the area has already seen sharp gains in sales — particularly among first-time home buyers. In fact, the Nashville real estate market saw its first increase in home sales in three years in October, when the number of completed deals jumped 23 percent compared with a year earlier as a result of the federal government’s aid.
Agents attributed the double-digit increase to more first-time buyers scrambling to take advantage of what had been an expiring $8,000 tax credit, which Congress has now extended into next summer. Congress also added a new $6,500 tax credit for others who have lived in their current residence at least five consecutive years in the past eight. If they buy a new home before June 30, they get the smaller tax break.
Real estate sales professionals hope the new incentives keep sales rolling and prop up the market over the winter, when the pace of sales normally slows.
"The phone calls I’m receiving, the open houses, I just feel like there is so much more positive energy right now than a year ago,” said Christie Wilson, president of Wilson Group Real Estate Services in Nashville. "A year ago, it was unnerving how scared the marketplace was. Right now, everyone is cautiously optimistic. That wasn’t true a year ago."
The Greater Nashville Association of Realtors also reported that the median sales price for a single-family home in October stayed the same as the past three months — $160,000 — or a 6 percent decline from a year ago. Realtors said that was a sign that first-time home buyers, who tend to buy less expensive homes, are continuing to affect prices. The median price for a condominium sold was $144,000, down 5.6 percent from the same month a year earlier.
Tennesseans in particular seem to love the federal tax credits. The U.S. Government Accountability Office said last month that Tennessee had the fifth-highest rateper capita of people taking advantage of the first-time home buyer credit, with 35,836 people taking $256 million worth of tax breaks as of Aug. 22.
"That obviously is the driving catalyst" for home sales, said Mike Nichols, president of the Greater Nashville Association of Realtors. "We don’t know where the bottom is for first-time home buyers."
People such as Julia Crownover, a 23-year-old public school teacher, said they wanted to buy a house, but the tax credit pushed them to act sooner.
Crownover signed a contract on a new three-bedroom cottage to be built in Sylvan Park for less than $300,000. She didn’t want to disclose the exact purchase price on the home in West End Station, which is being developed by Core Development Services. Homes in that neighborhood start at $249,500.
"This is the time to buy, when the market is down,” she said, adding that she planned to get roommates to help her pay the mortgage. She now lives with her parents.
Still, some economists and others worry how long the federal government will be able to stimulate the housing market with special incentives. "I would like it to be the economy and not the stimulus,” said Mark Deutschmann, the president and chief executive officer of Village Real Estate Services in Nashville.
Josh Anderson, an agent with Keller Williams Realty, objects to the tax creditsin principle, although he concedes they are helping sales. "Government can’t keep propping everything up,” he said. "At what point do you quit giving money?"
The foreclosure rate in the Nashville area also continues to edge up, and statewide unemployment remains high at 10.5 percent. "In Nashville, (a recovery) is really going to be dependent on the recovery of the job market,” said David Stiff, chief economist at Fiserv, a financial data consulting firm that monitors home prices in 384 cities.
The company forecasts that average home prices in the Nashville area will continue to fall 4.3 percent in the year ending in the second quarter of 2010, compared with an 11.3 percent drop for the nation as a whole.