Disruption? Home sales increase as virus spreads

From The Nashville Ledger | April 3, 2020

With the COVID-19 pandemic reaching across the country and state, and beginning to claim lives in Nashville – recognizable names and treasured residents – many are concerned about real estate values.

For better or worse, stock prices are available instantaneously and with current values. Real estate, for many reasons, lags behind, even with the “marvel” of Trulia and Zillow, which so many rely on for their data.

Through February at least, the area was rolling toward another record-breaking year. With pending sales soaring, the first quarter seemed a shoo-in for the most sales in a first quarter in the city’s real estate history.

Between March 15-30 last year, there were 326 closings. This year, there have been 251. But the record is still within reach and will, most likely, be broken, thanks to the robust first couple of months this year.

Closed real estate sales are, for the most part, not the result of activity that occurred that day, that week or that month. Most sales take place toward the end of the month following the month in which the contract is executed by both parties.

For example, a contract placed in effect in early to mid-February would close in late March, while a late February contract could have an April closing.

For this reason, some scholar will look back years from now and be perplexed that Nashville’s real estate numbers looked so good in the middle of a pandemic. Although many of the transactions occurred before most in U.S. had concerns about COVID-19 with misinformation running rampant, a check of recent activity reflects that many in the area have a need for housing, pandemic or not.

In order to observe what has happened over the past six weeks, pending sales have more relevance than closed sales, and those numbers vary according to price range.

In the $250,000-$400,000 price range, the numbers are staggering. From Feb. 15-29, there were 136 houses put under contract in Davidson County, according to Realtracs, the Middle Tennessee Regional Multiple Listing Service.

The 136 sales pending during that period lag significantly behind the contracts from March 15 through March 29, a time when fist bumps were giving way to foot fives and elbow bumps, and there were an astonishing 209 houses that went pending.

Even more surprising is that 111 of the 209 went under contract following the Safer at Home Order issued by Mayor John Cooper. Pending sales in the $250,000-$400,000 price range have increased since that order.

In the $401,000-$600,000 price range, there is more of the same. Between Feb. 15-29, there were 83 pending sales. Between March 15-29, there were 101.

A check of sales March 22-29 reveals 50 of the 101 pending sales occurred that week. At the higher end of the $400,000-$600,000 range, sales continued to increase from those in February – and February was a record-setting month.

In the $601,000-$750,000 range for Davidson County, pending sales Feb. 15-29 totaled 11 sales, significantly down from the 136 in the $250,000 to $400,000 category and the 83 in the $401,000 to $600,000 range.

Yet there were 15 between March 15-29, with 10 of those occurring in the last week of March.

It is not until sales prices hit $751,000 that there is a decline. There were 21 pending sales between Feb. 15-29. For the same dates in March, the number dropped to nine, with four of those, less than half, occurring the last week. As sales prices climb, the numbers become more dramatic.

In the $851,000-$999,000 range, there is another substantial drop. There were 11 sales in the last two weeks of February and only three the last two weeks of March, with one of those coming in the last week.

The largest change was in the $1 million-$1.25 million range, where there were 10 properties that went under contract the last two weeks in February and none for the last two weeks of March.

In the $1.251 million to $1.5 million, the pending number drops from seven in February’s last two weeks to four in March’s final weeks.

What is astonishing there is that three of those sales came the last week of March.

There was no difference in the one sale in the $2.5 million-$3.5 million in the final weeks of February to the one pending sale in that range in March.

However, one of the stranger pending sales in all of this is that a house that was listed for $4.5 million and had lingered on the market for 565 days went under contract during these uncertain times.

Stay home, wash your hands, stay away from people, help others when you can.

Richard Courtney is a licensed broker with Fridrich and Clark Realty and can be reached at [email protected]. This column begins its 10th year in the Ledger with this writing.