Buying a home now will provide better options later

Friday, February 15, 2019, Vol. 43, No. 7

How important is home ownership? It is something everyone should attempt?

NewsChannel 5 had a story this week about 86-year-old Aline Lyles, whose apartment building was sold and she was given notice to find a new place to live.

She says it has been quite difficult – almost impossible – to find affordable housing. And it was only with the help of a “Good Samaritan,” she says, that she was able to locate a new place.

Not everyone is able to buy real estate. But it’s not as difficult as some might think.

Thanks to the government’s longstanding determination to end unfair housing and lending practices, there are programs in place with all lenders that make home ownership easier.

Certainly, these loans are not promoted as well as conventional loans, but local banks have loans that require no down payment, include no private mortgage insurance, are at market rates and allow the seller to pay the closing costs.

And while real estate is increasingly expensive in Nashville, there are affordable pockets in Nashville and outlying areas.

Most of the population will not achieve 86 years of age. The average in the United States is 78.7. Or maybe 86 will be the new 66. If that is the case, ownership is even more important.

A 35-year-old purchasing a house today with a 30-year fixed loan would have that loan paid by age 65. That owner could then live there free and clear with only taxes and insurance to pay. If they were so inclined, they could sell for a huge gain and rent in style.

Purchasing at age 25 would be all the better.

There are paths to home ownership that are less expensive than rent. At any age, there are programs that insure stability and security for homeowners, and they are no longer at the mercy of landlords.

Property owners who sell for big profits and the developers that acquire these buildings should not be vilified or villainized. In many cases, the property is the only liquid asset of its owner and the sale is simply them cashing out. Being a landlord of multiunit housing is no walk in the park.

Once developers purchase properties, they create scores of jobs and purchase millions of dollars of materials, most from local vendors. They can be part of the solution, not the problem.

Anyone renting should explore whether home ownership is an option – before they turn 86.

Sale of the Week

Think today’s political environment is bad? You should have seen The Gulch between 2005 and 2010.

The argument was whether the development that was given birth by Bristol development and christened the Icon could be successful. Following successes with the Bristol on Broadway and the 168-unit Bristol on West End – a development that is not on West End at all, rather a block away at Vanderbilt Place – Bristol opened its sales office in The Gulch amid great fanfare.

With a launch unlike any the city had seen in condominium sales, the Bristol group borrowed a page from the single-family builder’s playbook and constructed a model home as its sales office next to the proposed site at 600 12th Avenue site at the entrance to The Gulch.

In fairness to the naysayers, The Gulch was a project that had taken years to get off the ground and, quite frankly, was still struggling. The Mercury apartments had been built by the group that developed The Gulch, but that was about it.

Without the Turner family’s money, it would have collapsed.

When the Icon sales office opened, there was no shopping or restaurants. There was a rendering that pictured The Gulch almost identically to how it looks today.

The debates were heated, and the participants grew into two distinctive and unlikely groups. Many of the haters were Realtors who, oddly enough, stood to profit with the success of the development.

There also was a rather large contingent of developers who saw themselves as wise for playing it safe in the face of a deepening Great Recession.

Bristol sold the initial offering in a matter of hours, raising prices all along the way. But they only required a $5,000 deposit, a tactic the haters felt would backfire.

Some bailed on their $5,000 investment and were sued to perform or pay a penalty. Many chose to pay approximately $20,000 to $30,000 to void their contracts.

Various media outlets opted to join different sides of the argument, some lauding Bristol’s courage and praising the company for its success. Others argued the pre-sales were not really sales at all.

One of Nashville’s more prominent developers made the statement, “In six months, I will buy those units for 20 cents on the dollar.”

As buyers walked, supply rose. But demand also began to rise.

The sales team sold many of the condos as many as three times each as financing fell through.

Eventually, the low owner-occupancy rate meant that buyers would have to produce cash.

Somehow, magically, the cash appeared, and all of the units sold. And, as time has passed, initial investors have fared well, as have second- and third-generation buyers.

Unit 1711 sold last week for $551,000 – $585 per square foot – after selling for $325,000 in 2010 and $435,000 in 2014.

The design features two bedrooms with one and a half bathrooms.

The buyers who dared to buy have fared well.

So much for “20 cents on the dollar.” It’s more like $25,000 appreciation each year for nine years.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty, and can be reached at richard@richardcourtney.com.