New home market gets competitive with existing home sellers
Inventory is making snail’s pace increases in NE Tenn. and it’s giving the new home market an advantage to be more competitive with the existing sales market.
The local market has been in an inventory rut for eight straight months. That’s how long the region has had 1.6 to 1.7 months of inventory. New listings have increased every month this year, but the sales pace has increased proportionally. And we’re at a place in the market where sellers are not going to get 2022 prices and many buyers are not able – or willing – to pay the current market price. That’s where the new home advantage is showing up.
The lack of inventory driven by owners who are not ready or willing to move up or scale down has kept prices stickier. At the same time, materials and supply chain conditions have made some improvement and allowed builders who are willing and able to trim their prices. Those willing to offer discounts like mortgage rate buy-downs are also creating a lot of buzz.
One popular item is a 2-1 buy-down. It is accomplished by the seller giving the buyer the discount it would take to effectively knock two points off the mortgage for the buyer’s first year of ownership and a point the second year. The theory is that by the third-year mortgage rates will have dropped and the buyer can refinance at a lower rate.
Local mortgage originators are also offering the product, but according to some it gets nominal reception from buyers – especially those in the affordability house range – $150,000 to $225,000.
Another competitive factor is the price point of some new homes and condos are in the same sweet spot price range buyers as asking – and getting for existing homes. That lets the new product sales pitch that focuses on a new building standard and energy efficiency ratings vs what the existing home offers. The energy point is a big deal for many Millennials.
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