After declining through most of last year, the median sales price of homes sold in Chattanooga increased in the first quarter of 2008 amidst signs that the local housing market may be faring better than in much of the country.
Chattanooga appraiser Ed Blake, who has helped assess the value of Chattanooga houses for the past 15 years, said the local market tends to be more stable than the country as a whole.
“We didn’t see the run-up in home prices in the past, and we’re not seeing as much of a decline as there has been in many markets,” he said. “There are still areas like Signal Mountain and Riverview where demand is still strong and prices are still going up, even in the current market.”
The National Association of Realtors last week reported that the median home price in Chattanooga during the first quarter was down less than half as much as the national average over the past year.
In the first three months of 2008, the median price of Realtor-assisted homes sold in Chattanooga was $125,200, up 3 percent from the fourth quarter but still 3.4 percent below year-ago levels.
Despite the dip in prices in the past year in Chattanooga, median home prices nationwide were down an even-bigger 7.7 percent in the past year, including a 4.6 percent drop since the fall of 2007.
Home sales by Chattanooga-area Realtors in the first quarter were still off 19.5 percent from a year ago. The Chattanooga Association of Realtors said 1,461 homes sold in the first three months of 2008, down from 1,815 in the first three months of 2007.
“The numbers point to a softer market, but it’s by no means a time to panic,” said Pam Duffy, president of the Chattanooga Association of Realtors.
Ms. Duffy said the decline reflects the loss of home buyers with troubled credit histories or no money to put down who previously were able to get sub-prime loans.
With fewer sales, home-building starts in Hamilton County were only about half the year-ago level in the first three months of 2008, according to a new quarterly report by The Market Edge Inc.
Tighter lending standards and slower economic growth also combined to push up the number of property foreclosures in Hamilton County by nearly 30 percent in the first four months of 2008 compared with a year ago, according to filings with the Hamilton County Registrar of Deeds.
From January through April, 421 properties in Hamilton County were lost by their former owners through foreclosure — the highest level for the period on record. In the same period a year ago, Hamilton County recorded 329 property foreclosures, and a decade ago foreclosures in the first four months of the year totaled only 127.
“With all the foreclosures and fewer sales, there is a lot more inventory on the market and it’s going to take some time for the demand to catch up with the supply,” said Ben Kelly, a Realtor for the past 34 years who owns Prudential RealtyCenter. “But May is going to be our best sales month this year, and I really look for the market to slowly and steadily improve from here.”
Lawrence Yun, chief economist for the National Association of Realtors, blames most of the softening of the housing market over the last year on the “subprime mess,” where consumers with blemished credit records got loans they couldn’t afford when their interest rates reset to higher levels. Although many home sellers and Realtors will make less money this year in the depressed market, Dr. Yun predicted last week that home prices and sales should improve in many markets by the end of the year.
Ms. Duffy agreed, noting that the 19.5 percent drop in Chattanooga home sales in the first quarter of this year is comparable to the share of Chattanooga’s market previously sold to those with subprime mortgages.
“We’ve lost most of the subprime market, and inventory is at a high level,” she said. “But sound financing is available with attractive interest rates, and buyers are discovering they can get more house for their money in our market.”
The median price of a Chattanooga home sold in the first quarter was 36.2 percent, or $71,200, less than the U.S. median, according to data compiled by the National Association of Realtors. Among metro areas tracked by the Realtors in the mid-South, only Memphis had lower median prices in the first quarter among markets in Tennessee, Georgia and Alabama.
Home buyers also are benefiting by historically low mortgage rates. Despite renewed inflation fears last week, rates on 30-year mortgages dipped below 6 percent, falling to their lowest level in five weeks and within a half-percent of the lowest rates in a generation.
Freddie Mac, the mortgage company, reported that 30-year fixed-rate mortgages averaged 5.98 percent and 15-year fixed-rate mortgages averaged 5.55 percent.
Local Realtors cautioned buyers against waiting for home prices to decline much more because those savings may be offset by higher borrowing costs as inflation fears push up interest rates later this year.
“The real concern in our housing market should be on what you’re going to miss if you get swayed by the headlines,” Randy Durham, president of the Chattanooga Multiple Listing Service, said in a recent Realtors’ report on the local market.
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