By Nathan Walldorf, ABR, GREEN, GRI, SFR, e-Pro
President, Greater Chattanooga Association of Realtors
Even as prices rise in many communities, homes are selling faster now than they have in the past several years. This creates a situation where buyers need to move fast in order to secure homes, and they may have to pay more for them. While increasing prices generally coax more selling activity, there has been some hesitancy among potential sellers who worry that they will not be able to buy a desirable and reasonably priced home once they sell.
New Listings in the Chattanooga region decreased 15.4 percent to 1,158. This downward adjustment is typical for the summer months. Pending Sales were down slightly since June but year-to-date were up 4.2 percent to 862.
Inventory levels in Greater Chattanooga shrank 20.6 percent to 3,731 units, which is the same across the country. Low housing supply has already prevented an outright national boon in sales activity, despite a continuation of near record-low mortgage rates and an unemployment rate under 5.0 percent deep into 2016. The issue is not purchasing power. Many areas are falling behind last year’s closed sales totals simply because of lack of available inventory. As this continues, higher prices may put a deeper squeeze on the current buyer pool.
Thus, it is with hesitation that we report for another consecutive month that prices in our local market continued to gain traction. The Median Sales Price increased 1.0 percent to $164,500. The Average Sales Price increased 0.4 percent to $200,097. The Percent of Original List Price Received was relatively flat, with only a 0.2 percent increase to 95 percent year-to-date, and a 0.4 decrease from June’s report.
Days on Market was down 13.9 percent to 62 days, which is the lowest we’ve seen locally in more than 10 years. Sellers were encouraged as Months Supply of Inventory was down 26.6 percent to 4.7 months.
Despite a shrinking Inventory and Days on Market, the Housing Affordability Index is encouraging with an 8.2 percent increase to 184. Low interest rates are key to this Index, which measures affordability for the region. For example, an index of 120 means the median household income is 120% of what is necessary to qualify for the median-priced home under prevailing interest rates. A high number means greater affordability. This Index for our region has dropped slightly for each month since March of this year but is on another upward path, which follows last year’s upward trend for the remainder of the year.