State of the 2021 NE Tenn. – SW Va. housing market
By KRISTI BAILEY
When Charles Dickens wrote the opening to “A Tale of Two Cities” in 1859, he was almost describing 2020’s events.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
Last year demanded a radical new normal for doing business in the housing market. REALTORS® paused, adapted and became leaders for those new best practices. They will do the same for any challenges 2021 brings.
While no one can precisely say what those challenges will be, it is worth a quick look at 2020 benchmarks that set the tone for this year’s state of the housing market. A review of the region’s annual submarket performance is a good starting point. It is the pulse for the regional big picture already heralded in the Northeast Tennessee Association of REALTORS® (NETAR) Home Sales Report.
While the region saw strong sales growth and dramatic price appreciation, some submarkets outperformed primary markets. Here are a few examples. Blountville had the highest sales growth rate, and Piney Flats posted the highest average annual sales price while Erwin, which had the only annual sales decline, had the highest sales price growth rate. The takeaway is the region is experiencing a healthy real estate market. The fundamentals are strong while the unbalanced market conditions that were the staple of 2020 are projected to stay in place.
A continued staple for this year’s market is housing demand. It continues to be a juggernaut for sales and price appreciation. At the same time, it is also driving new rental housing demand. This should continue for those who need bridge housing while they wait for a new home to be completed and new residents adjusting to the region before deciding where to buy.
Buyer demand is also projected to outpace last year’s levels while the inventory situation will likely remain pretty much unchanged. An uptick in the number of owners who have been holding back and now think it is time to make a move will some inventory relief, as will the additions from new home builders. Both will help, but not enough to balance the supply with demand. That means continued upward pressure on prices.
Local existing home sales were up 8.4%, and the sales price increased 13.1% last year. It is not unreasonable to expect a similar sales performance this year. The price growth rate is dependent on a variety of “ifs.” The odds of a tax credit change are likely, and without an immediate increase in inventory, it will push prices higher. Another factor is mortgage rates and whether or not lenders will continue raising lending standards. The rates’ outlook is for a moderate increase but not enough to dampen home price growth at least through the first half of the year.
National Association of REALTORS® chief economist Lawrence Yun predicts U.S. sales will increase 9% this year and prices will increase 3%. Market forces and the persistence of REALTORS® to service their clients helped drive local market performance at and sometimes ahead of the national level last year. The current state of the market points to more of the same this year.
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 1,400 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, Trends Reports, and the regional market analytics can be found on the NETAR websites at https://netar.us/voice-real-estate-northeast-tennessee.