Area home sales drop in November

Area home sales drop in November

December 23rd, 2010 by Ellis Smith in Business Around the Region

Chattanooga-area home sales continued to plummet in November, decreasing by 13.1 percent to 371 from 427 the previous month.

Sales were down 27.1 percent from November 2009, when buyers purchased 509 homes, showing that the Chattanooga market has lapsed into an "almost chronic weakened state," said Randy Durham, president of the Greater Chattanooga Association of Realtors.

A lack of job opportunities, tightened credit standards and a 30 percent foreclosure rate "are all factors that immediately come to mind," he said.

Median price dropped to $125,000, down 8.6 percent from $136,700 the previous month.

The average number of days a home was on the market before it sold increased four days from the previous month to 134, and almost three weeks longer than in November 2009.

Sales have fallen consistently since the expiration of the federal tax credit for homebuyers in June, which Durham believes distorted the market by encouraging buyers to move up purchases they may have been likely to make later in the year.

Despite declining sales, numbers are up 4.1 percent for 2010 over 2009 because of higher numbers in the beginning of this year.

"This is a great achievement in a market that has shown little good news," Durham said.

Bobby Teems, Chattanooga-area Multiple Listing Service president, expressed worry that another federal government plan under consideration - the elimination of the mortgage interest deduction for homebuyers - could harm the market further.

"It is beyond my comprehension as to why they would even consider elimination of the mortgage interest deduction," Teems said of the plan recommended by the President's Deficit Reduction Commission.

Durham agreed, saying that the plan could "be the most destructive force in the U.S. housing market in decades."

November 2005 holds the record for highest sales in the past decade, with 617 homes sold, while November 2008 had the least homes sold, 349.

Contact staff writer Ellis Smith at esmith@timesfree or 423-757-6315.