Sellers will lose some advantage in the moderating market
Historically November is a month that sees exceptions to the seasonal slowing trend. This year is no exception. Sales didn’t get a bump as they have in years past, but sales prices did.
The median sales price peaked in August at $210,000 then backed off for two months as the market slipped into a seasonal cooling-off period. It was back to $210,000 last month due to a sales spike in the $250,000 to $300,000 price range. Credit some of that to mortgage urgency.
Just about everyone has accepted the reality that the days of sub 3% mortgage rates are over. That was enough to energize some buyers to lock in what they thought would be the best rate going forward.
Many were not as aggressive as they were during the spring and summer. There were fewer multiple offers. But they were willing to pony up a little more to seal the deal.
The local median home sales price has grown 14.8% so far this year. And while prices are expected to continue increasing, the growth rate is expected to stabilize.
Lawrence Yun, NAR’s chief economist, forecasts home prices will increase at a “gentler pace” over the next several months. He expects demand to be milder as mortgage rates rise. The 30-year fixed-rate mortgage averaged 3.11% for the week ending Dec. 2, up from a 2.72% average a year ago.
Ali Wolf, chief economist at Zonda, a national consulting firm, was quoted by Realtor.com saying, “the pool of buyers who can continue to push prices higher is a lot smaller than it was last year. We’re past the point of anything goes in the housing market. We’re not going to see the same level of home price growth.”
Sellers are expected to lose some advantage, but no one thinks a buyers’ market is on the horizon.
According to the firms that monitor who is moving and where say folks who abandoned high-density areas during the pandemic’s first wave have tapped the brakes. Many are still moving, but they’re staying closer to home instead of striking out cross country.
That doesn’t mean the spigot has closed for the NE Tenn. and SW Va. markets. Things are slower, but this region is still a hot spot because markets like Nashville, Knoxville, and Chattanooga have moved up as
secondary markets and tertiary markets like the local region have become more attractive. Some are calling the increase in migration to rural metro regions from nearby larger metros “the sister city effect.”
New residents continue shopping and relocating to rural metro markets. They’re searching for better home prices and a more affordable lifestyle. Real estate investors are doing the same in their quest for better profit margins.
Although the slow inventory growth in the existing home market has stalled, it’s expected to increase as we close out 2021. That goes for the new home market as well as existing homes.
And while the crazy days of the last half of 2020 and 2021 may be over, the housing market roller coaster ride is not over yet. Look for more balance next year. But also expect surprises compliments of COVID, a stubborn supply chain, and a labor market that can’t seem to regain its footing.
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 1,500 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.
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