By Mark Blazek, President
Greater Chattanooga Association of REALTORS®
In reviewing our monthly markets stats, it is clear there is a strong demand for a limited supply of homes for sale. In the Greater Chattanooga market, New Listings were down 2.8 percent to 1,037. Pending Sales decreased 30.3 percent to 443. Inventory shrank 2.9 percent to 5,149 units.
On the surface, a shrinking inventory seems to be a negative, but let’s take a closer look. According the Lawrence Yun, Chief Economist for the National Association of REALTORS®, national figures show that distressed property sales are coming harder to come by. In the last two months, only 15 percent of all real estate transactions were “classified as being due to a foreclosure to needing a short-sale approval from the bank,” says Yun. He adds, “This is a marked changed from nearly one-third of all sales being distressed from 2008 to 2011. Last year the figure decreased to 26 percent.”
For 2013, Yun predicts the number of distressed sales will drop to 17 percent and between 11 and 13 percent in 2014. And he predicts these rates will “fall to single-digit percentage in 2015. Why? The number of seriously delinquent mortgages in the pipeline has been steadily falling. With fewer in the pipeline, fewer distressed properties will show up as for-sale. Fewer distressed home sales also mean higher home prices. Higher prices in turn mean more people getting lifted out of the underwater status and hence will not face a distressed situation.”
Locally, the housing demand seemingly has outweighed higher mortgage rates, at least for the time being. The idea that mortgage rates may rise further is likely spurring some of this demand. The dream of homeownership is very much intact, but buyers should be prepared with competitive offers, since every measure of market health is pointing upwards.
Prices moved higher as the Median Sales Price was up 6.7 percent to $144,000. Days on Market decreased 4.0 percent to 120 days, which is good for sellers and reiterates our continued inventory shortage. Months Supply of Inventory was down 8.2 percent to 9.0 months, indicating that demand increased relative to supply.
While the local market’s Closed Sales are down slightly by 4.1 percent from last month, our year-to-date numbers show an increase in Closed Sales of 8.4 percent. Eyes continue to fixate on the Federal Reserve and its policy inclinations related to stimulus tapering. Labor market growth is positive but still tepid. Things like gas prices, stock market shifts and global economics have a tendency to sway consumer sentiment. At the moment, U.S. housing continues to be a bright spot.