|Steven Dotson couldn’t hide his enthusiasm when discussing the latest home sales data.
“I’ve been holding back my excitement as much as I can, so I’m going to go out on a limb here and say that we have officially turned the corner to a better improved real estate market,” the local Realtor and president of Rutherford County-based Red Realty stated in his monthly Red Report.
“I haven’t been this excited about the future of our market in quite some time and it keeps getting better each month.”
He admitted that some of the positive news is seasonal, but pointed out “even the seasonal numbers are much better than last year.”
Rutherford County witnessed a surge in home sales in April, as compared to the same time last year. According to the Multiple Listing Service, 354 homes were sold in the county last month, compared to 251 in April 2011, representing a 41 percent increase. This number is also a substantial increase from the 288 sold in March 2012.
“Closings up, inventories down, and pendings higher than the same time last year tells us we are on the rebound,” Dotson continued, adding inventories are down 12 percent year-over-year.
This is important because homebuilders cannot construct new houses if the market is already saturated with existing homes. As the inventory decreases, the chances for new home construction rise.
Dotson pointed to the 425 sales that were still pending in April as a good outlook for May sales.
Another positive indicator is the increase, albeit modest, in home sales prices. Homes in Rutherford County sold for about 2 percent more than they did last year. Nearby, Williamson and Wilson counties saw home sales rise 11 percent, while Davidson County homes sold for 3 percent less.
“Prices are starting to improve a little and will continue to improve as volume increases, inventories decrease and more properties get multiple offers and appraisers adjust accordingly,” he said.
Last month’s prices varied from home to home and county to county, but Dotson said that is partially due to the natural flow of supply and demand in the market.
“But there is another reason that the general public may not see or hear about that I think is important to understand,” he said. “That other reason for pricing issues is the federal government’s regulations on the appraisers and banks.”
Dotson explained how the government allowed lending practices to get too lose decided they would fix the problem by going too far the other direction.
“Appraisers/Banks have a new set of rules/regulations that are not helping the real-estate market’s prices,” he said. “The appraisal selection process is improving, but still a little ridiculous when an appraiser who is three counties away gets on the rotation and ends up appraising a home in a subdivision he/she has never heard of. Appraisers should be allowed to serve their market where they know all the factors.”
While appraisals are improving, Realtors are still seeing multiple offer situations where several buyers were willing and able to buy a home for a certain amount and then the appraisal still comes in 5-10 percent below the price several buyers were willing to pay.
“That still happens more often than you think and that is a concern. If the supply/demand justify a price then an appraisal should not stand in the way,” Dotson continued.
“It seems like the appraisal regulations are not allowing the pricing to do what the supply/demand is naturally doing to improve the prices. … Yes, I’ll be the first to admit we don’t need to go back to previous lending practices where anyone that had a job and less than mediocre credit could buy a home with 100 percent-plus loans, but we could come back to the middle to allow the market to naturally set the prices, not the opinions of federal regulators.”
Rutherford County is faring better than the mid-state and the nation, according to data from CoreLogic, an analytics company that released its March 2012 Home Price Index this week.
In Nashville-Davidson--Murfreesboro--Franklin Metro Service Area, home prices, including distressed sales, increased by 1.3 percent in March 2012 compared to March 2011, the report states. Excluding distressed sales, year-over-year prices increased by 1.7 percent in March 2012 compared to March 2011.
“While housing prices remain flat nationally, in many markets tighter inventories are beginning to lift home prices,” said Anand Nallathambi, president and chief executive officer of CoreLogic.
“This is true in Phoenix, New York and Washington, for example, which all reflect higher home price values than a year ago. A continuation of this trend will be good for our industry across U.S. markets.”
Nationally, home prices, including distressed sales, declined on a year-over-year basis by 0.6 percent in March 2012 compared to March 2011. Excluding distressed sales, month-over-month prices increased for the third month in a row.
The CoreLogic HPI also shows that year-over-year prices, excluding distressed sales, rose by 0.9 percent in March 2012 compared to March 2011. Distressed sales include short sales and real estate-owned transactions.
“This spring the housing market is responding to an improving balance between real estate supply and demand which is causing stabilization in house prices,” said Mark Fleming, chief economist for CoreLogic.
“Although this has been the case in each of the last two years, the difference this year is that stabilization is occurring without the support of tax credits and in spite of a declining share of REO sales.”