The Chatter Class: Shake-up has taken Nashville housing market back to 1993

When February's area home sales are released in a few weeks, they likely will be down again, continuing a lengthy string of declines.

That news — combined with continued national talk of foreclosures, troubled mortgages, bailouts and recession — certainly will make it seem as though there's no end in sight and that Nashville is immeasurably suffering.

Real estate agents everywhere had hoped for the stimulus package would do a lot to prop up housing. What they got was a $8,000 tax credit for first-time homebuyers, a measure that isn't expected to have a major impact here or anywhere else. What good is a credit if you can't get a loan?

But as bad is it seems, there are bright spots. There are local real estate agents who had the best January of their careers. Still others are looking at having their best-ever February.

For qualified buyers with cash up front, banks and mortgage companies are lending. Low interest rates are fueling a refinancing rush that has spurred talk about some mortgage brokers getting backed up.

Tales of woe typically are reserved for folks trying to sell their houses so they can move into a new one or builders toting the note on speculative homes. One Realtor said today's market is like it was back in 1993, when agents had to actually work hard at selling homes.

It was easy money for agents during the heady days of record-setting home sales filled with agents fielding several offers hours after hammering the for-sale sign in the front yard. They likely won't see those days again soon. Agents now have to know their stuff and must hone their business skills. The weak will fall and the strong will thrive.

Interestingly, one area still active despite a crummy economy is corporate relocation services. Although many companies are shedding employees, businesses who moved here hiring and moving around managers and executives — the folks who can still get funding.

This may be a byproduct of the economic development efforts over the years to attract companies here. After all, residential broker Shirley Zeitlin is ubiquitous at announcements of corporate relocations. And her firm rarely fails to land the work of handling relocating employees of the new company.

While agents still are selling, there is groaning — perhaps rightfully so — from potential buyers and the sellers they’re talking to. The market has swung from one extreme to another. Instead of sellers fetching big gains on their homes only to overpay somewhere else, agents are contending with vultures and buyers trying to squeeze sellers with offers significantly below already lowered values.

Then, there are the sellers who have overvalued their homes and aren't inclined to lower their prices into an acceptable range. In Green Hills, for example, the average sale price last year was $688,011, 31.2 percent lower than the average list of $999,375 now, according to real estate appraisal firm Manier and Exton.

That could be because there are more homes, both new and existing, on the market at the upper end of the market. But another factor mentioned in the real estate business is that expectations exceed reality.

In Franklin, the difference between the 2008-average price and the current list price is nearly 40 percent, again for some the same reasons mentioned previously. Franklin does have a lot of new pricey inventory.

By comparison, the price difference in Area 1, which encompasses much of Antioch, is just under 8 percent. There were a lot of new homes out there as well, just not at the high end.

With the statistics Manier and Exton have put together, the differential seems lower in areas where there weren't a lot of expensive homes built or where few new homes could be built.

Last week, Sen. Bob Corker whipped up Middle Tennessee agents saying housing got the country in the mess and housing is what it is going to lead the country out. The irony of having a Senator say those words is that, contrary to today’s conventional wisdom, government help may not be key to fixing the residential real estate market. The free market, a big dose of pricing reality and Realtors pounding the pavement may be the best medicine.