Home buyers gaining a little more bargaining power
Jan Stapleton - 2023 NETAR President
The region’s housing market is still a strong sellers’ market. But buyers are beginning to get more negotiating power. The dynamics are slowly shifting in their favor and, for some; it translates to better deals.
The change is not widespread. And not all buyers can take advantage of it. Affordability is at an all-time low, inventory is clawing its way to small gains, but there is a shift even as local affordability standards decline. It favors those who have pushed back the national reports and done the local research. They have marshaled their resources, partnered with a professional Realtor® to find the best deals and are prepared to hunker down and negotiate.
September’s existing single-family sales are down five percent from the first eight months of last year. The year-over-year decline is larger. Median price growth has flattened out. The year-to-date average is up 10 percent.
So, where’s the advantage for savvy buyers?
Twenty-nine percent of the sales that closed last month were on properties that the seller reduced their original list price to attract sellers. The most common reduction was $10,000. The average was $33,873.
But there’s more to the story.
A little better than half of all sales were also reduced. It’s been that that range since the first of the year. Last month, buyers negotiated sellers down by an average of $19,743. It was a couple thousand more than August’s reduction. The most common reduction was $5,000.
Do the research and you’ll see that the dynamic is stable and making small gains. It signals the days when sellers could set a price and let a bidding battle seal the deal are all but gone.
But it doesn’t mean all buyers are bailing on their asking price.
While 51 percent of sales were with a seller reduction, buyers paid over list on 23 percent of September’s sales. The rest went for list price.
When the number of sales decline like they have and the dynamics are gyrating as they are, the stage is also set for some eye-popping monthly and year-over-year price numbers. They’re interesting but be careful to put too much stock in monthly numbers. And use extra caution if they creep into a pricing strategy. The percentage spikes are not because all prices are up that much. The number of sales is down and some big deals are skewing the numbers.
Here’s some examples:
- Last month, the median Roan Mountain price was up 143 percent. But there was only one sale. And it was a biggie.
- The median price in Blountville was up 84 percent on 10 sales. That community has been a hot market all year, and it takes only a few high-end sales to skew the numbers.
Here’s a few more examples:
- Telford prices were up 64 percent
- Rogersville was up 34 percent
- Mountain City was up 33 percent
In all, 11 community markets saw double-digit price increases from last year. Four markets were in the single digits. Another four saw price declines.
And where were the hot markets?
- Roan Mountain – $590,000
- Gray – $408,000
- Blountville – $372,200
- Piney Flats – $371,443
- Jonesborough – $356,000
Those are median prices, so half of the sales were for more and half were for less.
And those high-end markets accounted for only 14 percent of September’s regional sales.
There were some markets with median sales prices in the affordability zone. Mt. Carmel, Elizabethton, Bristol, TN, Mountain City, Bulls Gap and Bristol, VA had prices that ranged from $225,000 to $186,500.
Another thing you won’t see without doing a deep-dive into the numbers is Kingsport again outperformed the region’s leading market – Johnson City – in September.
Kingsport’s had 102 sales. Johnson City had 78.
Kingsport’s median price was $295,000. It was $286,500 in Johnson City.
Shift to the eight-month price trend and the region’s two largest markets are almost even: Johnson City, $268,500 – Kingsport $260,000.
Odds are the market will continue to be frothy for the rest of the year.
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