Well 2008 has come and gone and the real estate market in Rutherford County has experienced the second consecutive year of declining sales since the mountaintop year of 2006. But hey, what did we really expect after 14 years of a “let the good times roll” market? Economists say that most vibrant real estate cycles usually last 7-8 years max. Middle Tennessee’s ran full throttle for a decade and a half without so much as a catnap!
You really had to scratch your head when you pulled up to the red light and right next to you the roofing contractor was revving up his new Ferrari, or when your plumber just bought his second home in Aspen, (interest-only baby). Let’s not forget us Realtors who ran through Hummers and Harleys faster than a Chris Johnson 40-yard dash. Oh those were the days! When the only qualification to become a builder was to have king cab-duelly and a cell phone. Two by four, two by three? Who really cares? Land developers were buying jets quicker than you can say “King Air!”
Okay, so I am exaggerating a little bit… well, not much. We in the business knew it would not last forever; we just figured it was always three years off. I never really understood when mom would say, “Grandpa is frugal because he grew up during the depression.” But now as I am collecting cans on the side of the road, I am starting get it. I feel ya, Grandpa.
Back in 2006, I actually thought something was amiss when I attended a closing where an exotic dancer and her muscle-bound boyfriend closed on a million-dollar home in the prestigious Governors Club. Business was booming. Pacman was in town. Did I hear someone say, “Let it rain!”?
Pacman Jones - Make It Rain
The lending industry became a contest to see which bank could give away the most money the fastest. They had this product called a “stated income” loan where the liar, oops I mean borrower, simply had to state what they earned without any verification.
“Hmm, lets see. Put me down for $250,000 a year and my wife, well let’s see. She’s working part-time; just put her down for a cool fifty-K.”
“Well congratulations Mr. and Mrs. Dumba#%. You qualify for a $500,000 mortgage.”
The couple sighs.
“But hey, if you go with the adjustable-rate product we can probably increase your purchasing power to $750,000. How does that sound?”
“What if the rates go up?”
“Don’t worry about it, we can refi you to a fixed in a couple of years.” Forgot to tell them about the $20,000 prepayment penalty.
I’m sorry; I’m getting a little over the top, but it was pretty crazy! The truth of the matter is that what we are going through here in Rutherford county pales in comparison to the much of the country. We simply did not have the appreciation run-up that many areas experienced; therefore our fall won’t be nearly as great.
In reality, we actually did the same numbers this year as we experienced in 2001, which at the time was a good year. The only difference: we had built up a supply of homes to support 6,300 sales, not 3,700. We are going through a correction period right now and that’s okay. It has to happen. Although I do miss my weekly massages and quarterly back wax treatments. Sorry, dreaming about 06, again! No really, I would not trade our market for any other in the country! We have been blessed here in Middle Tennessee and our market will strengthen before most others.
In my opinion, 2009 will be similar to this year! Although we have sold off or foreclosed off much of the new construction, bank-owned and short sale homes have kind of taken their place. The inventory of homes is basically the same as it was at this time last year, which is an 8.2-month supply. Experts are speculating that Obama will pass a pretty healthy housing stimulus package and that should help! I do not know if we are at the bottom; nobody ever does ‘til six months after we’ve left it, but my gut tells me we are in the valley!
I wish everybody a great 2006… I mean 09. There I go again living in the past!
Tuesday Morning Coffee 