Condos propel increase in Nashville-area home sales

Demand is sluggish for building lots, single-family units By Naomi Snyder • THE TENNESSEAN • February 10, 2010 Homes sales climbed for the fourth consecutive month in January, rising 6 percent to 1,033 closings compared to the same month a year ago, mostly driven by new condo sales, according to figures released by the Greater Nashville Association of Realtors. But single-family home sales stayed flat compared to January a year ago, and land sales didn't show much improvement, either, as homebuilders continued to pick up scattered lots here and there for deeply discounted prices. Overall, prices for a single-family home continued to stay below comparable values from a year ago, the Realtors data showed Tuesday. The median price for a single-family home sold in January was $159,000, down 3.8 percent from a year ago. Prices have been held down by foreclosure sales and by a flood of first-time home buyers taking advantage of an $8,000 federal tax credit, and those home buyers tend to go after moderately priced homes, according to real estate agents. The median price for a condo was $154,550 in January, down from $165,000 a year ago. "People are wanting smaller houses, but they want lots of good stuff in there, like an outdoor fireplace, granite, gas lights outside,'' said Reggie Garner, the vice president of community development for Stone Gate Land Co., which is redesigning its Arrington Retreat subdivision off Nolensville Pike in Williamson County to accommodate lower-priced homes. The 229-lot subdivision was originally planned for $500,000 to $700,000 homes. Now, it likely will have $299,000 to $400,000 homes, Garner said. "There are a lot of lots on the high end that aren't moving,'' he said. It's not only home buyers interested in lower prices. So are the homebuilders. Pulte Homes, one of the largest builders in the Nashville area, bought an unfinished subdivision in Brentwood out of foreclosure for $6.2 million in January, one third less than the previous developers had paid in 2005. Pulte plans to build 140 lots in the subdivision, which is called Whetstone. Homes are to be priced at about $400,000, much less than the $1 million or so initially envisioned for the subdivision. "We were able to come up with a good offer from the bank,'' said Andy Pfeifer, vice president of sales and marketing for Pulte. "We were able to buy into Brentwood." Other developers say they're also picking up lots they couldn't have afforded a few years earlier, when the economy was more robust. Regent Homes, which developed Lenox Village in Nashville, bought 11 lots late last year in Bent Creek subdivision in Nolensville for $550,000. The deal had to be approved by a judge in U.S. Bankruptcy Court because the owner of the lots, Newmark Homes, had gone bankrupt. David McGowan, the president of Regent Homes, said the $50,000 per lot price was about one-third less than Newmark had paid. "The whole market is being reset,'' McGowan said. Loans hard to get Land sales still are significantly down compared to previous years. Thirty-eight lots sold in January, up from 34 during the same month a year ago. That's only one-fifth the sales completed during the peak of the real estate market in 2005. McGowan said one thing holding back land sales is the difficulty getting a bank to approve acquisition and development loans. "The banks have completely shut us down,'' McGowan said. "With the banks shutting down all of the development process, there is no supply coming into place. All the good lots are being chewed up very quick. There will come a time in the next year or two that we will have a shortage of good lots." Until that happens, people such as McGowan will be trying to get a good deal