By Nathan Walldorf, ABR, GREEN, GRI, SFR, e-Pro
President, Greater Chattanooga Association of Realtors
Last week more than 30 Tennessee Realtors travelled to Charleston, SC for the annual state convention. While enjoying the coastal climate, collectively we implemented policy changes and examined the political future of Tennessee. Also, we had ample opportunities for professional development and prepared our business and the association for serving our members and clients in 2017. And we installed the new state officers and showed our appreciation to Chattanooga Realtor Randy Durham, who is serving this year as President of the Tennessee Realtors. During the convention, several Chattanooga Realtors stepped into state leadership roles, including Kathy Tucker as 2017 Secretary/Treasurer and Travis Close who continues as 2016-2017 Regional Vice President. Also, Jennifer Grayson was installed as 2017 President of Tennessee’s Women’s Council of Realtors (WCR) and Susan Barnette as the 2017 President-Elect of WCR.
One of the conference highlights was hearing from realtor.com’s chief economist, Jonathan Smoke, who highlighted many great fundamentals to Tennessee’s strong real estate market. Tennessee has higher employment rates than the national average. People are moving to Tennessee, which leads to higher incomes in the state. The affordability of homes in Tennessee and specifically in Chattanooga is a strength of our area. You can still buy a home in Chattanooga and be in a good financial situation compared to the median household income. Tennessee has some the best interest rates in the country. Just like gas costs more in some areas of the country, interest rates cost more, too. By the end of 2016, Smoke predicts that Tennessee will be back to 2006 levels of home sales after having the fastest home sales market in history.
Some people start to cry “bubble” when they hear such statistics, but the fundamentals for a long-term investment in real estate shows huge potential for continued growing home prices. There will be years when the market corrects itself and prices level off or drop a bit. That is to be expected. Smoke anticipates that household growth will be good in Tennessee and in the Chattanooga area over the next 5 years. As Tennessee keeps growing in population, the existing home stock will not be able to keep up with demand. This dynamic will continue to push Chattanooga house prices up.
Currently the rental market has the highest rental rate in years. Despite the enormous amount of newly constructed apartments, there are still more rental households than supply of rental units. As rental rates keep rising, it becomes less expensive to buy homes than rent homes.
Some have tried to claim that America’s largest generation of home buyers – Millennials ages 25-35 – do not want to buy homes. Studies from the National Association of Realtors determined quite the opposite. Millennials want the American Dream just like anyone else, and about 45 percent of them are buying homes. This percent is consistent with other generations, of which about 45 percent also purchased homes when they, too, were ages 25-35. Also, Smoke reported that 71% of adult Millennials looked at houses on-line in July, which shows their interest in entering into home ownership and a strong player in driving the real estate market.
Across Tennessee and here Chattanooga, the fundamentals of supply and demand over the long haul will lead to continued growth in home values. Smoke anticipates that consumer confidence will not be shaken by whomever ends up in the White House after the November elections. Regardless of which candidates prevails as President, people need a place to live. Currently, we do not have enough units to accommodate every buyer, and this shortage will continue to drive housing prices upwards and the demand for construction. If you’re on the fence about entering the real estate market, the time is now to invest in your future. Call a Realtor today to help you navigate that investment.