News
September 22, 2019

Single-family resales punch through $200,000 average price level

By KAREN RANDOLPH


KAREN RANDOLPH
2019 NETAR President

It was inevitable the average single-family resales price would break the $200,000 mark this year. Increasing demand and an ever tighter inventory have shifted the supply-demand gears toward higher prices.

With the exception of Johnson City, all local primary city markets had strong year-over-year August price performance. The same is true for all 11-counties monitored by the Northeast Tennessee Association of Realtors® (NETAR) minus two Southwest Virginia counties.

Before anyone breaks out the champagne, remember August’s regional new average price benchmark is a one-month thing. It is certainly noteworthy, but the really big deal would be an annual average over $200,000.

Look at it this way.

The difference between last year’s annual price and this year’s eight-month trend is a little south of $16,000. In order to obtain the $200,000 annual level, prices for the next four months will have to sustain the August pace. This pace is a heavy lift considering the history of what prices do during the year’s closing months.

But never say never.

This market has provided several contradictions to market norms. For instance, one of the primary drivers of housing demand is a growing population. Unfortunately, our population growth is stagnant - at best.

I know some will be quick to say, “but there are all kinds of new residents moving here. How can the population be declining?”

Yes, there have been many new residents, but our death rate is higher than our birth rate. Our population is rapidly aging, so the death rate is increasing. The only way to stabilize or grow the population is to attract new residents. There is an ongoing effort to attract new residents. So far, the number of new residents has barely balanced the population scales. Our population growth has been under one percent for the two most current Census reports. The 2018 reports will be available later this month.

Without getting into the weeds of local conditions v. housing demand, there’s another quick comparison that illustrates a fundamental housing market shift has happened in the past year. 

The number of home sales in the primary price ranges has shifted.

During the 12 months ending in August, the share of homes sold in the $200,000 and below price range has decreased from 71% to 68%. At the same time, sales of $200,000 to $399,999 priced homes increased from 25% of all sales to 28%.  

A similar change can be seen in August listings. The share of homes in the $200,000 and below price range is decreasing while the share of listings in the $200,000 t90 $299,999 price range is increasing. There was also a small increase in the number of homes in the $600,000 to $799,999 listed last month.

These conditions continue to make the current market more favorable to sellers, for now.

 I do not know when it will happen, but it’s safe to say that pent-up demand sooner or later will ease and the market will shift back to normal conditions that rely on population growth and new household formations. Until that happens the best tactic for both buyers and sellers is to partner with a local professional Realtor® who has the street smarts, network, and proprietary databases to find the best strategy for a transaction that fits their client's personalized needs.

NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,200 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics can be found on the NETAR websites at https://netar.us/voice-real-estate-northeast-tennessee .

 

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