Is your home worth more today?

MURFREESBORO – 2014 ended with a real estate sector that approached pre-recession levels, and in some cases surpassed them.

"The housing market is certainly more stable and growing than we have seen over the last several years," said Candy Joyce, president, Middle Tennessee Association of Realtors.

Home sales and new construction haven't bounced back to 2006 levels quite yet, but home prices have, according data provided by MTAR and the Red Report.

After most of the distressed sales — foreclosures and short sales — were absorbed, home prices began to trend upward again, Joyce said.

And as home prices tick upward, so do sales, which pushes inventory downward. The county currently has a healthy — two to three month's worth — inventory on hand.

For 2014, Rutherford County saw 4,996 homes sold, an increase of 474 homes or 10.4 percent from 2013. Since the sector hit rock bottom in 2010, home sales have improved 57.8 percent, according to data provided by MTAR.

The improving industry can be seen in Murfreesboro's increase of single-family building permits.

"It appears the strong demand for new homes in Murfreesboro, though not at the brisk pace prior to the recession, is on a strong growth trajectory," said Interim City Planning Director Gary Whitaker.

Final figures for 2014 released by the Murfreesboro Building & Codes Department last week indicate permitting for single-family detached units increased by 58 units in 2014 to 647 units compared to 589 units in 2013.

Increasing multi-family unit permits also reflect a growing trend in satisfying the demand of the Millennial generation. Multi-family unit permits jumped from 889 in 2013 to 913 in 2014.

A tight supply of available lots and new homes has been boosting residential development in Murfreesboro.

"It also appears that Murfreesboro will continue to struggle with a shortage of building lots as the number of lots available for construction is at a 20-year low," Whitaker said.

Lots available for construction in Murfreesboro dipped from 1,254 in 2012 to 984 in 2013 and the inventory of available lots in 2014 is only around 826.

That is far lower than the peak of 1,799 available lots in 2006.

Simply supply and demand

When the squeeze on available lots for new construction is combined with shrinking numbers of distressed sales and increase in eager buyers, it produces a bounce in home prices.

Nationwide, home prices remain 12.9 percent below their April 2006 peak. But in Rutherford County the average price was up 9.4 percent from $173,751 in 2006 to $190,234 in 2014.

"We have a substantially higher average sales price now than even at the peak of sales," Joyce said.

Dotson said the average price in December 2014 was about $189,000 versus $178,000 in December 2013.

"I think there are several reasons for the price increases," he said, citing lower inventory and multiple offers driving prices up.

"(And) investors have helped our market recover from the recession and clean up most of the foreclosures," said Steven Dotson, president of Red Realty and issuer of the Red Report. "Investors continue to buy for rentals, which are keeping the inventories low, and help sell the less desirable inventory that would normally drag down the market."

Joyce cited the lack of new construction for keeping the supply low and prices high.

"Additionally, the volume of multi-family construction pulled at the available land, labor and inventory of single-family homes being built last year," Joyce said, calling the increase in building permits in Murfreesboro "encouraging news. … but it is noted that development is still lagging and created a very tight inventory of lots on which to build."

Joyce also credited continued low interest rates that helped homeowners update their properties that could then be sold at a higher value.

Nationally, prices increased by 5.5 percent in November compared with 12 months earlier, real estate provider CoreLogic said Tuesday.

That was up slightly from October's year-over-year increase of 5.4 percent, which was revised downward from a previously reported 6.1 percent.

Compared to the peak

2006 was a banner year for real estate across the nation, not just in Rutherford County, but local agents wouldn't trade it for now.

"I would argue that today's market is much healthier for the overall market, economy and general public in the long term than 2006's market," Dotson said.

In 2006 there were 6,253 closed home sales at an average price of $178,393. Inventory approached 2,000 homes and the average days on the market was only 59, according to Dotson's Red Report.

"2006 was a much stronger year as far as sales volume and less days on market, but I wouldn't say that was 'healthier' now that we know what happened a couple years later," Dotson said.

Joyce agreed with Dotson's assessment, citing a 21 percent decrease in sales from 2006 to 2014.

"Still not as strong in volume of units this year as we had in 2006, but we have a substantially higher average sales price now than even at the peak of sales," Joyce said.

Many of those 2006 buyers were financed by subprime mortgages that burst with the bubble, which is what led to the financial crisis that still plagues some sectors today.

But regulations have tightened up since then to reduce the risk of default.

Joyce said changes in the process, new appraisal requirements and other changes have all impacted the market and created a healthier market overall.

"Today, in 2014, there were basically no subprime mortgages, so all of the buyers were good-risk buyers with down payments and great credit," Dotson said.

He added the market is more balanced today between home owners and rentals.

"It has to be healthier to have the steady growth that we can all plan for without the risk of another collapse with many losing their jobs, homes and families," Dotson said,

What does 2015 hold?

Most experts are paint a rosy picture for the real estate market in 2015.

"As we enter 2015, factors such as the improving economy, job growth and a rise in consumer confidence provide strong foundations for continued health and stability in the housing market, both here and nationally," said Cindy Stanton, president, Greater Nashville Association of Realtors.

"Even with the rise in home prices and lower inventory, both buyers and sellers should remain encouraged. Lower interest rates and focused buyers make now a great time to buy or sell a home," Stanton said.

Joyce said President Barack Obama's announcement that the Federal Housing Authority will reduce loan premiums will help spur the market onward.

The National Association of Realtors estimates that 2015 sales will total 5.3 million. Analysts say sales of roughly 5.5 million existing homes are common in a healthy real estate market.

Over the next 12 months, CoreLogic expects that home values will rise 4.6 percent nationwide. The firm estimates that roughly half the country's homes will match or surpass their pre-recession prices by the middle of 2015.

A national survey of home builder sentiment fell slightly in December 2014 to 57 but the chairman of the National Association of Home Builders (NAHB) indicated that builders are expected to remain confident in 2015. A sentiment above 50 is considered positive.

"With the positive job growth, continued national recognition for our quality of life, the great asset of MTSU in our backyard, the outlook for 2015 gets brighter all the time," Joyce said.

Contact Michelle Willard at 615-278-5164 or mwillard@dnj.com. Follow her on Twitter @MichWillard.