Home prices dropped sharply in December — back to levels last seen before the real estate boom — as the Nashville-area housing market wrapped up its weakest year in a decade.
The median price of a single-family home sold last month dropped 13 percent compared with the same month a year ago, and the price of a condo unit fell even more, 21 percent, in the latest sign that homeowners may be more willing to sell at reduced prices.
The single-family median of $163,750 was the lowest for the month since December 2004, when the median was $153,000, according to data released Thursday by the Greater Nashville Association of Realtors. The condo median of $134,062 also was the lowest for the month since 2004.
The declines are a sharp reversal from a year earlier, when homeowners appeared to be holding out for their asking prices despite fewer buyers.
Since then, sales have slumped an additional 29 percent. The 24,246 closings recorded last year were the fewest since 1997 in the nine-county region tracked by the GNAR.
December sales were down a bit more. There were 1,422 closings in the month, a drop of 33 percent from a year ago. "It's consistent with what's been going on," said Mike Nichols, GNAR's president.
The declines in home prices essentially reversed the increases that Middle Tennessee had experienced over a three-year run that began in early 2005.
From December 2004 to December 2007, the median price of a home rose nearly $35,000. That represented an increase of more than 22 percent.
But since this summer, sellers began to respond to the slower market with price cuts, and the median price settled lower back to a preboom level.
"If you bought in 2004, 2005, you're going to be fine," said Richard Exton, principal appraiser with the local firm Manier & Exton. "If you bought in 2006, you may not get out what you have in it."
Inventory declinesThe number of homes on the market also has started to fall. A total of 21,274 single-family homes, condos, multifamily homes, farms, land parcels and lots were listed for sale at year's end.
The housing inventory has fallen 15 percent since peaking at more than 25,000 listings in May.
Nonetheless, listings remain 3 percent higher than a year ago. An important factor in setting the direction of the market as this year unfolds will be separating homeowners who must sell from those who simply are willing to sell if they get the right price.
"The real challenge is that so many sellers that have homes on the market right now are discretionary," Exton said. "People seem to think it's the other guy's problem. … They seem to have the expectation that their neighbor didn't get what they wanted to be paid, but they will."
Other data released by the GNAR suggest the slowdown in the real estate market has been most pronounced in some of Middle Tennessee's suburbs.
Robertson, Maury and Williamson counties experienced the sharpest drop in sales last year, with each recording a decline of more than 30 percent. Those same three counties also had three of the four biggest relative drops in median homes prices.
Price cuts and a slowdown in construction in new subdivisions may explain those declines.
"You're competing with a builder," Exton said. "They've got a profit built in, so they can go down in price and still be OK."
Sales in Cheatham County declined by about 20 percent. Sumner County saw a 24 percent decline in sales, and Davidson County experienced a 25 percent drop.
Those three counties did relatively better in pricing, though. The median price sank about 2 percent in Davidson and 1 percent in Cheatham, and it actually rose 3 percent in Sumner, to $185,000.
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