Some news that includes some TN housing markets (Memphis, Knoxville: for sale, condos)

[mbmouse]

Interesting article here. I have looked at many (in my industry, I have to keep up with this stuff) news articles from many different sources about home price projections, corrections and housing bubbles popping, etc.over this past year. This is the first one I have seen which includes anywhere in the state of TN when it comes to projections of housing prices dropping (equity decline instead of growth). There have been folks here on the forum projecting large decreases in home sale prices in TN, some saying folks should wait until a house price drops 10% or more before they buy. Some have said prices are only going up. I too have seen some listed homes lower the asking price after a few months on the market, I have also stated I believe those prices were inflated when first listed. Some say they believe they have to lower the price to offer a "deal" to sell a house. Which school of though is correct? Who knows.
This article says: "According to an analysis conducted by Moody's Economy.com, declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 of the cities will experience price drops of 1 percent or more." How does this Moody's economy come up with these figures and why do they believe they can predict the future to 2008? I don't know but it is still an interesting article. I do like that they took into account local job markets as well when coming up with these projections.
Only two TN markets/towns/cities are included in this list of top 100 markets that are projected: "will suffer some decline in home prices".
On the list, they are #77 Chattanooga which is projected to see a negative 3.5% price decline.
#100 is Memphis which is projected to see a negative 1.1% price decline.

If I take this info and break it down to reality terms, this what it means to me. If someone bought a house in July of 06' in Chatt for say $100,000 and the appraisal showed it really was worth $100k at that time, then the house would next month, 4th quarter of 07', will be worth $96,500 if they tried to sell or refinance the same house.
Same scenario in Memphis means that same house is now worth $98,900.
Here is the caveat in these scenarios: Does this refer to houses that have had no change or updates? Seeing as this "study" says the dates are peak and bottom does that mean this is the lowest they will go then maintain or go up from there? If these are the only two cities in TN listed as cities that are going to see a "bottom" does this mean all other homes in TN are going to see an increase?
Just some food for thought I guess.
Here is the link to the article if anyone cares to give your opinion of this information, I would appreciate it.
Double digit* home price drops coming - Sep. 19, 2007

[SuzieQFL]

The link is not working for me right now. I tried to go to cnn.com, but it isn't responding either. Temporary, I'm sure, but without reading the article the only thing I can comment on is that many people from Florida, California, Arizona, New Jersey, New York, etc. (the people who post on here, wanting to move to TN) all say that the housing prices there are fabulous.

While that's true in comparison to most other states, I see it as a buyer's market in most areas of TN simply because of the vast amount of listings. When I was checking realtor.com for the tri-cities area there are tons. There are tons in Knoxville, Chatt., Cookeville. I haven't checked all areas, but there are LOTS of homes for sale in Tennessee. Usually when there are so many for sale, the buyer has such a wide choice that the sellers are forced to offer something to make their house stand out. Such as a lower price, offering to pay x amount of dollars toward buyers' closing costs, etc.

Where the market is heading there...I don't know. I also don't know why there are so many listings. Where are all these sellers going to move to? Is it because the market took an upturn with all the people wanting to move in, and the sellers just want to capitalize on that? That's what happened to the SW Florida market, and now it's very difficult to sell a house here because people can't get it through their heads that their house isn't really worth what their neighbor sold for 2+ years ago. When the market went way up, EVERYBODY and their brother put their house for sale. Prices are starting to stabilize here, but there's still tons for sale.

What do you think about the Tennessee market? In your business, are a lot of closings actually happening, or is everybody just looking and not actually buying? I've seen lots of nice homes on realtor.com that have been there for quite some time. Some with trees still bare, so you know they are from last winter.

[pdq]

mbmouse,

I had read that article this week and I think it's a bit on the conservative side. According to that data many of the cities have already seen the bottom. Funny thing is the resets are just now starting to kick in, the real trouble lies ahead. That was the main factor in the extreme Fed decision this week other than the obvious of trying to keep Countrywide and others solvent for a bit longer.

Look at some of those cities, Stockton, Modesto, Fresno, Reno only down 22-25% ??? Come on really now, they shot up 200-300% in a couple years and we're supposed to believe they'll only drop 25%? I don't think there's a single job available anywhere in the central valley to support the median home there. I would predict those and many many other cities are going back to 1999 prices.

Memphis is an interesting one too, only down 1.1% and the bottom will be Q3 07? Memphis was leading the nation in defaults at one point recently. It's true it didn't see the price increases that other areas of TN has, but it sure is in trouble.

I've read projections that show many TN cities to come down 10-20% in the next two years, adjusted for inflation. Even if prices stay flat you're home is depreciating due to devalued dollar and inflation in other sectors, not to mention upkeep, etc. I can see 10-20% declines as being very possible given the fact that so many potential relocators are now stuck where thery are. The locals aren't buying the overpriced stuff that's been sitting.

I posted this on another forum, some may find it interesting.

Our neighbor put his home on the market 1.5 years ago at over double the tax appraisal, fsbo. After no interest he brought in a realtor who he somehow convinced to list it at almost the same price. The house sat empty month after month, 5 open houses and only the neighbors showed up for free cookies. He lowered the price a little. Funny his first lowering was only $2000, on a $379,000 house. He's a stubborn guy who really believed that everyone in the world wanted to relocate to our neighborhood here in east TN. He continued to slightly lower the price a little at a time, still no interest. Realtors changed a few times. Finally it did sell, guess what, it sold for $165,000, just a hair over tax appraisal. If he had priced it at that to start with it would have sold quite easily and without 1.5 years of constant hassle, grief, depression, etc. His main problem was he was trying to make enough off of it to support the new house he had bought. This didn't work out so good as he now has a new mortgage at 62 years old, his old house was paid for. People are strange.


Good luck to all.

[alleycat]

They might be right . . . however, I've learned that predicting the future is hard (else we'd all be flying around in helicopters and our energy would be "too cheap to meter" . . . which was the prediction for the future in the fifties). It's the same with the stock market. If the experts could predict the future so well they'd all be as rich as Warren Buffett.

I could be wrong, but I believe one big news item around the late 80's or 90's was another prediction of a major decline in house prices. It didn't happen in most areas.

Anyway, I'm not sure which way house prices are going. If I just had to bet, I might say a slight decline in most areas . . . but I wouldn't bet a lot on it. If I wanted to study this more, I might be more inclined to look at what the "baby boom" generation is doing rather than the short-term effect that the mortgage debacle has had.

[knoxgarden]

I was driving home yesterday and was stunned by the number of "For Sale" signs I saw along the way. Usually there's one or two since that's the main road and there are a lot of houses and particularly condos that run down the sides of the ridges.
But now there are multiple signs on every street corner. Even the higher-end condos like Lennox View have multiple signs out. It was rare to see a unit there on sale.
It may be investors selling off. Hard to tell.

[pdq]

Metro Knoxville mls has over 24,000 properties for sale right now. This does not include FSBO, properties in rollover, classifieds, etc. That's a LOT of inventory to try to shed. Like my dad always said, "nothing sells like the price".

Alleycat, there were many stories of home price decline in the late 80s-early 90s. The CA market was booming turning to bust. The rest of the country followed with a flat to down market for several years. The early 80s bust was much the same, Knoxville saw declining property values.

Tn has always lagged the coasts by a year or more. With our bloated inventories I think were just beginning to see the decline that follows.

[mbmouse]

Originally Posted by SuzieQFL

What do you think about the Tennessee market? In your business, are a lot of closings actually happening, or is everybody just looking and not actually buying? I've seen lots of nice homes on realtor.com that have been there for quite some time. Some with trees still bare, so you know they are from last winter.

At the moment I can't say about any other market than the local market of the Tri-Cities and immediate surrounding counties as that is all I have closed in in the past few months but according to my personal office, local Realtors and title agents, closings are actually up over the past 2 months than in June and July. There was also the article a few weeks back about an increase in residential building permits as well. The equity growth for Sullivan County for the first half of 07 showed a 9% equity growth which was up 2% over the consistent 7% it has seen for the past 5 years. There is a higher number of cash closings in the past 8 months than there ever has been so someone is selling elsewhere and buying here. LOL!
I don't know why certain homes seem to be just sitting on the market here. I have seen a few too that have pictures of leaf less trees. I will call a few Realtors Monday and see what kind of answers I get. I know of two in particular that from what I have been told that are WAY over priced. They were both purchased by folks from out of state as an investment in the past two years and think they are going to make a mint on them and they are just unrealistically priced. Not sure why others are sitting, I will find a few in the book or Realtor.com and make a few calls, see what I can find out and let y'all know.

Originally Posted by alleycat

They might be right . . . however, I've learned that predicting the future is hard (else we'd all be flying around in helicopters and our energy would be "too cheap to meter" . . . which was the prediction for the future in the fifties). It's the same with the stock market. If the experts could predict the future so well they'd all be as rich as Warren Buffett.

LOL!!! Boy isn't THAT the truth! Well said.

[FromTheOC]

We just bought a house in Tennessee. We did not find these big bargains and unrealistic sellers others are talking about although we wish we did. LOL. We were not able to negotiate a lot and we lost one house because we waited. We looked at some houses that had been sitting and saw that they are sitting for a reason. Something was wrong with the house, the decorating, the yard, the neighborhood, the location, or the school district. We thought about waiting for a year. But we found a house we love and it was not as easy as we had thought. We are coming from a bubble market and do not see the same thing here. If we are wrong we still love our house and had to live somewhere!

[bethletters]

I have a friend who's trying to sell her house in a suburb of Nashville and has had it on the market since Feb but can't seem to sell it. She thought she had it sold in Aug but it had to go back on the market when the deal fell through.