How long will this last?

Don Fenley 

Buyers, sellers, and investors want to know how long the current housing market logjam will last. Unfortunately, there’s no single simple answer. There’s too many moving parts.

Typically, a housing cycle last about 18 years and has four distinct phases. They include a recovery phase, an expansion phase, a hyper-supply phase, and a recession phase.

The Great Recession is the local current starting point. Supply exceeded demand, vacancy rates were up, there was a rental growth squeeze. It was a good time for bargain buyers.

The Recovery phase for sales began getting a toehold in 2009. After a three-year trough, sales picked in 2012. Prices were slower to gain momentum. Their real recovery began in 2017 when the annual appreciation rate was at and exceeded the historical rate. In 2020, the pandemic pushed prices into an unattainable double digit increase level.

We’re currently in a gray zone as the market leaves the recovery phase and moves into the expansion phase. And it’s stubborn beast.

An over-supply phase typically follows the recovery phase. There are signs it’s on the way. Vacancies are low, property values are stable and trending up, and a lot of new construction is coming out of the ground. But the existing home inventory – the largest inventory source – is stuck. Although it’s showing slight improvement, it’s nowhere near balanced conditions.

There’s no compelling reason for existing homeowners to give up mortgages that are at historic lows and migrate to the move-up or scale-down markets and. Builders are in the drivers’ seat, but hampered by interest rates, labor, materials, supply chain and land costs. Mortgage rates are also at a 23-year high thanks to the Federal Reserve’s efforts to curb inflation.

Once the recovery has gained full strength, the market typically moves into an over-supply phase. It doesn’t look like it will gain a foothold for a while.

After the over-supply phase, real estate is staged for another recession phase.

There’s no hard-fast-timeline for phases and this one is like a lot of other economic models have been turned upside down by the pandemic.

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