By DON FENLEY
TRI-CITIES, TN – Home sales eased for the 13th straight month on the long-range monthly 12-month rolling average. The sales softening began in the 12 months ending in mid-Sept. 2021 and marks when the region’s housing market began readjusting toward a more normalized cycle.
Obviously, we are not there yet, but the local market is a month ahead of the national trend. According to Economist Elliot Eisenberg, “home sales eased for the 12th straight month in Jan, the longest streak of monthly declines since 1999 when data collections began. The increasingly tiny declines suggest the sales bottom is here or fast approaching. Prices will soon decline.”
That’s not precise comparison with the local metric, but the outlook is similar. The local median sales price has declined a little over 11% from $250,000 last May to $221,000 in January. February’s monthly Northeast Tennessee Association of Realtors (NETAR) Home Sales Report should be out by the end of the week or the beginning of next week.
A primary challenge the local market faces is inventory and affordability. TCI’s months of inventory chart show inventory is slowly increasing in the most active and affordable price bands. It is nearing balanced market conditions in the higher-end portion of the market.
The dynamics keeping the existing home inventory at a historically low level is the number of rate-locked existing owners and the fear of not finding something to buy. About 90% of today’s mortgaged homes at a rate of 5% or below and many owners are not willing to give that up for a higher mortgage rate in an uncertain market.
As mortgage rateS moderate and owners explore all their options, inventory levels should increase. That’s being pushed by an accelerated effort by builders to bring new homes to the local market and many of them are in direct price competition with some of the more popular existing home listing price ranges. It’s an unusually competitive situation that should eventually work to buyers’ advantage.
Categories: REAL ESTATE