By Travis Close, ABR, GREEN, GRI, e-PRO, President
Greater Chattanooga Association of REALTORS®
It has been another recovery year in 2014 but not the same as 2013. With a broad pattern of rising prices and stable to improving inventory, the market has shifted from being drastically undersupplied to approaching equilibrium. Price gains are still positive but less robust than last year.
The metrics to watch in 2015 include days on market, percent of list price received and absorption rates, as these can offer deeper and more meaningful insights into the future direction of housing. So let’s take a look at how December 2014 ended.
Closed Sales rose 1.4 percent, topping out with 573 residential units sold. New Listings in the Chattanooga region increased 4.3 percent to 630.
Inventory levels shrank 11.0 percent to 4,467 units. Despite this drop in inventory, new construction is on the rise, with several projects already underway.
Prices continued to gain traction as the Median Sales Price increased 6.8 percent to $149,250. Days on Market dropped 5.2 percent to 128 days.
Sellers were encouraged as Months Supply of Inventory was down 10.7 percent to 7.5 months.
In comparing 2013 to 2014, there are some key differences:
- Closed Sales increased 0.7 percent finishing with a total of 7,323 residential units total in 2014.
- The Median Sales Price increased by 5.9 percent, ending 2014 at $147,900.
- Days on Market increased by only 4.0 percent, averaging only 129 days.
- Months Supply of Inventory brought about the most significant change, dropping 10.7 percent to 7.5 months.
Finally, Interest rates remained lower than anyone expected for the entire year. That trend snowballed with solid and accelerating private job growth to empower more consumers to buy homes. This coupled nicely on the governmental side with mortgage debt forgiveness and interest deduction preservation. Student loan debt, sluggish wage growth and a lack of sufficient mortgage liquidity still remain hurdles to greater recovery.