Downward housing trend results in more negotiation-friendly market

Annualized home sales continued their narrow downward trend in May. Regionally, the market is shifting from a seller’s market to a more negotiation-friendly conditions for buyers and investors.

According to the TCI Group’s Annualized Sales Tracker, the 2.9% contraction softening that began last June underscores a cooling cycle.

Commercial Realtors, investors, and savvy consumers watch the annualized sales trend for key insights purchases, demographic, population trends that point to marketing and development opportunities.

Key insights for the report on sales ending in the mid-May 12-month period are:

• Slower sales growth and the modest month-over-month contractions offer good timing in submarkets where sellers are adjusting their expectations.
• The continued downtrend may be yielding discounting leverage, especially in the mid-to high price ties where the time on market in increasing. However, updates on the luxury markets show sellers are exercising more discipline in discounts and negotiations.
• As affordability challenges persist, investors interested in build-to-rent are gaining traction. A new build-to-rent development was recently denounced in Johnson City and investors have stepped up their search for multi-family properties. Much of that search has been muted by persistent high pricing.

As the market enters summer, typically a stronger period for transactions, the coming months will be crucial in determining whether this downtrend represents a temporary correction or a longer-term plateau. Currently, sales are tracking slightly higher than their pre-pandemic level, while the year-to-date median sales price trend is holding at 4.6%.

Inventory levels in many of the submarket price tiers in the $200K and up ranges are at or near what is technically seen as balanced market conditions.

Earlier this month, Zillow reduced their annual price outlooks for metro markets in the Tri-Cities region. Their current outlook is:

• Johnson City metro market, 0.6%
• Kingsport-Bristol metro market, 0.2%
• Greeneville micro market, 0.9%.