‘Bottomed out’: Home sales, prices continue decline in Memphis area – From the Commercial Appeal

By Cassandra Kimberly  529-2786


Memphis Commercial Appeal


Tuesday, December 30, 2008


As 2008 winds to a close, some real estate professionals are looking ahead in hopes of a different turn of events in 2009.


“We’re preferring to look forward and not backward because 2008 has been the most challenging year since we’ve been in business,” said Harold Crye, co-founder of Crye-Leike Realtors Inc.


Marked by the consequences of predatory lending practices, job loss, and the declaration of an official recession, the housing market nationally has dipped far below the normal “valleys” and hard times.


“Maybe it’s just optimism, but most Realtors feel like we can’t go down any further,” Crye said. “Most of us feel like we’ve bottomed out, and we’re running along the bottom of the trough right now.”


As seen through most of the year, homes sales were down again last month by 31.2 percent from November 2007, according to the Memphis Area Association of Realtors’ Multiple Listing Service.


Year-to-date sales totaled 12,643, down 19.5 percent from the same period last year.


Active listings declined for the sixth straight month, sliding 2.7 percent from October 2008 and 12 percent from November 2007 showing a decrease in new inventory on the market.


“The new inventory is coming down because home builders are putting up fewer starts,” said Jules Wade, executive vice president for MAAR. “We’re gradually going through the inventory with fewer homes coming on the market, but a lot of it is eating through the foreclosure properties.”


Though foreclosures are starting to be absorbed, the mass numbers still on the market have brought down home values across the board.


According to MAAR’s November report, year-over-year median sales price declined 13.1 percent to $119,000. Average sales prices declined 14.9 percent to $148,000 over the same time in 2007.


A mix of low rates, low prices and tax credits are presenting opportunities for some investors and even first-time homebuyers, Wade said.


According to a survey by the National Association of Realtors released in November, the percentage of first-time homebuyers in the overall Memphis market increased from 39 percent in 2007 to 41 percent in the first half of 2008.


The results were compiled from 133,000 surveys mailed between July 2007 and June 2008.


For those who were able to buy a home, 2008 was dominated by people “going back to the basics” and buying within their means, Wade said.


“Over the past year, there is a much larger than usual number of homes that have sold under the $100,000 price range,” he said. “People are realizing they have to be sensible in how much home they buy.”


Due to rising foreclosures and job losses in 2008, the multifamily housing market began to see an upswing in occupancy, rents, construction and absorption by the third quarter.


“There’s a larger percentage of new households that are renting,” said Tom Grimes, executive vice president and director of property management operations for Mid-America Apartment Communities.


Apartment occupancy was up slightly by third quarter from the end of 2007 reaching 90.5 percent, according to the latest CB Richard Ellis Memphis Multi-Housing Marketview report.


While the economy is volatile, the Memphis multi-family housing market remains stable, said Blake Pera, senior vice president with CBRE.


Since 2005, marketwide occupancy has hovered roughly between 88 and 91.5 percent.


By the third quarter, average rents increased by $16 from fourth-quarter 2007, leveling out at $706 per unit monthly.


Though the market turnaround is expected to be slow, all signs indicate that Memphis should be one of the first markets to bounce back as production increases.


“The new units recently leased up have performed well,” Pera said. “The multifamily market should hold its own because the pipeline of new supply has slowed greatly.”


In the third quarter, 213 units were delivered to the market, bringing total deliveries to 904.


Little construction and few investment sales are expected in 2009 as was seen through 2008 compared to previous years.


“The continued tightening in capital markets combined with investor concerns about the economy practically dried up transactions in practically every market across the country this year,” Pera said. “And it has obviously impacted sales in Memphis in all commercial categories.”