By DON FENLEY
GRAY, Tenn. – There was a time when real estate market watchers could keep tabs on the time a home spent on the market before selling and the monthly pending sales report and get a pretty good handle on the market’s pulse. That won’t be the case in this year’s frothy market.
The pandemic has pushed the old market forecasting models so far out of whack that some data reinforcements are needed. One that bears special attention is the percentage of homes with price reductions. It employs an extra helping hand from the “wisdom of the crowd.”
During the past five months, sellers discounted their asking price by an average of 43% of all sales to seal the deal. The trend began with 35% of sales being discounted in August. As of the end of Dec., it had increased to 55.9% of all the existing home sales in the Northeast Tennessee Association of Realtors (NETAR) core area.
That was a pretty good monitor for the crowd of sellers’ mood during the avalanche of media reports that sales and prices were plummeting. Of course, that’s what was happening in some of the major metro areas, but not locally. Local sales have declined while prices have plateaued. That was punctuated by the median listing price, making monthly increases. Was it just a tactic for more wiggle room during negotiations? Or is another trend that hasn’t fully materialized at play?
There were also some seasonal effects at play. The local market hasn’t seen much of seasonal patterns for the past three years, but that, too, is changing.
Time on the market, price reductions, and pending sales all point to weaker demand as we head into a new year. That’s illustrated by the 2022 annual area home sales total. It declined for the first time in a decade.
Things like the listing price trend and volume will add to the body of knowledge as sellers gear up for the peak spring home buying and selling season. Those who pay attention will have the edge. That’s important because the days of a super-heated market muting miscalculations and mistakes are gone, and the focus has returned into more detailed local market trends.
While many are bracing for a more turbulent real estate market, those wanting to keep their finger on the pulse of the local market are going to have to do a little more research.