published Thursday, September 22nd, 2011

Home sales surge: Low prices, mortgage rates bring best figures since June 2010

Timmy Scott, left,  waits to spread hay on the yard of this Jay Bell home in Hamilton on Hunter North.
Timmy Scott, left, waits to spread hay on the yard of this Jay Bell home in Hamilton on Hunter North.
Photo by Tim Barber.
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June Christian is moving from her Hixson apartment to her newly purchased townhouse, and she'll be making the same monthly payment she does renting.

Christian likes her apartment, but she wishes she had a yard and little garden.

"It's nice just knowing that you're putting money into something you own instead of that money just going out," she said.

With house prices down and mortgage rates lower than they've been in 60 years, Christian is among a growing number of local homebuyers who helped push home sales last month to the highest number since June 2010.

In August, 595 residential units sold, a 13.5 percent increase over July and 24 percent jump over August 2010. Compare that to a national August-to-August increase of 18.6 percent, and Chattanooga is looking good.

"We're down considerably from where we were in '06 and '05, but compared to the rest of the country we're doing well," said Jay Bell, owner of Bell Development. "It's going to be slow, steady growth from here on out."

Part of that growth comes from low home prices. The median home selling price in Chattanooga last month was $129,000, about $4,000 lower than the August before and $13,000 less than this July.

And 15-year mortgage rates below 4 percent were a huge motivator for new homebuyers.

"There's no doubt low interest rates are driving it, and beyond that people have postponed their moves for so long there's a lot of pent-up demand," Bell said.

That pent-up demand seems to have burst out as buyers lock in low-rate loans on low-price homes.

"It's not surprising," said Tina Christein, branch manager of local Churchill Mortgage. "People are starting to realize with the rates this low, they can get a home for less than they're paying in rent right now."

Those rates are what kicked Christian into her search, and could motivate the housing market to steady increases.

"You've got some really positive underlying things, and then you've got some strong headwinds, too," said Walter Molony, spokesman for the National Association of Realtors.

In addition to interest rates and lower prices, Molony cited rising incomes and rent rates as catalysts for home sales.

But tight credit is holding many potential homebuyers and sellers back from buying. Lenders still feeling burned by the housing crash years ago are requiring a high credit standard before approving any mortgages.

"Lenders are using arbitrarily high credit scores. We think the pendulum has swung from being too loose to too restrictive," Molony said. "It's kind of a pattern of two steps forward, one step back."

But as long as the economy continues to improve, Molony expects the housing market will follow.

That could be good news for metropolitan Chattanooga, which added 6,800 jobs over the past two years, according to the U.S. Bureau of Labor Statistics.

"That kind of sounds like the housing market," Molony said. "It's gradually trending up."

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nucanuck said...

National housing statistics indicate that low household family formation and home vacancies will push home prices lower for years to come. You may get a good interest rate now, but in all probability, nationally you will watch your home value decline year after year. The price bottom is not yet in sight.

September 22, 2011 at 12:55 a.m.
kevindavis455 said...

How do you find good refinance rates? I like "123 Refinance". They gave me the option of selecting various rates with different problems. I choose the lowest rate of 3.29% BTW Remember to call and verify the loan rate. Search online to find them.

September 22, 2011 at 1:54 a.m.
rolando said...

When have I heard this before?

Oh yeah...late 2007/early 2008...just after Baah-Nee told us FannieMae/FreddieMac was in bee-u-t-ful financial shape.

You know, just before the deafening "POP".

Although the way the value of the dollar is dropping, borrowing now with high-value dollars and re-paying later with ever-dropping low-value dollars kinda makes sense. [It worked in the early 30's in Germany.]

September 22, 2011 at 10:02 a.m.
harrystatel said...

If you have a home paid for, great! If you're thinking about buying a home, upgrading, or want to know why buying a home could be the worst financial mistake of your life read this.

Guaranteed to Not be like by banker$, realtor$, mortgage broker$, and everyone who sees your debt as their payoff.

"Why I Would Rather Shoot Myself In the Head Than Own a Home"

September 22, 2011 at 10:32 a.m.
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September 22, 2011 at 7:07 p.m.
NoMyth said...

"It's going to be slow, steady growth from here on out." Ha. Why does the TFP incessantly shill for developers and realtors that continually mislead the public? It is shameful. You will never see an article in the TFP that predicts housing prices are set to decline in Chattanooga. Is the TFP owned by a group of realtors/developers? Seriously, the reporting is so far off-base that I'm interested to know if there is a TFP agenda on this topic.

September 22, 2011 at 10:09 p.m.
harrystatel said...

For those considering "investing" in residential unreal estate, here's another article.

Recently the TFP has been running articles such as "What can you buy for $250,000?"

The answer is, "probably the same thing six months from now for $200,000."

Home value appreciation is over for 90% of houses purchased. A few will appreciate, but those will be exceptions.

As to the charge that the TFP is in cahoots with realtors and developers, look to all the ads in the papers, one of the few areas of profit for any newspaper today.

Frankly, I see no great collusion between the TFP and real estate businesses; just an attempt by both to profit in the free market.

But for a long time to come, don't look for home ownership to be an "investment." It's not. There may be other valid reason why you wish to buy a home, but when an agent starts throwing around the words "good investment," let the red flags be raised.

September 23, 2011 at 8:39 a.m.
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