Home prices rise
The median sales price of most homes in the Mid-South rose faster than the U.S. average during the past year but remained cheaper than the national average.Nashville $208,500, up 12.8 percentBirmingham, Ala. $190,400, up 11.8 percentAtlanta $181,500, up 9.2 percentKnoxville $159,800, up 5.1 percentChattanooga $155,200, up 8.3 percentMemphis $153,600, up 8.1 percentU.S. average $229,400, up 8.2 percentSource: National Association of Realtors. Median home prices for second quarter 2015
With more buyers trying to capitalize on near historic-low mortgage rates, prices for many homes sold in the Chattanooga area are being bid up and sold at higher prices.
“The market is definitely stronger and contracts are coming in at – or even in some instances above – what the list price is because there are often multiple bidders for homes in attractive areas or price levels,” said Vicki Trapp, a broker for Crye-Leike Real Estate Services and the incoming president of the Chattanooga Realtors’ Multiple Listing Service. “I’ve been in this business for more than 30 years in good markets and in bad. But I don’t ever recall so many homes getting multiple offers and selling so often at list price.”
The National Association of Realtors reported last week that the median price of homes sold in the Chattanooga area during the second quarter rose 8.3 percent in the past year to a record spring high of $155,200. The typical home sale was valued at $11,900 more than a year ago, according to the Realtors data.
In July, median home prices rose again and were up a full 10 percent from a year ago, according to Travis Close, president of the Greater Chattanooga Association of Realtors.
“We’re seeing a strong market all the way from the first-time home buyer up through million-dollar home sales,” Close said. “In the past, there were three or four strong areas of town or parts of the market, but it’s really become a sellers market nearly everywhere.”
Chattanooga’s price appreciation was slightly above the U.S. rate of 8.2 percent, although still below the gains in some of the hottest markets in the South, including Nashville (up 12.8 percent) and Birmingham, Ala., (up 11.8 percent).
In the past three years, the median price of homes sold in Chattanooga has jumped by more than 20 percent, adding $26,100 to the average value of each home sold since 2012. Most of the MidSouth markets have raised prices at a faster rate than the U.S. as a whole.
But local prices still remain well below the U.S. average. Chattanooga’s median home prices last month, $155,200, is one third less than the national average.
Mark Hite, a broker and team leader at Keller Williams Realty, said the Great Recession curbed new home starts for years and now that buyers are flocking back into the market, inventories are at the lowest level in a decade.
“Home sales are up 12 percent in our market so far this year so the inventory of homes available is down and that pushes up prices,” Hite said. “It’s definitely a sellers’ market in most areas of town.”
Nationwide this spring, the median existing single-family home price increased in 93 percent of measured markets with the highest prices in California and Hawaii and the cheapest homes sold in cities in Maryland, Ohio, and Illinois.
Although mortgage rates have edged up in each of the past three weeks, the average 30-year mortgage rate has remained under 4 percent and 15-year mortgages last week averaged just 3.13 percent, according to mortgage giant Freddie Mac.
But as rents have increased and more millennials and other home buyers enter the market, prices are rising much faster than income or wages.
“With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering home ownership – especially in higher-priced markets,” said Lawrence Yun, chief economist for the National Association of Realtors.”The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth. In the meantime, inequality is growing in America because the downward trend in the home ownership rate means these equity gains are going to fewer households.”
Nonetheless, Close said most of those priced out of one home sale are staying in the market and looking for another home – often with even more urgency.
“You may lose that first house, but that pushes you into the next house quicker,” he said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340