Chattanooga had the fastest job growth of any Mid-South metropolitan area in the past year, and a study suggests that should help stabilize local home prices after three years of decline.
Among the nation’s 315 biggest markets, Chattanooga is among the top 20 percent for residential real estate investment opportunities, according to the Local Market Monitor report on real estate conditions in most U.S. metro areas.
In his latest update, Local Market Monitor President Ingo Winzer estimates Chattanooga’s home prices are slightly below the price that homes would bring in a normal market. Winzer predicts Chattanooga home prices should begin to rise again within three years because of the improving job market.
“Still moderate by historical standards, the increase [in jobs and economic activity] suggests very strongly that the scenario of a slow but steady recovery continues to play well,” he said.
In metro Chattanooga, employment grew by 1.3 percentage points in the past 12 months, or more than twice the national rate of 0.5 percent. The 8.3 percent jobless rate in metro Chattanooga in September was nearly 1.5 percentage points below the U.S. average.
“Chattanooga is doing better than most markets in the Southeast, and I think we’ve probably bottomed out in home prices as a result,” said Henry Glascock, a real estate appraiser and property auctioneer. “We still have a decent supply of unsold lots where developments have stalled and left what we call ‘PVC farms,’ where pipes and roads are laid out but few, if any, homes built. That supply tends to depress the prices of new lots and new houses.”
But that unsold inventory of homes is approaching more normal levels, according to Randy Durham, a real estate agent for Keller Williams Realty and president of the Chattanooga Association of Realtors.
“I think we’re at the trough of this downturn and we should see stable prices with very little change in the next year or so,” Durham said. “With rates at historic lows right now, those that try to wait for better prices are likely to lose out.
“I think we’re basically back to the sales levels we enjoyed up until 2003, when we had several years of excessive go-go buying and selling,” he said.
The Local Market Monitor projects that home prices in most markets will decline slightly this year but should begin to improve within the next couple of years. The study rates Chattanooga as an attractive market for conservative investors.
Local Market Monitor’s Carolyn Beggs said those who buy homes in Chattanooga “will likely do very well in four or five years.”
Contact Dave Flessner at dflessner@timesfreepress.com or 757-6340 or follow him on Twitter at www. twitter.com@chattreporter.