By DON FENLEY

The peak home buying and selling season has arrived and although local sales and prices are performing pretty much as expected, almost all other outlooks have fallen by the wayside.

Mortgage rates are at the 7% range and it’s beginning to look like that rate is sticky. The odds of a FED interest rate cut are beginning to look slim. If fact, talk about a potential increase is rumbling in the background. Inflation has yet to be tamed. Consumer spending and the labor market are seeing the slightest signs of softening but remain robust, and the overall economy has slowed to the slowest pace since the second quarter of 2022.

The TCI Group’s annualized home sale tracker flattened in April after four monthly increases. But April’s decline isn’t a red flag. It accounts for a one sale a month decline for the 12 months ending in mid April. Overall, annualized sales have a firm footing on the 6,700 sales range for the past 12 months.

Although it beginning to sound like a broken record, the biggest housing variable to watch is inventory. In mid-April, the region has 1.8 months of inventory on the market. When the Northeast Tennessee Association of Realtors (NETAR) rolls out its April Home Sales Report, we’ll get a better picture of what things looked like at the end of the month.

Although 1.8 months of inventory is nothing to brag about, things are not as drastic as the average number. The best monitor is the TCI months of inventory chart that is segmented by price range and months of inventory. The Greeneville region currently has the best overall numbers in the $200K through $500K price ranges. Its markets inventory has a toehold on balanced conditions in those price ranges.

The new listing pace is picking up, but since buyers are snapping it up, the gains to total inventory are minimal. Still, last month there was 55% more active inventory than there was in 2021.

Although a lot of the housing and economic news isn’t encouraging on the surface, there’s a lot to be said for local conditions, some of which are slow marching. A market downturn is unlikely considering the strong demand. There’s even a faint silver cloud to the locked-in effect keeping a normal volume of existing homes off the market. Tenure – how long owners stay in their current homes – is increasing, so owners continue growing their equity. At some point, it will allow repeat buyers to buy their next property with larger downpayments or cash.

Higher downpayments – especially if they reach to 20% level – will dramatically reduce the monthly mortgage payments since there won’t be the private mortgage insurance add on.

Currently, local cash payments are running in the 37% and 38% ranges in the two local metro areas, according to court-house records from ATTOM Data Solutions. That’s a little shy of the 2023 annual number of 40.8% in the Johnson City metro area and 39.3% in Kingsport-Bristol.

The sleeping giant of both the local residential and commercial real estate markets are the investors and locals waiting on signs the economy is moving in the right direction to fit their plans and needs. That’s not an unusual dynamics in a presidential election year.

Categories: REAL ESTATE