2021 another record-setting year for housing
The books on the 2021 local housing market are almost closed. They’re almost final because the Multiple Listing Service (MLS) numbers for the home sales report were pulled on the second working day of the month. So, closings reported too late for the December report are not included. That means there will be an adjustment on next month’s Northeast Tennessee Association of Realtors® (NETAR) Home Sales Report.
With that said, the 9,523 closings reported in the December and end of the year report are a new existing home sales benchmark for the region. And that doesn’t include existing home sales that were not listed on the MLS or new home sales. When those numbers are available, it’s safe to say that last year’s home sales were at or just above the 10,000 mark.
The amount of money involved also increases. It was $2.3 billion on just the sales reported by NETAR in the region it monitors. Sweep in the economic multipliers identified by the National Association of Realtors® (NAR) economic researchers and the total balloons by $627.5 million. And that doesn’t include non-MLS sales, vacant land sales, new home sales, and commercial real estate transactions, which like residential sales set a new record.
The bottom line is real estate is a major part of the local and regional economy. The latest accounting says it’s about 15% of the economy.
Local home sales bottomed out of the Great Recession in 2011. The annual total that year was 4,173 sales. The first recovery year (2012) saw a 13.8% sales increase. That has continued every year since with one minor exception. There was a small decrease in 2019, but 2020 and 2021 more than made up for it with double-digit increases.
It’s also noteworthy that nine of the region’s smaller cities and unincorporated areas recorded double-digit sales growth. All but two of those 15 local submarkets had double-digit price growth.
Moving forward, market outlooks call for sales to moderate and slowly move to more balanced conditions. Don’t mistake what’s predicted as a market decline. Sales and prices should continue increasing, but the growth rate will ease up from last year’s frantic pace.
The last time the local market had balanced market conditions was in 2018. That’s when there was a little better than five months of inventory of existing homes for sale. Given current conditions getting back to balanced market conditions is expected to take at least four years.
The new home construction now underway, and what builders are planning should bring the region’s new home industry back to levels near its 2005-2006 peak. But that won’t happen overnight. New home market performance has been at about half of the peak performance until last year.
During the past five years, market growth has dramatically increased many local market fundamentals. For instance, from 2000 until 2015 – when the current market pace began – the annual sales price growth rate averaged slightly more than 2% per year. Since then, it has doubled to almost 4% per year. That has greatly improved wealth growth for local homeowners and residential investors.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region representing over 1,500 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us