2020 wasn’t a great year for predictions for me.
Remember when I boldly predicted that June 2021 would see an all-time spike for consumer bankruptcy filings in Nashville? (Note: That time period actually saw local bankruptcies hit a 10 year low.)
Remember when I joined an out-of-town law firm with the express goal of creating the “perfect law firm”?
Remember when I bought a boat? (Note: Yes, I was quoted in USA Today calling it all a big hassle.)
So, with that grain of salt, here are my predictions for 2021:
The Bankruptcies are coming. Maybe in February, but maybe not. All the local bankruptcy lawyers have been confused by the lack of new filings.
The reasoning behind my analysis was partly correct, though: The stay on evictions and in-person court proceedings (coupled with a general reluctance by banks to attract negative attention through aggressive collections) has kept direct pressure off many consumer debtors.
And, strangely, the discovery of the coronavirus vaccine will lead to more filings. But, in May, I was just more optimistic about the timing:
As strange as it sounds, it’s likely that bankruptcy filings will not spike until the economy starts to recover, when businesses start to reopen and people begin to go back to work. That’ll be when people can stop worrying about survival and start worrying about digging themselves out a financial hole.
I stand by this prediction. Even in a typical “economic boom” year, the filings were always steady (and higher than the national average) in Nashville; with what our economy went through in 2020, we would have reasonably expected double the filings.
The financial and other relief we saw in 2021 didn’t offer cures or solutions; instead, they only delayed the inevitable (which was still a good thing for borrowers). But, having said that, all of those cases will get filed at some point in 2021. I’m just done guessing “when.”
Note: This reasoning also applies to divorce filings, which are way down.
The Nashville real estate market will continue to grow. I’ll leave the stories about all the new companies and people moving into the city in record numbers for the Nashville Post.
Instead, for this post, I’ll tell you about how my foreclosures over the past 6 months compare to my sales during the Great Recession.
Back in 2009, I’d get zero calls on my pending foreclosure sales. Inevitably, nobody would show up at the sale, and my bank client would be the high-bidder, with a new problem to deal with in their REO department.
In the last six months, though, I’ve been deluged with calls. Then, I’ll have 6-7 people show up at the sales. And, in the last six months, a third party buyer has been the winning bidder at every single one of my foreclosures.
The number of people and companies looking to get rich in Nashville real estate remains high and, generally, undeterred by the pandemic. Instead, because investments in traditionally safe properties are so expensive in Nashville, many of those investors are focusing their attention (and capital) on opportunities in non-traditional locations and via non-traditional sales (like foreclosures, tax sales, sheriffs sales). There’s simply too much money and not enough land.
For 2021, there’s enough money in town to keep the highs-high and to keep the lows from falling anywhere near the bottom.
(As an aside, I hate this for our city and our most at-risk residents, and I write all this in a way that can acknowledge how big and grand the flames are, even though it’s my house burning down.)
Nashville Commercial Real Estate. As a lawyer who recently started his own firm and who has not signed a long-term (or any other sort of lease), I’ve been waiting patiently for the economic crisis to hit the CRE market.
Part of that is timing. Not many projects came online over the past 4-6 months and, of those, many were fully (or mostly) leased. The other part of that is the amount of new money surging into Nashville from all over the country (see above), and, for most existing businesses, a sincere reluctance to change how they work. In short, people still want big, shiny office space.
At worst, I think 2020 and early-2021 will be a blip on the CRE profit-loss statement, but it will not bring any fundamental or long-term impact on the Nashville market.
We’re seeing this in the commercial litigation realm. In March and April, we all predicted dozens of commercial landlord eviction and debt collection lawsuits, but, aside from a few noteworthy cases here and there, there just haven’t been that many COVID-related lawsuits filed.
All of this is a developing story, but these are my totally watered-down predictions as we start our first business day of 2021.