Appreciation growth rate can accommodate price softening
Another indicator that a little bit of the bloom is coming off the local housing market is the number of price reductions showing up. During the first 12 days of September, there were 13 of them.
During a normal market, about a third of homes are overpriced. In hot markets, sellers agree they’re overpriced, but about 25% think a hot market makes cancels any need to reduce the price. August’s price reductions are not a surge but an indicator the mood is shifting.
The picture gets a little clearer when you combine it with the difference between the median listings price and the median sales price. So far this year the discount has averaged out at 5.4%. It was in the 6.8% and 6.4% range in July and August. During the first nine months of the year, the difference between the median listing price and the median sales price averaged $11,563.
That doesn’t mean sales above the list price have gone away. Nor have the listings getting multiple offers. It’s just a sign the market is beginning to transition from sizzling to hot.
On the growth side, the median sales price is 16.9% higher than during the first nine months of last year. And August’s average sales price was at an all-time high. So, there’s ample room for some price growth rate softening without taking too much of the edge of the appreciation pattern. The historical annual appreciation in the NE Tenn. – SW Va. market has been in the 2.5% to 3% range.