Historically, November has been a month with exceptions to the downward seasonal trend. This year is no exception. Sales haven’t gone up like in the past, but selling prices have.
The median selling price peaked in August at $ 210,000, then fell for two months as the market entered a period of seasonal downturn. It had returned to $ 210,000 last month due to a spike in sales in the $ 250,000 to $ 300,000 price range. Credit some of that to the mortgage emergency.
Almost everyone has accepted the reality that the days of mortgage rates below 3% are over. This was enough to motivate some buyers to lock in what they thought was the best rate in the future.
Many were not as aggressive as they were in the spring and summer. There were fewer multiple offers. But they were willing to pay a little more to close the deal.
The median selling price of local homes has increased 14.8% so far this year. And while prices are expected to continue to rise, the growth rate is expected to stabilize.
Lawrence Yun, chief economist of NAR, predicts that house prices will rise at a “milder rate” over the next few months. He expects demand to be more subdued as mortgage rates rise. The 30-year fixed-rate mortgage averaged 3.11% for the week ending December 2, up from 2.72% on average a year ago.
Ali Wolf, chief economist of Zonda, a national consultancy firm, was quoted by Realtor.com saying, “The pool of buyers who can continue to push prices up is much smaller than it was last year.” We are past the stage of everything happening in the housing market. We are not going to see the same level of house price growth.
Sellers should lose some edge, but no one thinks a buyer’s market is on the horizon.
According to companies monitoring who is moving and where, for example, people who abandoned high-density areas during the first wave of the pandemic have stepped on the brakes. Many still move, but they stay closer to home instead of cross-country.
This does not mean that the tap is off for NE Tenn markets. and SW Va. Things are slower, but this region is still a hot spot as markets like Nashville, Knoxville, and Chattanooga have grown as secondary and tertiary markets like the local region have become more attractive. Some call the increase in migration to rural metropolitan areas from nearby major metros the “sister city effect”.
New residents continue to shop and relocate to rural metropolitan markets. They are looking for better prices for homes and a more affordable lifestyle. Real estate investors are doing the same in their quest for better profit margins.
While slow inventory growth in the existing home market has stalled, it is expected to increase at the close of 2021. This applies to the new home market as well as to existing homes.
And while the crazy days of the latter half of 2020 and 2021 may be over, the real estate roller coaster ride is not yet over. Look for more balance next year. But also expect surprises, compliments of COVID, a stubborn supply chain, and a job market that can’t seem to regain a foothold.
NETAR is the voice of real estate in Northeast Tennessee. It is the largest trade association in Northeast Tennessee, Southwest Virginia, representing more than 1,500 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.