Getting real: After a decade of rising sales, high mortgage rates may curb growth this year, but Chattanooga is attracting an influx of home buyers from other markets

Over the past decade, home sales and prices have more than doubled in the Chattanooga area, rising steadily as interest rates have been historically low and the local economy continues to add jobs and residents.

But higher mortgage rates in 2022 are holding back longer sales growth in the housing market. With 30-year mortgage rates rising above 5% this spring, Chattanooga real estate agents are bracing for a potential annual decline in home sales for the first time since the 2008-2009 recession.

“High interest rates have clearly affected the purchasing power of consumers, and everyone is tightening their belts a little bit,” says Derek English, an associate broker with Scout Realtor Group, LLC, president of the Greater Chattanooga Realtors Association. Huh.

“We’re probably not going to break last year’s record for home sales, but we’re still moving more people to Chattanooga; and luckily we’re seeing more inventory to sell, so it’s worth it right now.” Should also be a very good year,” said English.

Even with the higher lending rates, mortgage rates are still relatively low from a historical perspective. Historically, 30-year fixed rates have averaged less than 8%. So even with 30-year rates hovering around 6%, they are still attractive by historical criteria.

As mortgage interest rates headed up this spring, many Chattanooga home buyers scrambled to buy in and lock down prices before they exceeded their budgets. Over the past two years, the average rate on a 30-year home mortgage has more than doubled from a record low during the pandemic.

Lawrence Yoon, chief economist at the National Association of Realtors (NAR), says, ‘The housing market is clearly going through a transition.’ Contract signings are significantly less than a year ago due to very high mortgage rates.

According to a NAR report this summer, the monthly mortgage payment for an average-priced home in the U.S. has risen by about $800 since the beginning of the year.

Read |  23-ton Chinese booster rocket crashes uncontrollably on Earth

Jay Robinson, a real estate broker for Keller Williams Realty and Chattanooga’s best-selling real estate agent last year, said he expects the market to take more buyers out of the game this year with higher mortgage rates and home prices. will do it. The high selloff earlier this year that came in the form of a hike in interest rates “is the last in the market for true, courageous sellers.

Photo Gallery Chattanooga Home Buyers Influx View 6 Photos

“We’re looking at the last rush at the door to close deals before rates go up,” Robinson said earlier this summer. “Things have changed so dramatically that what happened three months ago or six months ago is not necessarily what’s going to happen now. We see the market slowing down in all price ranges.”

Many of Chattanooga’s neighborhoods remain popular, keeping up with both the decrease in demand and the influx of retired and remote workers into the Gig City. Travelers to Chattanooga from the major cities or markets in California find much less expensive accommodation options in Chattanooga.

Despite a 21% increase in median home prices in Chattanooga in the 12 months ended May, Chattanooga home prices in May are still 22.8% below the US average, according to multiple listing service data compiled by Greater Chattanooga Realtors. In May, the median home sale for a one-family home in Chattanooga was $315,000, compared to the US average of $407,600.

According to the Jumper National Rent Report, the average rental rate for a two-bedroom apartment in Chattanooga jumped 21.7% in the 12 months ended June, to a record high monthly rate of $1,400. But Chattanooga rental rates are still 10 to 20% lower than the American average, on average, according to Jumper.

Read |  3 stocks i have and i will buy more if the stock market crashes

“Even with the price increases we’ve seen, Chattanooga home prices are still below most of the country and we are still seen as a relatively affordable area to buy in,” said Chattanooga’s top seller. says Mark Height, head of one of the real estate teams at Real Estate Partners. “If the homes are priced right, they will still sell out almost immediately, and I think our market will remain relatively vibrant this year despite the rate hike.”

According to Greater Chattanooga Realtors, in May, the typical home in Chattanooga sold in just 14 days, the lowest level ever.

Chattanooga has been the top Tennessee city for a net influx of new residents coming out of the pandemic this year, according to a study by Moving Requests by the website moveBuddha.com. Chattanooga had 3.06 new residents in the six-county metro area for every person moving out of the Chattanooga metro area in the first 18 weeks of the year. Tennessee, overall, is leading the country in attracting new residents. Last year, moveBuddha.com ranked Tennessee among the top 10 states for net inflows of residents.

“We’re still seeing a lot of people move to Chattanooga and there’s still a lot of lack of demand,” says English.

Chattanooga real estate agent Linda Brock, one of the top sellers of luxury homes in Chattanooga, says that both home listings and home sales increased in Chattanooga this spring.

“We’re so screwed that if a property doesn’t go under contract within the first week, we wonder what’s wrong,” Brock says. “Things had to be put to rest, but Chattanooga is in a unique position as Covid has become our best friend of growth for all of our reasons. It’s a great place to recreate 12 months out of the year, so beautiful There is no state income tax and as people were sent home to work, why not have the fastest and strongest internet while doing so.”

Read |  Top winners/losers of July; Ethereum and Ethereum Classic Win the Month

The current downturn in the housing market is not expected to be anything like the recessions in the Great Recessions of 2008 and 2009, when home foreclosures jumped and average home prices fell in value.

“Don’t expect a housing crash in 2008,” said Jeff Andrews of the Jumper National Rent Report. “The labor market remains strong, and lending practices have become much more prudent since the last housing market crash. Instead, we will see a slow return to seasonal trends that were more typical of pre-pandemic years, as digital The nomads either return to the office or settle in their new work-from-home locations.”

Chattanooga home sales

Sales and prices of single-family homes in Chattanooga have risen steadily and more than doubled over the past decade to reach record highs in 2021.

* 2011 – 5,569 sales at an average price of $124,000

* 2012 – 7,038 sales at an average price of $131,500

* 2013 – 7,634 sales at an average price of $134,900

* 2014 – 7,828 sales at an average price of $142,000

* 2015 – 8,755 sales at an average price of $152,000

* 2016 – 9,623 sales at an average price of $161,000

* 2017 – 9,828 sales at an average price of $175,000

* 2018 – 10,043 sales at an average price of $187,000

* 2019 – 10,780 sales at an average price of $203,085

* 2020 – 11,737 sales at an average price of $23,000

* 2021 – $265,000 . 12,896 sales at an average price of

Source: Greater Chattanooga Realtors Multiple Listing Service.

read more

*big catch

*Neighborhoods to rent: Chattanooga-area build-to-rent housing is strong but may face economic challenges

Source link