By Kim Bass, ABR, CNHS, GREEN, RCC
President, Greater Chattanooga Realtors
With each new year comes a time of reflection and planning, both personally and professionally. As I take over the reins from 2018 President Geoff Ramsey, I am grateful for his leadership and excited to be part of the ever-evolving role that Realtors play nationally and in our local communities.
For example, amidst the federal government shutdown, Realtors were able to secure a Federal Emergency Management Agency (FEMA) reversal on new flood policies. On December 21, Congress passed legislation extending the National Flood Insurance Program until May 2019. With the extension came an unexpected FEMA policy change, which prevented insurers from issuing and renewing policies during the government shutdown.
National research shows that 40,000 home sales are lost every month that flood insurance is not available. In late December, Realtors and other national groups urged policy makers to reevaluate the decision, which was reversed the last few days of December. We are relieved and grateful to have assisted in preventing a potential market disruption had there not been a continuation of flood insurance.
As Greater Chattanooga Realtors looks towards to what the future holds for real estate, I am reminded of recent comments by the Chief Economist at the National Association of Realtors®, Lawrence Yun, who gave his 2019 projections during our national convention in November.
Yun anticipates we will see a continued, yet slower, rise in home prices and for home sales to flatten. "Ninety percent of markets are experiencing price gains while very few are experiencing consistent price declines," said Yun. He added, "2017 was the best year for home sales in ten years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we've been experiencing over the past few years."
When asked about another housing bubble, Yun dispelled such speculation stating, “The current market conditions are fundamentally different than what we were experiencing before the recession 10 years ago.” He added, “Most states are reporting stable or strong market conditions, housing starts are under-producing instead of over-producing and we are seeing historically low foreclosure levels, indicating that people are living within their means and not purchasing homes they cannot afford. This is a stronger, more stable market compared to the loosely regulated market leading up to the bust.”
After the year-end numbers come in for 2018, we will be able to analyze better what we might expect nationally and locally for the housing market. In late December we saw an increase in new listings and pending sales. We continue to monitor the housing affordability index, which has decreased slowly in the local market. However, the local index remains strong at 135 percent, meaning the median household income is 135 percent of what is necessary to qualify for the median-priced home under prevailing interest rates. In addition to national efforts, Greater Chattanooga Realtors will continue to work with local decision-makers on issues that impact housing affordability and inventory.