September 23, 2018

Into the weeds with our Energizer Bunny housing market


Northeast Tennessee's Housing Market is a lot like the Energizer Bunny. Its record sales pace is still going strong when other markets – even some of the hottest markets in the nation are slowing down.

August is the current example.

Aaron Taylor
2018 NETAR President

Year-over-year sales of single-family homes, townhomes and condominiums were up 15.5 percent in the 11-county region monitored by the Northeast Tennessee Association of Realtors (NETAR). Sales in the Greater Nashville area were up two percent in August.

So far this year, closings on residential resales saw the two best single months in 10 years. This sales pace has gone on for two and a half years, and some wonder when it will exhaust both the pent-up demand from the recession and the natural reaction to the local economy that is the best the region has seen since the recession? The numbers show it's not finished, yet.

Let's get down into the weeds for a better look at how things are going and a better feel for the pulse of this Energizer Bunny market.

According to Realtor Property Resource (RPR), there were 682 new listings in August. That brings the year-to-date total to 6,424. It's not quite as good as it was during the same period last year, but it's improving. One thing to watch is the number of new accepted contracts vs. new listings. Recently there have been slightly more new listing than accepted offers. That means buyers have a little better selection options each month.

The region had 4.6 months of inventory last month. It was the second month that metric has increased. The low for the past year was 3.9 months in April, and the high was March at 6.4 months. The benchmark for normal market conditions is six months of inventory.

There's no question that sellers have the advantage in today's market. There are plenty of examples of multiple offers. But there aren't many examples of bidding wars that drive the sales price 10 percent above the listing price. And the average sales price is still less than the average listing price.

So far this year, the average listing price for residential resales is $243,232. That's up $18,556 from the first eight months of last year. That means the average listing price has increased 8.7 percent. But the RPR year-to-date average sales price is up 4.2 percent. That's a pretty good appreciation level for a conservative market like ours. The annualized average price increase using NETAR's Trends Report data is 6.1 percent. The region's best annual appreciation was in 2012 and 2013 when the average price increases was 5.9 percent each year. 

Another way to look at the appreciation picture is the median sales price as a percentage of the median Realtors® Valuation Model (RVM®). The RVM® uses the same data as the RPR automated valuation model (AVM) plus Multiple Listing Service (MLS) data.

In August the median sales price of a local residential sale as a percentage of the median estimated value was 101 percent. That's the lowest it has been this year.  The highest was 108 percent in January, and most of the year it has ranged from 105 percent to 107 percent.

Like the annualized average sales price, those are signs of a stable, conservative housing market that is still going strong but technically not overheating.