Chattanooga area home sales rise to 6-year high

Chattanooga area home sales rise to 6-year high

January 24th, 2014 by Dave Flessner in Business Around the Region

Photo by Laura McNutt/Times Free Press.

Chattanooga area home sales rose last year to the highest level since 2007 and most of the homes sold by local Realtors fetched higher prices than in 2012.

But the gains in home sales and prices in Chattanooga didn't keep pace with the torrid pace recorded nationwide last year, according to reports released Thursday by the National Association of Realtors and the Greater Chattanooga Association of Realtors.

"We didn't see the highs and lows that many markets did and we're now seeing a steadier growth pace," said Vicki Trapp. president of the Greater Chattanooga Association of Realtors. "But we're definitely seeing an improving market and I expect 2014 will be an even stronger year."

Chattanooga home sales rose 8.4 percent in 2013 to 7,247 units, the highest yearly total in six years. Although still 11 percent below Chattanooga's all-time sales peak year in 2006, economists cautioned against trying to reignite sales to the pumped up levels prior to the housing downturn.

Lawrence Yun, chief economist for the National Association of Realtors, said the 2006 sales levels "reached an unsustainably high 6.48 million (nationwide) at the close of the housing boom." Last year, Realtors nationwide sold 5.09 million units, or 9.1 percent more than the prior year.

"Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market," Yun said. "We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population."

The national median existing-home price for all of 2013 was $197,100, which is 11.5 percent above the 2012 median of $176,800, and was the strongest gain since 2005 when it rose 12.4 percent.

In Chattanooga, the median sales price for homes last year was 139,7000, up 2 percent from the prior year.

"Our homes remain very affordable in a very attractive city," Trapp said.

Harold Crye, co-founder and president of Crye-Leike Real Estate Services, said mortgage rates are likely to edge higher this year but that shouldn't be enough to slow down rising home sales.

During a visit to Chattanooga on Tuesday, Crye said as the economy improves he expects mortgages will like eclipse the 6 percent mark, which has been a sort of ceiling in recent years.

Affordability of homes is also likely to change, Crye said. The upcoming year, he predicted, will see buyers getting less for their money, because home prices will start going up as buyers become more interested, and more confident, in buying.

That applies to new homes and foreclosures, which are both shrinking in size.

"We think they're about out of those lots," he said.

In Chattanooga, the inventory of homes for sale declined another 4 percent in 2013 -- the fourth consecutive year of fewer homes on the market, according to the Greater Chattanooga Association of Realtors.

Contact Dave Flessner at dflessner@timesfreepress.com or Alex Green at agreen@timesfreepress.com