By DON FENLEY
GRAY, Tenn. – December’s Tri-Cities housing market report benchmarks the continued transition of the local market. One element of that transition is existing home sales declined for the first time in a decade. Getting to a new normal is going to be a headache for those who have gotten used to the go-go market for the past three years that turned normal marked conditions upside down.
The big picture is the annual median sales price – that’s the middle of the market – posted its third consecutive double-digit annual increase while sales stabilized to a pre-pandemic level. That pre-pandemic level was a robust market by Tri-Cities historical standards.
The monthly report shows December sales were down 38% while prices were up 4.6%, according to the Northeast Tennessee Association of Realtors (NETAR).
The region’s annual sales total was also down. It lagged the 2021 all-time sales record by 12.3%. It was the first annual decline in a decade. The annual median price of $230,000 was up 15.1% from 2021.
The mortgage rate increases that drove payments up by as much as 50% will probably continue to be felt early this year. March is typically when the numbers for the peak home buying and selling season start showing up, and they should be up from the Jan. and Feb. numbers
“Real estate professionals are girding for a turbulent prime home buying and selling season,” said NETAR President Jan Stapleton. The last half of the year saw rapid increases in mortgage rates curb housing affordability and put many buyers and new listings on pause. Last month’s new listings were down 26.8 percent. “However, fewer sales have let active inventory make some small gains, so buyers are finding a little better selection of homes on the market.”
She added that the outlook is for a complex year with a lot of disconnect between buyers and sellers because the local market remains robust despite some negative numbers.
Some of those frothy conditions can be seen in the number of sellers who have discounted their asking price to cinch a sale. From August to the end of December, sellers came off their asking price on an average of 43% of all sales in NETAR’s core area of Carter, Greene, Hawkins, Johnson, Sullivan, Unicoi, and Washington counties. The average discount was a little over $16,000. And this happened as sellers were increasing their listing prices every month.
The affordability issue was highlighted in ATTOM Data’s Solutions’ current Home Price Index. It found that Washington Co. had its third quarter as an unaffordable market. Given the lending standard assumptions, that means the average working person in Washington Co. didn’t have the buying power to purchase a median-priced home. Sullivan hasn’t reached that level yet, but its affordability continues trending lower.
At the end of December, there were 1,304 active listings on the market, according to NETAR. That’s 210 more than last year and equals 1.7 months of inventory at the current sales pace. Balanced market conditions are five to six months of inventory.
The average home that closed in December was on the market for 50 days. That has been increasing by one-day-a-month increments since April. The more time a home is on the market before closing is an indicator that demand is decreasing. However, when compared to December last year, when the average was 56 days, the demand decrease doesn’t look as significant, Stapleton said.
December sales were down in 13 of the region’s city and community markets. Prices declined in all but five markets.
Categories: REAL ESTATE