February 10, 2019

Market begins the year with more new pending sales than new listings


It may only be weather legend, but Punxsutawney Phil did not see his shadow on Groundhog Day. Phil has predicted an early spring for us all, but do not get too excited, he is usually wrong. After the bone-chilling temperatures, we have recently experienced, an early spring is good news. It is also a signal for Realtors® and their clients – both buyers and sellers – to put the finishing touches on what they are planning for the spring peak buying and selling season.

2019 NETAR President

Mortgage rates have bumped up a little, but it is beginning to look like the predicted 2019 average of 5.7 percent will come later rather than sooner. This delay pushes inventory to the front of the watch list.

The rule of thumb for our local real estate market has been an average of six months of inventory. We saw inventory at this level twice last year - in February and March - then inventory dropped into the four-month range. January numbers are in, and we are currently looking at four-months of inventory. Some analysts say it is the new norm.   Time will tell, but for now, it is a fact of life.

January’s outcome was more new listings than last year. At the same time, new contracts outnumbered new listings by 63. The active inventory was just shy of 1,900 homes last month. This total is 228 fewer than January last year.

You must analyze listings by price range to get the full impact of the status of the local inventory situation.

The lion’s share of homes sold in the 11-county area monitored by the Northeast Tennessee Association of Realtors’® Trends Report is in the $200,000 and below price range. Last month there were 1,347 listings in this range. During January 2018 it was 1,544. Go back to January 2017, and there were 2,223.  This price range is where about 70 percent of all resales happened during the 12 months ending in January, down 3 percent from the same period ending in January 2018. This share of total resales used to consistently be in 74 -76 percent range.  Beginning in June 2016, the economy was strong enough to release pent-up demand that had been building during the Great Recession, and the market began absorbing homes in this price range faster than new listings came on the market.

At the same time resales in the next price tier - $200,000 to $399,999 – increased. During the 12 months ending in January 2019, they totaled 1,619 and accounted for 26 percent of all resales, up from 23 percent during the 12 months ending January 2018. This increase happened during a period when the inventory was getting tighter.  Simply put, listings in both price ranges trended lower, but while resales in the $200,000 and below price range declined by 3 percent, they increased by 3 percent in the $200,000 to $399,999 price range.

Rounding out the January listings drill-down there were:

  • 173 listings in the $400,000 - $599,999 range.
  • 81 listings in the $600,000 - $799,999 range.
  • 56 listings in the $800,000 - $1 million and up range.

Those price ranges account for less than 10 percent of resales. This percentage is stable even though the market resulted in a small resale increase in all but the $1 million range in the 12 months ending in January.  Homes in these price ranges tend to be on the market longer than those in the two previously mentioned primary price ranges.

So, what is the bottom line for buyers and sellers?

January’s inventory would impugn economic predictions of a sales slowdown for 2019. Recent analysis shows local profits of resales, when compared to the time of original purchase, are at a high point and buyers are looking at local listings on at a greater rate than the national average. The best strategy under these conditions is to partner with a local Realtor® who continuously monitors daily market conditions so his or her clients can be first in line for buying and selling opportunities as soon as they present themselves.