Realtor.com’s December housing market hotness index is a mixed bag for the Tri-Cities but points to improvement from last year at the same time many analysts are talking about a market cool down. Views of listings of homes for sale for both local markets exceed the average number of views for listings on the U.S. average.
The Market Hotness Index exposes how local areas are experiencing fast-moving supply and rising demand. “Using proprietary insights on buyer activity and the most comprehensive data on active inventory, the analysis breaks down demand and supply dynamics to rank metro areas relative to the rest of the county,” according to Realtor.com. The index uses listing views by market as an indicator of demand and median days on market as an indicator of supply. That makes it a current market indicator with a forward-looking component. Most market reports area backward-looking.
The Johnson City metro area’s December housing market got a “slightly hot” but “cooling down slightly” while the Kingsport-Bristol market got a slightly cool market rating that is cooling down slightly. Demand – as indicated by listing views – for both of the region’s Metropolitan Statistical Areas are heating up from what they were last year.
Median days in the Johnson City market for December was 93 days, with inventory moving 85 slower than last year and 13 days slower than the U.S. overall. Properties in the three-county area received and an average number of views 1.7 times higher than the U.S. average.
Median days on market in the Kingsport-Bristol was 112, with inventory moving slightly slower than last year and 32 days slower than the U.S. overall. Properties in the four-county area received an average number of views 1.2 times higher than the U.S. average.
While the index doesn’t point to a hotter local market, it does temper fears that the recovery is running out of steam. If anything, the index points to a soft landing.
The Northeast Tennessee Association of Realtors’ (NETAR) December and end of year Trends Report will be available next week. Annualized data based on November from NETAR points to a sales increase in the range of 7% or a little better and an average sales price increase of about 4%. That would make 2018 the second-best sales year since 2008 and the best average price appreciation in four years. Of course, annualized numbers are just projections, so a weaker closing report can have a big effect. At the end of November, there were about 900 approved contracts in the pipeline and almost half of those were holdovers from October. Approved contracts typically close in a month to six weeks after approval.
Realtor.com thinks home prices will continue increasing, just not as fast as they did in 2018. The National Association of Realtors predicts that existing homes prices will rise 2.5% this year. That would be a typical year for a conservative market like the Tri-Cities.
The local market has been basically been a seller’s market for the past year and a half, and prolonged sellers’ markets are not a friendly market for first-time buyers. That’s shifting and so is the effort to give first-time buyers more attention.
Affordability is a local concern. In Q4 it hit 11- and nine-year lows in Sullivan and Washington counties. But the silver lining to that story is even at those low points an average wage earner had the buying power to purchase a median-priced home in both markets. That wasn’t the case in eight of the 13 counties analyzed in Attom Data Solutions Home Price Index.