Local home price reality check
There’s a simple answer to the frequently asked question: “When are home prices coming down?”
The answer is: When demand goes down.
Despite what you read in the mass media, the local housing market hasn’t significantly changed from last year. It’s not blistering hot like last year, but it’s still a hot sellers’ market. The reality check to the typical mass media report it’s about what’s happening in major metro markets – not the rural metro markets like Kingsport-Bristol, Johnson City, or Greeneville.
Locally higher prices and big mortgage rate increases have sidelined some buyers. That has slowed the long-term sales growth rate in all local metro areas except Greeneville.
But demand is still high, and inventory is shallow. Sellers haven’t reduced prices because most are getting what they’re asking – and then some.
A primary housing demand indicator is how long homes are on the market before selling. During June, that benchmark was 44 days from listing to close. It was 48 days June last year when the market was at a high sizzle. The July 2019 pre-pandemic benchmark was 105 days.
Another forward-looking indicator is pending sales. In June they were down 10% from last year. But again, that’s a comparison to an all-time high market. Compared to the pre-pandemic market, June’s pending sales were up 16%.
That’s just two context examples to what the local market is compared to what you read about in mass media.
There’s no doubt that the local market is adjusting. Sales are beginning to slow, and inventory is slowly starting to increase. Eventually, the edge will come off the price growth rate. But prices adjust slowly unless there’s a significant economic shock.
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 1,600+ 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