By Travis Close, ABR, GREEN, GRI, e-PRO
President, Greater Chattanooga Association of REALTORS®
As we turn the page to the second quarter of 2015, a significant increase in new listings is expected in most markets across the U.S. Spring is the traditional time of year that we see some of the most desirable gems polished for eager buyers. Though some Google searches and Twitter posts blatantly will offer pessimism about the state of the housing market, on-the-street evidence does not support bad tidings, especially when looking at local numbers.
For April, New Listings in Greater Chattanooga increased 12.5 percent to 1,423, which is a year-to-date increase of 6.2 percent. Pending Sales were up 20.7 percent to 880, which is a significant 26.5 percent increase from April 2014. Closed Sales also were up – 11.4 percent to 701. Chattanooga is ahead of the national trend, which showed homes sales slowing slightly in April.
Inventory levels shrank yet again – this month by 27.8 percent to 4,245 units. Months Supply of Inventory was down 37.2 percent to 5.9 months. With demand being greater than supply, Days on Market was down 15.5 percent to 93 days.
This drop in inventory is the greatest we’ve seen in the last six months. Nationally, inventory remains nearly 1 percent below a year ago. Lawrence Yun, Chief Economist for the National Association of REALTORS®, recently observed that low inventory levels do not appear to be deterring buyers. “The overall data and feedback we’re hearing from REALTORS® continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes,” said Yun.
Greater Chattanooga home prices continued to gain traction. The Median Sales Price increased 8.1 percent to $153,500. The Average Sales Price increased 7 percent to $180,310. Homes are being priced correctly for our market, as we saw a 1.7 percent increase to 93.9 percent of Original Price Received.
Despite price increases, the Affordability Index remained positive – we saw a 6.9 percent increase to 186. An index of 186 means the median household income is 186 percent of what is necessary to qualify for the median-priced home under prevailing interest rates. The higher the number, the greater the affordability. Good news for our region.
The national homeownership percentage is the lowest since 1993, when Jurassic Park was the highest-grossing movie. Rental prices continue to astonish with accelerated price growth, which may cause some to think twice before locking in a 12-month lease. Lending practices and mortgage rates will also have a decided effect on the number of buyers who will become homeowners this year. With the release of Jurassic World this month, we are reminded of cyclical conversations in both real estate and moviemaking.