The Relationship Between CA and TN Real Estate

Yes, I recently moved here from the West Coast, where the words short sale and foreclosure are normal dinner table conversation pieces. What I didn't expect was how rare they are here in Middle TN in comparison. Of my sales in CA, 50%-60% were short sales or buyers purchasing short sales and foreclosures. So what happened in TN? For one, we never had the huge 'run-up' in prices CA did, and the jobs picture here is a bit more stable. Its a lot easier to pay your mortgage when you have a paycheck. But what is striking is how everything that happens in CA (prices going up, prices going down) happen here in TN, just on a delayed basis. If someone could pinpoint exactly how many months/years, they could make millions using CA as the indicating factor! 

To further emphasize my point, I was looking for houses to show in Brentwood yesterday between $500k-$600k, and of the 18 available, half were short sales! half! Those are people who are late on their payments and gonna get foreclosed on if the bank doesn't accept the short payoff. You and I both know there are not enough buyers for all those homes, and what does supply and demand tell us? Exactly. More foreclosures. More short sales. I think TN has a way to go in its price drops. Why? Because when the market was going to hell in a handbasket in CA in 2007, the Nashville market was raging with Nissan buyers, new construction, and people moving up. Yes we were one of the last (if not THE LAST) national market to the party. That means, in my humble opinion, we'll be last to leave too, and we've got a lot more price correction to go. 

I must point out however, that I think this price correction will be from $350k and up. Just based on the average salary in America, and the "sort of stable" job picture in Nashville, lower priced homes here are gobbled up, and that demand will keep the supply down and prices solid. But for homes above that? Good luck! Anything over $417k and you have to get a jumbo loan, or a 2nd loan, and good luck getting that these days unless you have Fort Knox in your basement. I say all this to say that if you have a mid to high priced house, its got a ways to go in declining. I'm tired of hearing "Cory, we're gonna wait til next year and sell it for more." No, you're gonna wait til next year and sell it for 10% less. Thats the bottom line. We need to wake up to the trends and pay attention to the indicating factor, California. As that state begins to rebuild and prices stabilize, we will follow. If you have to sell your house, sell it now, not later...unless you can afford to hold on to it for 5-7 years. Over and out!