Home prices stay in the double-digit increase zone
By KRISTI BAILEY
Local home prices have increased by double digits so far this year despite the pandemic, high unemployment, and a hotly contested presidential election. The area median year-to-date existing home sales price of $198,796 is 11% higher than it was during the first ten months of 2019, according to the Northeastern Tennessee Association of REALTORS® (NETAR) Home Sales Report. That closely aligned with the national price increase of 12% in metro areas cited in a recent National Association of REALTORS® (NAR) report.
“It’s unbelievable. It’s a record number of metro areas showing double-digit price gains,” said Gary Coroation, senior NAR economist. “We have never seen this widespread growth.”
As the holiday season and colder weather approaches, it is not creating the traditional cooling-off period for home sales and prices. The local October median sales price of $175,000 is only half of the $350,000 national median reported by REALTOR.com®, but it’s almost 10% higher than October last year. The local market faces the same situation seen across the nation – extremely low inventory and many qualified buyers.
There were barely more than 1,500 homes for sales in our region in October compared with a little over 3,000 at the same time last year. That represents a two-month supply of home for sale on the market, and the crunch is getting tighter. Although new listings increased in the past three months, new pending sales also have. During September and October, new pending sales absorbed all but six of the 1,892 new listings.
Local REALTORS® have never seen a market like this. The number of newcomers is up, all-cash sales account for one-in-three resales, some listings are getting offers that the potential buyer has never walked through, and homes are selling at a record pace. In October, the median time-on-market for a resale was 57 days, down from 76 days in October last year, which was a record low at that time.
Lawrence Yun, NAR’s Chief Economist, says, “favorable mortgage rates will continue to bring fresh buyers to the market. However, the affordability situation will not improve even with low-interest rates because housing prices are increasing much too fast.”
That mirrors conditions here in our market. Although the imbalance between home prices and wages has reduced local affordability standards, our region is still considered an affordable market. The average worker has enough buying power to purchase a median-priced home without exceeding 30% of income.
Even though prices and competition are up, buying a home is still a sound financial decision. Despite the tight inventory, there are good deals in today’s market. That is why savvy house hunters partner with a local professional REALTOR® to identify and move on quickly opportunities when they present themselves.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,400 members and 100 affiliates involved in all residential and commercial real estate industries. The association’s monthly Pending Sales Report, Home Sales Report, Commercial Real Estate Transactions Report, and more are available on the NETAR website.