Home prices fall to 7-year low despite sales gain

Home prices fall to 7-year low despite sales gain

August 12th, 2011 by Dave Flessner in Business Around the Region

Staff Photo by Tim Barber<br> A line of new homes with distinct facades offer the buyer deals in Whisper Creek at Windstone. Several signs indicate slashes in prices from the $300's to the $200's.

Jennifer Grayson, president of the Greater Chattanooga Association of Realtors

Jennifer Grayson, president of the Greater Chattanooga Association...

Chattanooga home sales rose this spring from the depressed level at the start of the year, but the price of existing homes fell during the second quarter to the lowest level in more than seven years.

The median price of existing homes sold this spring in the Chattanooga area fell by more than 8 percent from a year ago to $115,500 -- the lowest level since the start of 2004, according to a new report from the National Association of Realtors.

Chattanooga was among 109 of the 151 metro areas included in the national report where home prices fell from year-ago levels during the second quarter.

The Chattanooga Association of Realtors reported that nearly 30 percent of the home sales in the second quarter were of foreclosed properties, which are typically priced below conventional home sales.

Chattanooga's housing market remained more affordable than most of the country with a median price of existing homes nearly one third below the U.S. average.

Home prices in Chattanooga did not fall as much as harder hit Southern cities, including Atlanta and Memphis where home prices have fallen below the average price in Chattanooga, Realtor figures show.

Local Realtors said they were encouraged by the 27.5 percent gain in home sales from the first quarter to the second quarter of 2011.

But Jennifer Grayson, president of the Greater Chattanooga Association of Realtors, said she remains worried about the uncertain economy and the prospect of Congress possibly removing the mortgage interest deduction for homebuyers.

"For me, it's encouraging to see the market arrow move upward," she said, noting that the 1,536 residential units sold this spring was up by 331 units from the winter period. "While I feel certain that the worst of the recent recessionary period has now passed, we are still concerned about obstacles in the lending market, and what legislative changes may result from the recent debt ceiling agreement."

Dan Griess, president of the Chattanooga Multiple Listing Service, said "there remains a level on uncertainty abut the pace of sales going forward."

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