The U.S. economy has been pretty even so far this year. Usually when new figures are released, they paint a pretty picture worthy of putting above the fireplace in that purchased new home. Recently, some numbers for the first quarter were adjusted to show a slight contraction in the economy.
The initial response from Wall Street was unfavorable, but the correction itself is truly a mere blip. Nobody is predicting that the market will take a sudden turn. And in taking a look at our local market data, that certainly seems to be the case.
In May, New Listings in Greater Chattanooga increased 10.5 percent to 1,399. Year-to-date, this same category is up 7.1 percent. Pending Sales also were up in May by 18.5 percent to 902, which support the 24.1 percent increase year-to-date.
Inventory levels shrank 29.6 percent to 4,326 units, which further shortens the Months Supply of Inventory by 38.8 percent to 6.0 months. However, sellers remain encouraged, as evidenced by the above-referenced New Listing stats – in short, now is a great time for sellers to enter the market.
Another positive for sellers is a decrease in Days on Market, which was down 31.6 percent to 78 days. Yet, buyers should not be discouraged or overlook the previously mentioned 10.5 percent increase in New Listings. It’s important to note that while May’s Month Supply of Inventory experienced a decline, Greater Chattanooga’s Days on Market is only down 18.3 percent year-to-date.
As we’ve experienced 11 out of the last 12 months, prices continued to gain traction. The Median Sales Price increased 3.6 percent to $154,000. The Average Sales Price increased 11.2 percent to $197,772. In both cases, these prices are the highest we’ve seen in more than 10 years.
In spite of rising prices, our Housing Affordability Index remains strong at 186 percent, meaning our market’s median household income is 186 percent of what is necessary to qualify for the median-priced home under current interest rates.
Current prices appear to be in line with market demand, as sellers obtained 94.5 percent of the original list price, which is up 1.4 percent for the month and 1.7 percent for the year.
One interesting effect of a weaker-than-expected economy is that the Federal Reserve does not seem ready to raise short-term interest rates during summer, as some had suggested might happen. New projections indicate that rates will remain the same until September at the earliest. The dominant storylines in housing are decidedly not negative these days. Instead, you’re more likely to see top sales and luxury living highlighted than the woes of foreclosures and short sales.
The Greater Chattanooga Association of REALTORS® is “The Voice of Real Estate in Greater Chattanooga.” The Association is a regional organization with more than 1,500 members and is one of more than 1,400 local boards and associations of REALTORS® nationwide that comprise the National Association of REALTORS®. The Greater Chattanooga Association of REALTORS® services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. For more information, visit www.gcar.net.
By Travis Close, ABR, GREEN, GRI, e-PRO
President, Greater Chattanooga Association of REALTORS®