Last year was proof that even the best housing market outlooks from the most-trusted analysts are more guidance than gospel. It also reaffirmed that real estate is hyper local even at the community level. some had a very good year. 

Overall, single-family existing home sales retreate

d to a pre-pandemic level and prices posted their fourth straight double-digit annual increase. Overall, it was an example of a market restructuring from unsustainable levels. 

Expect some variance in the numbers at mid-month when late closings filed over the holiday weekend are counted, but that won’t change the bottom-line. And conditions look for improvement this year. 

HOME PRICES 

The median existing-home sales price – that’s the middle of the market – was up 10.4% last year. The year before, it was up 15.1%. The peak was 2021 when prices were 17.6%. The historical norm for counties monitored by the Northeast Tennessee Association of Realtors (NETAR) is 3.1% per year.  

A typical 2023 sale shattered doom-and-gloom predictions that high mortgage rates and lack of inventory would force a market decline. Instead, prices slowly increased, and sales retreated. There were price reductions and discounts from the listing price – especially during the last months of the year – but prices didn’t dip below the previous year’s level.  

That typical 2023 sale was up $24,000 from the previous year.  

HOME SALES 

Inventory and affordability will be critical market drivers this year just like they were last year. The big change is more inventory and better mortgage rates are expected. Analysts at the National Association of Realtors (NAR) Research Department think that if mortgage rates settle in the 6% to 6.5% range, over 10,000 locals will return to the market.  

That’s an example of the local estimated organic pent-up demand. Couple it with new residents and you have a picture of an upbeat prime home buying and selling season. 

The stage for that is slowing being set. Inventory began inching upward during the latter half of 2023. Mortgage rates were at record highs, and well over half of local mortgaged property were locked in with a rate below 4%. It was a good time to hunker down and wait it out, which is what many locals did. That’s not expected to continue.  

It’s not expected because local owners are sitting on record-high equity levels. The latest report said over half of the local mortgaged properties were equity rich. It’s the wealth they accumulated during those years of double-digit price increases. And for many, it’s a good time to trade-up or scale back. 

Still, at year’s end, the market needed another 1,600 listings to achieve balanced conditions that would put downward pressure on the price growth rate. Conditions are right for a continued adjustment to something resembling normal conditions. But expect nothing overnight.  

The move-up and luxury markets were last year’s best performers.  

Although luxury sales of $500K and up were less than they were in 2022, last year’s performance was impressive. Sales were up 18.6% and million-dollar plus sales were robust. 

The move-up market ($250K to $499K) was up 7.5% last year with most of that in the $300K to $400K price range. 

Homes in the workforce housing price range ($140K to $249K) were down 15.5% from the previous year. That has nudged local government and civic officials to think about ways to increase that inventory because most of the jobs being created are in the lower-paying range. So far there are no solutions, but the challenge has risen to the top of the hierarchy of needs to grow local economies. 

The odds for this year’s housing market favor a moderately robust local prime buying and selling season if mortgage rates drop as expected and the inventory situation continues improving.  

The overall state of the local market is for another year of transition to a new normal.