Discounting shows today’s housing market is kinder to buyers
While the Northeast Tennessee region has seen a slight improvement in active housing inventory, the months of inventory metric is stubbornly stuck in the 1.6 to 1.7 months range. It’s been that way since July last year. That’s because pending sales have persistently absorbed most – sometimes all – of the new inventory volume and a robust jobs economy and consumer spending plus a steady stream of new residents have sustained an economy that’s absorbing existing inventory and building up long-term housing demand.
And despite lower mortgage rate outlooks for spring that would typically stimulate more inventory, rates are increasing. Last week the average for a 30-year fixed-rate loan was 6.73%. There’s not much relief on the horizon. Currently, there’s a good chance the FED is going to get more aggressive to move rate increases lower to combat an inflation rate that refuses to come down. While the interest rates are not directly linked to mortgage rates, this is one example of where trickle-down works.
Here’s how February’s local existing home market is reacting.
Both sales and price inched upwards.
About one-in-five sales went for the listing price while the percentage of sellers who discounted was 55.7%. That’s 10% increase from the percentage of discounts in January.
The average discount from the listing price was $17,956, up from an average of $15,853 in January.
The percentage of buyers who paid over the list was 20.9%. The average overage was $10,800.
While there’s a plethora of unknowns about how the market will perform in the coming months, there are a couple of knows to keep in mind.
As the monthly data on sales discounts show, buyers have gained some muscle in what is still very much a strong sellers’ markets. That’s upping the status of buyers’ agents who have a negotiating track record to attract and retain clients.
On the inventory front, there’s also some good news. Builders report they’re getting back to better production levels. And more buyers are turning their attention to new homes. The reason is simple: some of the new home products can compete with existing home prices for buyers who have specific needs and want a home built to current standards. That’s an issue in a market where older homes dominate the market.
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