Into the weeds with January’s home sales report
January’s Home Sales Report was a little like the stereotypical hangover after a big New Year’s Eve Party.
The comparison to December’s sales was a sobering 30% decline. The median sales price was down 18%. It was bragging rights for those who had predicted there was a housing bubble. But volatile monthly comparisons don’t tell the whole story.
Compared to the previous year, January’s sales were only down 6.7%. That’s not so bad when you remember that December’s sales were the best December on record. And the fourth quarter was the second strongest quarterly sales in a decade. They trailed the record set during Q4 2020 by 53 sales.
The price picture is similar, but with a couple of twists. When most people talk about prices, they use the average. It’s the old, comfortable flannel shirt of housing market data. But it’s not the best property value or market value indicator. Although the average is good at painting an overall value picture, it’s easily skewed. That’s the situation with the local average price.
January’s 25% increase in sales in the $400,000 to $500,000 price range and the 55% increase in the $500,000 and up price range drove the region’s monthly average price to $244,234. That’s almost $60,000 higher than the $186,000 typical sales price. That was the median sales price. The median is where half the sales were above it, and half were lower.
And then there was the inventory situation. We ended the month with the fewest number of homes for sales on record. February began with barely a month’s worth of inventory. Six of the region’s primary cities and submarkets were in the same shape. The other eight had less than a month’s inventory. Church Hill had 15 days of inventory. The situation is even tighter in the condo market.
There’s a chance residential existing home sales are at an inflection point driven by higher prices and lack of inventory. That would mean fewer sales. But while prices may soften, there is enough consumer demand to keep prices growing. What’s really needed to ease the price situation is enough inventory to give buyers more choices and bargaining power.
Builders are adding new homes as fast as they can. Kingsport recently held a briefing for Realtors® to discuss new single-family and townhome developments. They claim 2,500 lots in some stage of development.
There’s a similar surge of new home activity in Washington Co. and Johnson City, but a concise public list of developments and new home numbers has is so far not available.
There are also some multi-family developments coming online, and the number of flipped homes is expected to continue to account for about 10% of sales.
Market watchers say if current conditions continue, the local market should return to balanced market conditions in late 2023 or 2024.
While one month does not make a trend, buyers, sellers, and Realtors® should buckle up and get ready for another roller coaster ride if January is a sign of things to come.
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 1,500 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.
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