By KRISTI BAILEY
Housing is currently the brightest spot in our economy. As strange as it may sound, one reason for that is COVID-19. It has altered some fundamental ways we look at housing. Our homes now accommodate office space and virtual classrooms. Most importantly, it is a place of refuge. Those things directly benefited the housing market, but there are questions: Will the V-shaped housing recovery continue? Or run out of steam?
Do not look for it to taper off in the short term. All segments of the real estate industry are extremely busy. Some REALTORS® and lenders are recording the best months they have ever had. New home builders are now front and center selling spec homes faster than they can build them. The data behind those conditions signal continued high demand. Pending sales are at record highs, and the time a house spends on the market before selling is at record lows.
Local existing home sales took a hit in March, April, and May. But in the three following months, resales skyrocketed to levels local real estate professionals have never seen. During June, July, and August, closings averaged a little better than 800 a month. September won’t be much different. Last year there were 7,608 single-family, townhome, and condo resales reported by the Northeast Tennessee Association of REALTORS® (NETAR). So far this year, sales are about 500 less than last year’s pace. With four months to go in 2020 and at the current sales pace, look for annual sales equal to or even a little better than 2019.
There are a couple of significant drivers of what we see in today’s market. Here are a few examples:
- The region’s Millennials are coming of age. They are getting married and starting families. They have also come to terms with the reality that homeownership not only increases their satisfaction with their living conditions, but it also builds wealth for their future.
- More empty nesters are becoming downsizing. They no longer need the house they had while raising their family. They have built up equity in that home, and it makes sense to use it for a place that meets their new lifestyle needs.
- COVID-19 has and continues to shine the “opportunity” spotlight on our area; people looking to relocate are taking notice of the region’s affordability and high quality of life. In other words, it offers more stable conditions than some other areas.
- Although home prices have increased, record-low mortgage rates have boosted consumers’ buying power by lowering the monthly mortgage payment.
- A robust stock market makes some buyers more comfortable with the economic situation and has entered the housing market to lock-in some of that wealth growth.
The greatest obstacle the local market faces is the lack of inventory. The new home industry has picked up steam, but new single-family and townhomes will not create a quick fix for our record low inventory situation. That has made finding the right home, at the right time, more challenging than it has ever been. It is a hot market, so list today. The best way to have the inside track is by partnering with a local professional REALTOR® who has the contacts, resources, and skills to find the best opportunities for their clients.
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 1,300 members and 100 affiliates involved in all residential and commercial real estate industries.