By DON FENLEY
Tri-Cities home sales tumbled to a four-year low in January, but the slow monthly price declines have barely moved the needle off the record high.
Jan Stapleton, the Northeast Tennessee Association of Realtors (NETAR) 2023 president, said, “we’re seeing exactly what the December’s pending sales signaled.” New contracts were significantly down, so there were fewer closings to process. It was the seventh month that sales declined.
January’s median sales price for existing homes and townhomes was $221,000. That’s up 16.7% from last year and down $9,000 from December. Prices have been flat since they peaked at $250,000 last May.
There were 416 sales last month, down 33.1% from last year, and 132 fewer than the previous month.
Concerns about prices are a powerful force for consumers. They’ve been bombarded by predictions and examples of price cuts. Most of those were in major metro markets because that’s the focus for major media. Consumers have been more in touch with the market’s shifts due to the saturation of technology. Many have feared overpaying by buying at the top of the market. They’re also concerned about the broader economy, recession predictions, and a volatile stock market.
We know that housing frequently slows before the rest of the economy, then leading it back to normal. Using local sales as a local indicator, that’s what’s happening now.
The 800-pound gorilla in the local market conversation is price performance. It’s barely mirroring sales. Core Logic revised the odds for price reductions this month. The Tri-Cities’ two metro areas previously had a low probability for price reductions. Now the odds for lower prices are 50% to 70%, and the price reduction range is 4% to 5%.
That no doubt conforms to a statistical model at Core Logic. But it doesn’t jibe with local conditions. Lower mortgage rates are beginning to thaw some of the consumer chill. Existing home inventory is slowly increasing, and the region’s two largest builders are more optimistic than the National Association of Home Builders’ outlook. Job creation flattened at the end of last year, but the region has added more than 4,000 new jobs. This month’s local jobs report will be closely watched since job security is a big consumer confidence factor.
A better market picture will evolve with the prime home buying and selling season. Local demand has waned, but it’s still on par with the pre-pandemic levels. And those were robust years by local historical standards. Both local metro regions were also in the top 10 of the current Wall Street Journal – Realtor.com Emerging Housing Market Index. That means the region’s profile remains strong in the residential relocation industry.
Market activity in the region’s city and community submarkets varied widely last month. Sales declined in all but three markets while prices increased in all but three. There was quite a bit of skewed year-over-year numbers in the smaller markets.
Categories: REAL ESTATE
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