Changing housing market watchwords: Stay focused, stay local
Understandably, there’s a lot of confusion and concerns about the local housing market.
It’s easy to understand why. Real estate transactions have a big local economic footprint. Last year there were 10,000 local existing home sales. They had a total dollar volume of $2.3 billion. And that’s just the sales of properties listed on the local Multiple Listing Service (MLS) and reported by the Northeast Tennessee Association of Realtors® (NETAR). Sweep in the economic multipliers identified by the National Association of Realtors® (NAR) economic researchers and it balloons by another $627.5 million. And that doesn’t include vacant land sales, new home sales, or commercial real estate transactions, which also set a record.
Overall, real estate accounts for about 16% of the state and local economy. The real estate industry led the region out of the Great Recession and the pandemic. So, it’s no wonder the folks who understand the local economy get nervous when they read about big declines.
Homeowners and all the mom-and-pop investors who own most of the region’s 63,000 single-family and condo rentals hold what’s happening in the market close, too. Although we pay a lot of attention to stock market reports, most people have more wealth invested in their homes than in their 401Ks.
The most current market attention-getter is Moody Analytics’ revised housing forecast. Moody’s has rated the Tri-Cities metro areas as overvalued markets for a year. At the same time, it predicted that the odds of significant price reductions were very low.
That made sense. The local market has a long history of being undervalued. A runup in sales and prices during the last four years has corrected some of that situation. The numbers – especially price appreciation – were so jaw-dropping because it happened so fast. Most of it was in 2020 and 2021.
Mood’s revised forecast has a cloudier outlook. It projects price declines in all the NE Tenn. markets. It forecasts an 18.5% downturn in Kingsport-Bristol and 16% in the Johnson City metro area. That’s equivalent to what the local market has recorded this year, but not a return to yesteryear’s $200,000 and lower norms.
Here’s how Moody’s Chief Economist Mark Zandi explains what’s happening to Fortune: “Sellers realize they’re not getting ‘the price I could have gotten a few months ago, but it’s still much higher than I could’ve gotten three years ago.’ So, they feel like they’re doing OK. Even with these price declines, they’re still up a lot from where they bought the home originally.”
We’re beginning to see some of that here. September’s NETAR Home Sales Report pointed out that a little over 300 of that month’s sales were discounted from the asking price. But, it didn’t make a big dent in the price appreciation trend. So far this year, prices are almost 18% higher than last year. And the middle price has been flat in the $235,000 to $245,000 range since June. That on par with the 2021 annual average price.
Zandi thinks the bottoming-out activity in the coming months. Corrections could take years to play out. Most of that assessment is focused on major metro markets, and it’s established that regional markets – especially rural metro markets like the Tri-Cities region – vary widely.
What that means for agents and the clients they serve is a heightened need to stay local and focused. Looking at the big picture skewed by housing markets in the nation’s metro markets may be interesting, but drilling down to what’s going on in Johnson City, Kingsport, Bristol, Jonesborough, Gray, Piney Flats, Elizabethton and Greeneville is critical for local buyers and investors who want and need to stay on the market’s edge. The best source for that information is from local Realtors® and the Northeast Tennessee Association of Realtors® monthly and weekly market reports.
Watchwords for a transitioning market: Stay focused, stay local.
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 1,800+ 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