It should come as no surprise that the 3rd Quarter of 2021 did not disappoint. It reflected another stat-shattering pattern in nearly all categories. The most stark likely being the large increase in Median Home Sales Price across the region. A roaring 2021 continued through Q3.
But why is a $50,000 jump in Median Sales Price such a big deal?
Well… Other than people earning more in equity within a 12 month span than a Grade School teacher’s salary… Nearly double, in fact… For doing absolutely nothing to their homes…
Let’s remember that a large majority of the towns in the Nashville Region are in what many would consider “rural locations.” What do I mean, rural? They require septic systems because they do not have access to sewer. Many require water wells, with no access to City Water (coming from a water meter at the street) or even Utility Water (large water tanks). And the density of rock in the Tennessee soil is somewhat high! So passing a Percolation Test to build a new home or certainly developing a new subdivision isn’t as feasible as it is in other areas of the southeastern U.S.
Take a look at some of the Income Demographics in our Region: https://datausa.io/profile/geo/tennessee
Below, I’ll drop some Fun Facts from Quarter 3 for people like me that enjoy understanding local Real Estate trends!
How Long Will This Continue?
We’ve discussed “Are We Heading Into a Real Estate Recession” in a previous Blog Post. But the better question is whether 2022 will post another $50,000 boost in home values in our Region? The answer to that question could make you a very smart Home Seller.
Check out this 10 Year Analysis I put together for one of my Investors recently:
The normal Appreciation Rate for Site Built (non-manufactured) Homes was around $15,000 per year on average until about 2015. It’s consistently increased around 9% each year if you calculate the numbers correctly.
Median Sales Price for 2021 Thru Sept 30: $332,000
A 9% increase on $332,000: $361,880 (+$29,880)
If you look at the 10 Year History above, you typically see a stark increase followed by an “under-performing” year. And really, that doesn’t make it a bad year. It just indicates a less impressive year. I would expect 2022 to be a bit more normal, with a 9% increase at the Median.
When that happens, don’t freak out. A Recession won’t be eminent.
Fun Facts From Quarter 3 – 2021
This should paint a pretty cool picture of what happened in the trenches!
- Homes sold for 101.26% of Asking Price
- The Average Home costs about $213 per square foot
- Cash Deals made up 20.54% of all deals that Closed
- Conventional (min 5% down) Buyers made up 52.34% of the market
- VA (Military) Buyers closed 9.62% of the total homes sold.
- Just 8.74% of the Homes Sold were FHA Buyers (common loan for First Time Home Buyers)
- The 3,532 Cash Buyers mentioned above still paid 100.78% of Asking Price for their homes on average
- 8,513 Homes (49.52%) were between 1000 & 2000 square feet (most common size)
- 3 Bed/2 Bath homes accounted for 42.87% of the homes that sold
- Homes larger than 3 Beds/2 Baths accounted for 32.66% of the market
- 706 homes were listed over $1M (4.1%)
- Homes over $1M sold for 100.07% of Asking Price
- New Construction (Homes finished in ’21 or scheduled for completion after) consisted of 18.41% of the total homes sold
- New Construction (Homes finished in ’21 or scheduled for completion after) sold for 100.48% of Asking Price
- New Construction (Homes finished in ’21 or scheduled for completion after) sold in 12 Days on average. Median Days on Market was 0 days. Many sold pre-market.
- New Construction is selling for $193 per square foot (Avg Sales Price is about $447,000)
- Only 4.18% of the homes that sold had In-Ground Pools
- Of the 17,188 homes sold, 18.14% had a minimum 1 Acre or more
- 1,004 homes (5.84%) had a minimum 5 acres or more, and sold for $672,247 on Average.
- Homes between 1 and 5 acres sold for $502,291 in about 13 days for 100.22% of Asking Price.
- Homes between 5.01 and 15 acres sold for $592,924, only 99.82% of Asking Price.
- Homes with 50 acres or more made up just .31% of the sold market. They sold for $1.43M… At 93.14% of Asking Price.
- Homes with 50 acres or more took an average of 65 days to sell
- Of the 2,661 Rentals that closed in the MLS, the average rent was $1,833 per month.
- The average rental was on the MLS for just 17 days before it Closed.
- The average 1 Acre Lot sold for $81,327 (91.81% of Asking Price)
- The average 5 Acre Lot sold for $136,730 (93.93% of Asking Price)
- There were 359 lots that sold with 20 acres or more. They sold for $725,864 (about $9,584 per acre) for 94.69% of Asking Price. They sat on the market for about 88 days before selling.
- The largest lot sold had 840 acres. It closed for $12.5M.
Can you believe that homes with ACREAGE are selling for less than Asking Price? For the growth that we’re experiencing, the land stats were pretty shocking as well. A recurring experience that I’m having… Builders are so busy right now, people are having difficulty having homes built. And the perception of the real estate market is causing Land Sellers to pressure Buyers into smaller due diligence timeframes.
But what did we just learn?
Land Buyers have a little more leverage than expected!