The real estate reporter at the Tennessean painted a very inaccurate picture of the current condo market in Nashville in a recent article. Tom Turner, President and CEO of the Nashville Downtown Partnership, wrote a rebuttal which was recently published in the Tennessean. Click here to read the article on the Tennessean’s site, or read the article below.
Condos shore up the core Here’s truth about downtown housing
By Tom Turner
An article in The Tennessean on Aug. 20 incorrectly suggested our city’s downtown condominium market is experiencing a major slump. It alluded to a lack of buyers and indicated closings are behind schedule at Icon and Encore.
This limited portrayal of the urban marketplace is based on a narrow perspective, one skewed to create a bleak picture. It did not consider trends that bode well for urban living or the recent growth of Nashville’s urban environment. Just three years ago, Nashville had fewer than 10 condominiums downtown, and now 4,500 people live in the vibrant neighborhood.
The reality is that more condos will close in 2008 than in the previous five years combined. And the demand for downtown living is expected to continue — both here and across the country — as people seek authentic urban living, to downsize or want to mitigate the cost of gasoline.
Examine the facts. An in-depth review of Nashville’s urban projects provides an accurate — and promising — picture.
Several Icon units closed in May. Since the closing schedule began in July, 63 units have closed — an average of almost one unit per day. There are 326 contracts remaining to close and 29 units for sale. Of the 333 Encore units, 179 (54 percent) have closed since Feb. 25 — also an average of almost one unit per day. There are 67 contracts remaining to close, with 87 units for sale.
A graph in the story was erroneously labeled as the percentage of units sold at urban projects, although the percentage actually was for units closed. Icon has sales contracts for 93 percent of units, and 15 percent have closed. Encore has sales contracts for 74 percent of units and 54 percent have closed. These contracts are legally binding. To state that only 10.3 percent and 41.4 percent of units are sold is inaccurate.
Prices stable in urban Nashville
Nashville has not escaped the impact of relaxed lending guidelines, market speculation and predatory lending. Combined with increased energy costs, a perfect storm has pushed down prices and sales in suburban housing markets. As national housing prices peaked in summer 2006, the Chicago, Los Angeles, Pittsburgh, Portland, Ore., and Tampa markets began showing price declines of about 8 percent in the suburbs and 2 percent in close-in neighborhoods. Escalating fuel prices impact suburban buyers who are now less willing to buy in outlying markets.
Such disparities appear when comparing Nashville to surrounding markets. Data show 2008 housing prices are up for Nashville, while those in surrounding markets have fallen more than 10 percent. Nashville’s urban environment, the only submarket in the region with stabilized prices, is a steadying influence for residential markets throughout Middle Tennessee.
The likely future scenario is that supply of downtown condominiums will be absorbed in the coming months. Then, when additional construction begins, prices will be based on what construction costs are at that time. Given the two- and three-year development period, new projects are not likely to come online before 2011. Construction data show a 20 percent increase in costs from 2006 to present. With demand growing, neither the prices nor the number of potential buyers for downtown condominiums should decline.
This broader perspective and more complete analysis should be explored when evaluating Nashville’s burgeoning urban housing market, which is just beginning to demonstrate its promise.