Driven by a stronger economy than most of the nation and higher employment levels in its major cities, Tennessee is sustaining the real estate crash better than most of the U.S. That isn’t to say the state is out of the woods yet, but the hills of Tennessee are looking better than a lot of the country. Sluggish home sales produced by weak consumer sentiment riding over the housing market are keeping the lid on a quick recovery.
Home prices are declining in most of Nashville as a result of the foreclosure crisis and economic stress. But the local market saw an increase in home sales as a result of the federal home buyer tax credit and some residents’ needs for a new home after flooding inundated the community last year. A prolonged recovery from the floods should aid Nashville’s housing market in 2011 as the community recovers from damage.
An increase in sales will be good news for Nashville and will also act to hold back major deflationary pressures on home prices. The community didn’t see double-digit high inflation during the boom, which will also add to its saving grace. Nashville home prices are forecast to decline only a modest 2.7% in 2011, which is much better than most of Tennessee.
Clarksville was also slammed by severe storms, but commerce quickly returned to the community and home sales shot up as a result of the federal tax credit only to turn sluggish after the credit expired. A slow rise in home sales is projected for the New Year but with a larger supply than demand prices will continue to take a hit. The average
home in Clarksville is forecast to decline 3.4% in value for the year.
In Memphis home prices are sliding, despite the community being a target for federal aid to help with the real estate crash and investors purchasing bargain priced foreclosures. Driven by record low mortgage rates, Memphis has seen more investors purchase property in the last year than the two previous years. But an over-supply of inventory hinders the market from recovering. Housing values will only rise after the market finds a bottom and that’s not likely to be for some time. Memphis is forecast to experience average home price deflation of 4.9% in 2011.
Insurance claims for homes that were destroyed by flooding in Knoxville added to an improvement in home sales driven by the federal tax credit. A rebound, however, from the tax credit never fully materialized as many hoped, despite record low mortgage rates. Tougher mortgage under-writing guidelines that eliminate home buyers with credit scores as high as 750 on their FICO score will hinder just about everywhere from recovering in the state until requirements are reduced. Until then the value of homes will slide, and in 2011 that is projected to average 4.6% in Knoxville.
Lethargic might be the best term to describe Chattanooga home sales as fallout of the Great Recession and foreclosure crisis lingers in eastern Tennessee. The community should benefit over the long run from an increase in population but it will take sometime for the area to become accustom to the growth from newcomers. Locals who lost their jobs are seeking work elsewhere and that’s contributing to Chattanooga’s economic woes with more foreclosures. Average housing prices are forecast to deflate 4.5% for the year.