BY KRISTI BAILEY
Our housing market is a lot like the Energizer Bunny. You have seen the commercials. They feature a pink drum-beating bunny with limitless energy. Homes sales – and prices – are showing that type of endurance after a three month-subpar performance when COVID-19 gut-punched the economy. Remember when jobs and retail sales crashed in March and April? Economists who specialize in the housing market started talking about a “V” shaped recovery. Lawrence Yun, the chief economist of the National Association of Realtors’ (NAR), was one of those whose advice was “don’t panic” home sales will make a sharp rebound in the latter part of the second quarter. That is exactly right.
Here in the Tri-Cities region, June’s sales bounced from a 21.7% decline in May to a 9.9 % increase in June. July’s sales were up 11 %. The August report shows sales were 9.4 % better than August last year.
It is also noteworthy that sales rose above the 800 units a month mark for the first time in June and July. From a trend perspective, sales made that sharp recovery then plateaued mostly due to low inventory. And since sellers accepted a record number of new contracts in August, the stage is set for a record-setting third quarter.
Locally, many owners discovered they were not satisfied with their homes in a world when they are working from home and staying in because they were still leery of getting out as much. High on buyers’ wants list are options to enjoy some outdoor space, room for a home office, or separate spaces for school-age kids when they are schooling on-line.
We are also seeing an increase in the number of folks who are relocating to our area. All types of buyers from all over the United States are looking to move here. I personally have worked with buyers from Washington to Florida and lots of places in between. While some are looking for private homes in the mountains, others are looking for a peaceful town to raise a family.
And then there is the mortgage rates factor. They have never been lower, and it looks like they will stay that way for a while. Homeowners have refinanced in record numbers to either lowering their housing costs or pulling out some equity for major upgrades. Local refinancing loans have outnumbered purchases since the last three months of last year.
For those who are trading up, the record-low mortgage rates are an incentive to spend more. A clear example of that is the share of homes in the $200,000 to $400,000 price range. During the past two years, that share has increased from less than 10 % of all sales to 30 %.
The hot sellers’ market began four years ago, and the increased sales during that period absorbed a lot of inventory. In August, the number of active listings was 44% lower than August last year, and inventory was tight then. That is probably not going to change for a while.
In August, the average sales price was $212,626. That is an all-time high for our market. The average listing price was $294,908, up 14.6 % from last year. The median sales price was $180,000, up 12.5 % ($20,000) from last year
The big question is, how long will this last?
A good indicator is the days-on-market numbers. Homes are spending less time on the market now than they have during any other time since 2008. The average single-family resale that closed in August was on the market for 98 days. For a townhome or condo, it was 64 days. As long that that number holds, there will continue to be upward pressure on prices, but as long as interest rates stay low, buyers may not notice any difference in their monthly payments. So just keep shopping and stay safe.
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 1,300 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.
2020 NETAR President