Still want to buy a house this year? Here’s what to know about the local market
Kristi Bailey 2020 NETAR President
Common knowledge holds that fall and winter is not the best time to shop for a home. Check out the Northeast Tennessee Association of REALTORS® (NETAR) October Home Sales Report and you’ll see sales are down. That has sparked a lot of talk about a slump and price crash. But savvy shoppers don’t depend on common knowledge. And they tend to dig deeper than a snapshot of market dynamics.
Seasoned local REALTORS® know that the fall and winter markets have yielded some juicy real estate deals in the past. They also remember examples of sales spikes just before Thanksgiving. This year could be one of those years.
There’s no argument that the frantic rise of buying and home prices is slowing. October was the second straight month that the month-over-month home prices have pulled back. While that’s a signal of price growth rate moderation don’t mistake it for a red flag.
Price appreciation has been on an unsustainable tear since the summer of 2020, and while it will normalize, it won’t happen as fast as the spike we’re currently coming off.
Every year over a hundred economists, real estate experts, and investment and market strategists take part in the Home Price Expectation Survey. The take-away is how they think appreciation will look for the next five years.
The most current outlook was:
- 2021 – 6 percent.
- 2022 – 4.5 percent.
- 2023 – 4 percent.
- 2024 – 3.6 percent.
- 2025 – 3.5 percent.
The survey was taken early in the year and markets have outperformed expectations so far this year. The local market’s annual number is going to be better than 6 percent. It was 14.3 percent for the first 10 months of this year. That’s dramatically above the historical benchmark for our market. It has averaged just under 3 percent for the past two decades. That’s in line with the national average of 3.5 percent.
Here are some indicators to consider and examples of things putting downward pressures on the fall and winter market:
- The era of 3 percent and below mortgage rates is just about over. The National Association of REALTOR® (NAR) Chief Economist Lawrence Yun expects they will be about 4 percent next year. That means buyers won’t have as much buying power as they have enjoyed for the past year-and-a-half. For some, it’s pressure to make a move before the end of the year.
- Inventory is increasing. The number of existing homes for sale is slowly picking up, and we’re on the cusp of an increase in the new home inventory. Washington County builders are as busy as ever, Kingsport has 2,200 homes in some stage of production, and things are picking up in the Bristol market. That means we will have more supply next year and more supply takes the edge off the demand that has helped drive prices higher this year. That is a sign for buyers that we are probably at the top of the market and now is a good time to sell.
- Pending sales have declined for two straight months, but it’s happening at a snail’s pace. In October they dropped to 958 from September’s 996. However, that’s still 4 percent better than October last year.
- Sellers are slowly adjusting to the transitioning market. There are still examples of listing with multiple offers and full-list (or better) sales the median difference between the listing and selling price is increasing. It was 4.9 percent ($17,500) in October.
The bottom line is there’s a little less competition in the fall and winter market for buyers who want to lock in the current low mortgage rates. It’s the sort of market that makes the advice and guidance from a professional REALTOR® essential.
NETAR is the voice for real estate in Northeast Tennessee. It’s 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