By DON FENLEY
GRAY, Tenn. – Tri-City’s housing market is sliding into the last month of the year with fewer pending sales and fewer affordable homes for sale.
Affordability has been declining in the region for about three years, fueled by higher home prices that increased faster than wages. So far, that hasn’t changed.
The median price of an existing single-family home in November was $228,000. It has declined from a peak of $250,000 in May and stands at an all-time high. There won’t be much downward pressure on prices unless inventory grows more than it has or if the region’s robust labor market begins to run out of steam. Fewer than one-in-five of November’s new listings were in the median-price range.
Pending sales continued falling in November, according to the Northeast Tennessee Association of Realtors (NETAR). Sellers accepted 605 new contracts. That’s down 81 from October and 171 fewer than November last year, for a 22% decline.
Pending sales are a leading indicator of housing activity based on signed contracts for existing single-family homes and condominium sales in the region monitored by NETAR. Since resales go under contract 30 to 60 days before they close, accepted contracts offer insight into home sales’ direction.
“Last month’s pending sales were a continuation of a slowing trend that began in May,” NETAR President Rick Chantry said. “Despite a steady decline since their peak during the week of November 10, mortgage rates have been a big part in slowing existing homes sales and flattening prices.”
At mid-month, the region had 1,384 properties on the market – 17 more than the previous month. At the end of November, the region had a 1.8-month inventory of homes on the market for sale. That’s the time it would take to sell everything on the market at the current sales pace. “Inventory has increased at a snail’s pace,” Chantry said. “We have had less than two months of inventory for 24 months, and the last time we had balanced market conditions was the first quarter of 2018.”
Nationwide, the average duration of homeownership is eight years, an increase of three years over the past decade.
New Census data also show that homeowners are staying put longer. A little over 25% of Tri-Cities owners have been in their homes since 2017 or longer, and many have mortgages that are at or under 4%. If you think about it, why should they move? Mortgage rates are higher, prices are higher, and for elders looking to scale back, there are not a lot of options on the market. When asked what they want, many say “patio homes,” but that product is not high on the list of what’s being built. Complicating the issue is a growing number of people under 30 are moving back to their parents’ or relatives’ homes.
The typical home sold in November was on the market for 49 days before it closed. That’s up one day from October and the seventh monthly increase this year. However, it is still five days less than it was this time last year. Time on the market is a demand indicator. When it increases, demand softens. When it declines, demand rises.
Typically, sales slow during the holiday season, and inventory is flat. After that, things change as sellers start their marketing strategies for the spring peak buying and season.
The current outlook for 2023 is for a continuation normalization of sales and flat to slightly higher prices. According to Realtor.com’s Chief Economist Danielle Hale, it will be a year that will look more like a “nobody’s market” instead of the sellers’ market that has held a firm grip since 2018. The lack of inventory continues to keep upward pressure on prices. The 2024 outlook is for a more robust market.
Categories: REAL ESTATE