Chattanooga home prices continued to accelerate in the first three months of 2017 as sales outpaced the number of new homes put on the market, shrinking the available inventory of houses for home buyers to choose from in the area.
The National Association of Realtors reported last week that the median price of homes sold in Chattanooga during the first quarter of 2017 jumped by 9.8 percent from a year ago to $167,700. Although still 28 percent below the U.S. average home price of $232,100, Chattanooga housing prices continued to rise faster than the nationwide average.
"Inventories are as tight as I've ever seen, given the demand among homebuyers," said Mark Hite, a Keller Williams Realty team leader who is president of the Greater Chattanooga Association of Realtors. "Prices are continuing to rise in this environment, and buyers continue to believe that buying a home is a good, sound investment."
Mark Hite with Keller Williams Realty is photographed in their offices Tuesday, Dec. 6, 2016, in Chattanooga, Tenn.At the end of last month, Chattanooga Realtors were listing 2,965 homes for sale, or 28 percent fewer than a year ago. The reduced inventory cut the average selling time for houses to only 60 days and many homes are selling as soon as they are put on the market.
"Buyer activity is as charged as ever, especially from people who are moving to Chattanooga from out of town," said Byron Kelly, president of Berkshire Hathaway Home Services in Chattanooga. "The activity is really kind of through the roof and the market is playing catch up to fill the demand. As a result, prices are going up even faster than appraisers, inspectors and surveyors can keep up with the demand, in some instances."
Rising home prices
The median price of homes sold in the first quarter of 2017 in Chattanooga continued to outpace inflation and the nationwide gains in home values. But Chattanooga home prices still average 28 percent less than the U.S. average. The median price of homes in the MidSouth and the change from the previous year during the first quarter were: * Nashville, $232,200, up 13.4 percent * Huntsville, Ala., $192,800, up 4.8 percent * Birmingham, Ala., $183,000, up 5.7 percent * Atlanta, $182,800, up 8.9 percent * Chattanooga, $167,700, up 9.8 percent * Knoxville, $164,300, up 4.6 percent * Memphis, $150,100, up 10.5 percent U.S. average was $232,100 in the first quarter, up 6.9 percent from the previous year Source: National Association of Realtors
Last month, the average home sold at 95.8 percent of its initial listing price.
Kelly said one client his firm is working with has already made five purchase offers for homes on the market, only to be beat out by rival buyers.
"A good house priced well is usually selling in the first four days," he said.
Nationwide, the first quarter was the strongest sales period in a decade, according to the latest quarterly report by the National Association of Realtors. The national median existing single-family home price in the first quarter was $232,100, up 6.9 percent or $14,900 more than a year earlier.
"Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter," said Lawrence Yun, chief economist for the National Association of Realtors. "Those able to successfully buy most likely had to outbid others - especially for those in the starter-home market - which in turn quickened price growth to the fastest quarterly pace in almost two years."
Despite a rise in the national family median income to $71,201, the combination of higher mortgage rates and home prices slightly weakened affordability compared to a year ago. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $52,251, a 10 percent down payment would require an income of $49,501, and $44,001 would be needed for a 20 percent down payment.
In Chattanooga during the first four months of 2017, home sales have increased 1.4 percent over last year's record high, according to the Greater Chattanooga Association of Realtors. But home sales by local Realtors declined nearly 10 percent last month as tight inventories appear to be limiting some sales.
"The cause of softening sales can be found in the ongoing low supply of homes available for purchase," Hite said. "But if you are buying a home, there is fresh inventory coming to market daily, so do not despair. At the same time, with interest rates remaining low, it is a great time to invest in a home and lock in these rates for 30 years."
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.