Chattanooga: Realtors try to see bright side in crisis

A Wall Street meltdown, the mortgage crisis and a large number of homes for sale isn’t deterring Realtors from saying that now is a good time to buy a home.

“The last couple of years have not been as brisk with the economy the way it is ... but Chattanooga has not been hit hard,” said Lois Killebrew, broker-owner of Mountain City Realtors in Signal Mountain.

Ms. Killebrew is one of more than 550 real estate agents attending the 89th annual Tennessee Association of Realtors convention this week at the Chattanooga Convention Center and Downtown Marriott.

it’s a buyers market

The convention comes during a week when America’s financial markets have been shaken from high gas prices caused by Hurricane Ike, Lehman Brothers’ bankruptcy filing, the government bailout of American International Group, and Bank of America’s hasty acquisition of Merrill Lynch.

The U.S. Treasury Department announced placed Fannie Mae and Freddie Mac into conservatorship last week. The companies were created by the government to buy mortgage loans from banks and other institutions and thus allow banks to issue more mortgages.

“With the financial crisis going on with the mortgage industry, the challenges are getting the inventory of houses sold that has crept up over the last few years,” said Mike Gaughan, president of the state Realtor association.

Home prices are low, a lot of homes are for sale and interest rates are low, making it a buyer’s market, said Mr. Gaughan, from Hendersonville, Tenn.

Real estate is a cyclical business, and if home sellers and buyers will be patient they can ride out this downturn, said Ms. Killebrew, a previous president of the state association.

rules change oct. 1

Housing laws that take effect on Oct. 1 will change the way people buy houses. The minimum down payment will increase to 3.5 percent from 3 percent, and seller down payment assistance programs will cease.

First-time buyers still may qualify for down payment assistance from the Tennessee Housing Development Authority and other programs, said Linda Vaughn, a broker from Hendersonville with Prudential Woodmont Realty. There has been talk that the October housing changes may not be permanent, she added.

“Overall, the market is strong and we have ... lots of inventory,” Ms. Vaughn said. “That will help sellers sell their homes.”

Home buyers also can still receive a financial gift from a relative to help with the down payment, said Cheryl Whitehead-Parrish, owner of Freedom Mortgage and a former president of the Chattanooga Mortgage Bankers Association. Mrs. Whitehead-Parrish did not attend the Wednesday’s convention.

Chattanooga Neighborhood Enterprise Inc. offers a low-interest loan based on income requirements, she said. People buying a house in rural areas near a town may qualify for a 100 percent loan from the U.S. Department of Agriculture, she said. The area north of Hunter Road, for example, is considered rural, Mrs. Whitehead-Parrish said.