by Anna Varnell
on Tuesday, June 14th, 2022 at 3:30pm.
We are half way through the year 2022 and it has already proven to be one for the books in real estate. We have continued to see multiple offers with competitive bids including above asking prices and little to no contingencies. However, is all of that about to change?
Based on the market statistics from Greater Chattanooga Realtors, the average from the first half of this year are as follows,
Median sales price=$295,625
Days on market=19
Closed transactions per month=912
If we take a look at the end of 2021, the median sales price was $265,000, days on market was 22 days, and inventory ended with 903 properties for sale. In just 6 months, the average median price has increased by $30,000. What this means is that we have continued into a heavy seller's market.
There are several contributing factors as to why we have been in an extremely weighted market. One of those factors has been interest rates. Interest rates have been historically low which has given many first-time home buyers the ability to purchase and others the ability to afford higher price points. However, we have recently seen a significant increase in interest rates. Higher interest rates mean there is a likelihood of seeing a decrease in the number of buyers on the market. Per Christina Lane with Movement Mortgage, "current rates for a 30 year fixed rate mortgage with a 5% down payment is 5.99%." This number is almost double what rates started at in the beginning of 2022. Other experts say, “rising rates may be a housing market headwind in 2022, but as some buyers pull back from the market due to affordability and supply constraints... house prices will moderate, resulting in a more balanced housing market.” What this means is that instead of immediately tilting the scale over from a seller's market to a buyer's market, we are likely to see the market leveling out to create a balance where no one side has more of an advantage.
Another contributing factor to our market is the number of people moving to Tennessee. In 2020, more people moved to Tennessee than any other state. We are still seeing a significant amount of out of town buyers moving to Tennessee for reasons such as lower taxes and overall affordability. Nashville and Knoxville are among the top 10 cities with the most growth according to PODS Moving Trends. With people still choosing to move to Tennessee, there is still a demand for housing.
What does all of this mean for you? As a buyer, you are looking at higher interest rates, but a less competitive market when it comes to finding a home. While this will be a gradual process, in all probability, we will notice this shift as the year progresses. As a seller, this means if you’ve been on the fence about selling, now is the time to still get an amazing price before we start to see this shift. While the likelihood of home values decreasing is small, the days of getting tens of thousands of dollars above the asking price will eventually become a thing of the past.
If you've been considering buying or selling and want to know more about the process or what your house would sell for, fill out the box below!