By Mark Hite
President, Greater Chattanooga Association of REALTORS®
June represented the third month in a row that the number of homes which sold in the Greater Chattanooga area declined when compared to the same month last year.
While no one likes to see sales decline for consecutive months, the Chattanooga Real Estate outlook is not one of doom and gloom. The YTD numbers reflect a positive .8% increase and the trailing 12 months show a 4.9% increase when compared to previous year. The other factor to keep in mind is that the sales we are against are records for real estate sales in our community. In June 2017, we saw 950 closed residential units, which compares to 980 in 2016 and 912 in 2015.
At the root of the softening sales trend is the reduced level of inventory available for sale. In June we saw an average of 3,087 homes available for sale which is in stark comparison to 2016 with 4,020 and 2015 with an average of 4,651. While there is still ample inventory for home buyers to choose from, the supply is diminished when compared to recent years.
Homes that sold, did so quickly as the average days on the market (DOM) dipped to 60 days in June and the Year to date DOM stands at 63 vs. 70 days last year at this time. Home buyers continued to pay closer to the asking price as average sale was only 3.7% off the original list price. This indicates continued buyer confidence as YTD the percent of negotiation stands at -4.4% vs. last years -5.0%
Home buyers continued to pay more for homes they chose, as the median price increased 5.9% and the average home price increased by 8.4% to $228,402. To give this some perspective, the average home price in June 2015 was $192.159. This represents an increase of 18.8% in just 2 years. As we reflect on this price growth, one must keep in mind that wages are not growing at this rate, so at some point affordability will begin to put a strain on home sales. Low interest rates continue to facilitate affordability across the board, so this is a key metric to track in coming months.
The second half of 2017 continues to be a great time to buy or sell real estate in the Greater Chattanooga area. Realtors need homes to sell, so now is an excellent time to find out what your home may be worth and how long homes are on the market in your neighborhood. The overall economy remains positive and while interest rates have crept up, it has not been a significant change, so affordability is still good.