Rising home valuesView
Home prices in Chattanooga grew nearly twice as fast as the nationwide average in the past year, buoyed by both an improving local economy and a shrinking inventory of homes that encouraged buyers to bid up prices.
The National Association of Realtors said Wednesday the median price of homes sold by Realtors in the Chattanooga area rose over the past year by 11.3 percent — or $16,000 for the typical home — to a median sales price of $157,200. The price gains in Chattanooga outpaced all other Mid-South cities.
Nathan Walldorf, a broker for Herman Walldorf Real Estate who is the 2015 president of the Greater Chattanooga Association of Realtors, said the higher median price reflects both the price appreciation of existing homes and the buying preference for higher-priced homes compared with a year ago.
"We had a lot fewer first-time homebuyers in the market compared with the growth in existing homeowners moving up or new people coming into the market, often from cities with higher average home prices," Walldorf said. "The price ranges being paid are definitely higher and we're seeing more demand now for higher-priced properties than we have seen in a long time."
Chattanooga home prices still averaged nearly 30 percent below the U.S. median at the end of last year even with the faster price appreciation during 2015, however.
Nathan Brown, a team leader for the Keller Williams office downtown, said homebuyers who move to Chattanooga from many other markets are often pleasantly surprised by the relatively lower prices of homes in the Scenic City. As more such buyers move to Chattanooga as retirees or relocating managers and workers, "more buyers are willing to pay higher prices and the luxury and higher-end markets are gaining more sales," Brown said.
"Right now with interest rates staying really low and the economy improving, you are having more people able to purchase higher-priced homes than what we saw in the past," he said.
The higher demand spurred by last year's record sales volume in Chattanooga forced more buyers to pay prices near or at the initial asking price of listed homes.
Last year, the number of homes that were listed by Realtors grew by 9.9 percent but Realtor-assisted sales jumped 11.4 percent to their highest level on record in Chattanooga. As a result, the typical home sold last year for 94.2 percent of its initial asking price, up from 92.7 percent the previous year, according to the multiple listing service owned by the Greater Chattanooga Association of Realtors.
"There were often more buyers than sellers in some markets so we saw buyers more times than not having to pay the full asking price," Walldorf said.
Chattanooga Realtors last year sold the typical home in 80 days, or 29 days quicker than in 2014.
Nationwide, the National Association of Realtors said single-family home prices rose in 81 percent of the 179 markets included in the NAR survey last year. Chattanooga's median price gains ranked among the top 10 percent of all cities, behind only nine Florida cities and eight other cities elsewhere in the country.
Lawrence Yun, NAR chief economist, said faster price growth reawakened in the final months of 2015 despite the pace of sales slowing from earlier in the year.
"Even with slightly cooling demand, the unshakable trend of inadequate supply in relation to the overall pool of prospective buyers inflicted upward pressure on home prices in several metro areas," he said.
The national median existing single-family home price in the fourth quarter was $222,700, up 6.9 percent from the fourth quarter of 2014.
"Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead," Yun said.
The most expensive housing markets in the fourth quarter were, in order, San Jose, Calif., where the median existing single-family price was $940,000; San Francisco, $781,600; Honolulu, $716,600; Anaheim-Santa Ana, Calif., $708,700; and San Diego, $546,800.
The five lowest-cost metro areas in the fourth quarter were Youngstown-Warren-Boardman, Ohio, $81,200; Cumberland, Md., $86,100; Rockford, Ill., $87,600; Decatur, Ill., $90,000; and Wichita Falls, Texas, $101,900.
Contact Dave Flessner at email@example.com or 423-757-6340.