With Chattanooga home sales on pace to set another record high in 2021, local home prices last month jumped by 13.6% from a year ago to also reach a record high, according to new figures compiled by the Greater Chattanooga Realtors association.
The median price of homes sold by Chattanooga real estate agents in November rose to $280,000, or $33,600 more than the median price of homes sold a year earlier. Home prices, on average, have doubled in Chattanooga over the past eight years as a combination of lower mortgage rates, higher building costs and rents and more homebuyers have pushed up the value of residential properties.
"The economy is improving, unemployment is falling and the real estate market remains very strong," said Robert Backer, a real estate agent with Coldwell Banker Pryor Real Estate who is president of the Greater Chattanooga Realtors. "Although the market is not as frenetic as we saw earlier this year, buyer demand is still high and bolstered by attractive mortgage rates and a low supply of inventory."
Backer said "Chattanooga's secret is being discovered," especially during the coronavirus pandemic, as more people are relocating to Chattanooga to retire, work remotely or take advantage of the region's above-average job growth.
But even with double-digit price increases over the past two years during the pandemic, the typical home in Chattanooga is still priced more than 20% below the U.S. median, according to the National Association of Realtors.
By the numbers
— $280,000: Median home price in November, up 13.6% from a year earlier.— 18 days: Average time Chattanooga homes were for sale before being sold.— 1,094: Homes sold in November, bringing the year-to-date total in the first 11 months of 2021 to 11,554.Source: Greater Chattanooga Realtors multiple listing service
"We're still under the national average for our home prices, and I'm hoping by next spring we'll see more inventory on the market, and that should help sales at all levels," said Derek English, an affiliate broker with the Scout Realtor Group who will take over as president of the Greater Chattanooga Realtors group in January. "We still have room to grow."
The average house was on the market in Chattanooga 18 days before it was sold during November, or about half as long as a year earlier.
"The housing market hasn't slowed down all year, and it's looking like the same may be true for 2022," Backer said.
Housing economists expect the pace of rising home prices to moderate next year as inflation eases and mortgage rates likely head higher.
Lawrence Yun, the chief economist and senior vice president of research for the National Association of Realtors, expects annual median home prices will increase by 5.7%, inflation will rise 4% and the Federal Open Market Committee will continue to increase the federal funds rate, as signaled again Wednesday by Federal Reserve Chairman Jerome Powell.
"Overall, survey participants believe we'll see the housing market and broader economy normalize next year," Yun said. "Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve."
Yun forecasts the U.S.economy will grow at the typical historical pace of 2.5%, barring any major, widespread transmission of the omicron COVID-19 variant. He expects the 30-year fixed mortgage rate to increase to 3.5%.
Nationwide, the housing market performed better than it has in 15 years in 2021, with an estimated 6 million existing-home sales.
Chattanooga agents are expected to notch record-high home sales in 2021. Through the first 11 months of the year, Realtor-assisted home sales in Chattanooga were already within 126 home sales of the 2020 yearly total, which set a record high of 11,680 home sales last year.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.