House Foreclosures for Sale Cut Prices in Jackson, Tennessee

by Donald Hanz on cities

House foreclosures for sale in Jackson, Tennessee drove down home prices in the area in 2009, based on data from the Central West Tennessee Multiple Listing Service and local realtors.

The average home price in the area dropped in 2009 to $123,057, compared to the average home price of $137,706 in 2005. Aside from the downward price pressure of cheap houses, the price decline was also driven by the sharp drop in sales of homes priced above $250,000.

Total home sales last year also slowed down, compared to sales in 2008. Since 2005, sales have been on a decline. There were only 792 new and pre-owned homes sold last year in the area, down by 12 percent from sales in 2008.

According to Nashville-based real estate executive Tom Pierce, his company posted year-over-year improvements in sales starting July last year, but total sales were still low compared to sales in 2005. He said his firm sold 3,000 new and pre-owned homes last year, down from 5,000 homes sold in 2005.

Pierce also reported that house foreclosures for sale drove the performance of several of his company’s real estate teams last year, with foreclosed properties accounting for around 80 percent of their sales. He said that the more successful agents of the firm were focusing on bank repossessed homes.

Pierce said that the major factors affecting home sales are mortgage rates, available houses on the market and perceived future price appreciation. But he also noted that current unemployment and lack of confidence in the recovery of the job market remain the strongest hindrances to home buying.

Mahmoud Haddad, finance professor at the University of Tennessee in Martin, also insisted that unemployment remains the most crucial factor in home buying. He said that low mortgage rates mean nothing to people if they are unemployed or if they are uncertain about the security of their jobs.

Haddad believes that the unemployment rate in Jackson will still hover around the ten-percent level in 2010 despite the opening by Carlisle Tire & Wheel of its operations in Jackson. The jobless rate, meanwhile, in Madison County, where Jackson is located, reached 11 percent last December.

Home builders in Jackson are also suffering from the effects of the high jobless rate and record numbers of house foreclosures for sale. House builder Joel McAlexander said that many have stopped building new homes, and are now renting out their unsold properties to survive.

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