By KRISTI BAILEY
The weather may be cooling off, but it looks like this will be a hot winter for the local housing market. The housing market continues to be the strongest component of the local economy. Unlike the labor market or retail, it has recovered from the initial economic coronavirus pandemic. Existing home sales have never been better, and new home builders are having their best year since 2005.
October’s existing-home sales were almost 12% better last October. This year, they are 4% ahead of the total from the first ten months of last year. The average residential resale price was $208,551. That is a 15% improvement over October last year. Another way to track price trends is to compare the year-to-date average for the first ten months of this year compared to the same period last year. It shows sellers have averaged an increase of almost $20,000 per sale this year.
How long will the housing boom last in an economy that is having a challenging time? Some market analysts are having discussions about whether or not we are in a housing bubble. There is little doubt that foreclosures will increase once some of the government programs in place expire. Owners who availed themselves of forbearances will have to catch up or refinance to pay the mortgage payments they missed. But locally, it’s unlikely the housing pain on the horizon will be anything near what it was during the Great Recession. The market is a lot more resilient now than it was then.
The most current housing equity analysis and status checks on new foreclosure filings show some bumps, but nothing extreme. ATTOM Data Solution’s quarterly home equity analysis found that even after many local owners have tapped their equity, the number of equity-rich mortgaged properties has increased from this time last year while the number of seriously underwater mortgages has declined. Equity rich is defined as a property with a 50% loan to equity ratio, meaning the owner had at least 50% equity. Seriously underwater is defined as a property with a loan to value ratio of 125% or above, meaning the owner owed at least 25% more than the property’s estimated value. Currently, the local foreclosure rate is about half a percent – the local norm.
As measured by new pending sales and the median number of days a home in on the market before selling, consumer demand remains strong. Sales and are seeing some seasonal softening, but it is not enough to pull either off their record pace.
A comparison of those conditions and the local Commercial Real Estate market be found early each month on the Northeast Tennessee Association of REALTORS® web site under the Market Analytics tab.
NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in the Northeast Tennessee, Southwest Virginia region representing over 1,400 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. The association’s monthly Pending Sales Report, Home Sales Report, Commercial Real Estate Transactions Report, and more on the NETAR website.