On Monday, Realtor Ellen Eddy began listing a house in East Ridge with a sales price of $136,000.
By 5 p.m. Tuesday, she had received over 40 purchase offers for the residence, many of them well above the list price.
"People were coming out of the woodwork to look at the property as soon as it was on the market," said Eddy, an agent for Keller Williams since 2014. "It looked like we were having an open house with a mass of people. It was crazy, but there is just so much demand for houses these days. I've never seen a market like this before."
While the pandemic has limited the number of people listing their homes for sale in the Chattanooga region, homebuyers are still flocking to purchase houses in Chattanooga, encouraged by low mortgage rates and Chattanooga's appeal to relocating workers, retirees and outdoor enthusiasts. As a result, single-family houses in Chattanooga are selling at the quickest pace on record.
The typical home sold in Chattanooga last month in 39 days, or 36% quicker than a year ago and three times faster than houses sold a decade ago.
"Buyers are having to make purchase offers, in many instances, before they have much time to think about it, and unfortunately, I don't think we have a healthy market at this point," said Jay Robinson, a 33-year real estate veteran with Keller Williams Realty who is Chattanooga's top-selling agent. "Just like anything in life, I'm a big believer that balance is a good thing, and we're in a real unbalanced market right now."
Despite the frigid weather in February, Chattanooga's housing market remained red hot last month, with sales up nearly 10% and the median home sales price jumping another 10.2% in the past year to hit a record high of $237,443, according to data from the Greater Chattanooga Realtors.
"Although some persons were hard hit by the pandemic, many people have ended up with more money because they are not going out as much or taking vacation trips, and since they are spending more time at home, they want to upgrade their house or renters want to buy a bigger house," said Mark Hite, one of Chattanooga's top-selling real estate agents with Real Estate Partners in Chattanooga.
While sales continue to grow, the number of homes coming on the market fell in the past year due to fears about the pandemic, foreclosure forbearance and concerns by sellers about whether they will be able to buy the right replacement house if they sell in the current market.
This week, the number of homes on the market shrank to 694 houses, including just over 400 houses in Hamilton County. That was down 68% from the number of listings a year earlier and only about 10% of the number of homes that were on the market during the Great Recession
"I've been doing this for 24 years, and I've never seen the inventory of homes on the market this low," said Robert Backer, a Realtor with Coldwell Banker Pryor Realty who is president of the Greater Chattanooga Realtors' association. "We should probably have three times as many homes on the market given the demand right now."
By the numbers
> 893 - Homes for sale, down 63% from a year ago
> 785 - Number of homes sold in February, up 9.8% from a year ago
> 39 - Average days to sell single-family houses, down 36% from a year ago
> 1,042 - Pending sales in February, up 18.3% from a year ago
> 2,196 - Number of licensed Realtors in the Chattanooga area, up 1.5% from a year ago
> $237,443 - Median sales price of homes in Chattanooga, up 10.2% from a year ago
Source: Greater Chattanooga Realtors
In the past 12 months, the number of new home listings in Chattanooga was down 6.3% while home sales were up 8%. That combined to shrink the housing inventory and drive up home prices, Hite said.
The local market has flipped from a decade ago when more than 7,000 homes were listed for sale in the Chattanooga area.
"Our inventory is down 90% from 11 years ago," Hite said. "Nationally, there are 7 million fewer homes available for the resale market than there were a decade ago."
With lower interest rates and rising home appreciation, investor interest in buying homes has risen, and more single-family homes are being bought by investors and used as rental homes or for Airbnb and other short-term vacation homes.
Greater Chattanooga Realtors has nearly 2,200 licensed Realtors in the Chattanooga area, or three times as many real estate agents as the number of current home listings. With so many Realtors representing hundreds of prospective homebuyers in the market at any time, single-family homes with the right price under $400,000 are often selling within a few days of going on the market.
Hite said a four-bedroom, three-bath house he listed last week on Olde Mill Lane in Hixson for $249,000 had eight offers within the first couple of days.
Home sales quicken
The average selling time for single-family residential homes has dropped to an all-time low. Last month, the average home sold in 39 days in Chattanooga after sales in the previous decade fell by nearly two thirds.
Year - Days on the market
2010 - 126
2011 - 121
2012 - 114
2013 - 106
2014 - 109
2015 - 80
2016 - 65
2017 - 59
2018 - 50
2019 - 48
2020 - 43
Source: Greater Chattanooga Realtors
"It went on the market on Friday, and we had a contract to sell the house by Saturday afternoon," he said.
In such a market, many homes are selling well above list price and in some instances higher than the appraised values that are based upon historic home prices in the area from recent years.
"I jokingly tell my agents whatever the market analysis tells you, add about $20,000 to the price," Backer said. "The computer models just aren't keeping pace with this market. Appraisers are not always keeping up with the market."
Robinson said Chattanooga has been more insulated from the economic ills in other parts of the country due to its diverse economy and Tennessee shutting down fewer businesses during the pandemic than some other states. Chattanooga also is an attractive market for investors because its home prices, despite the recent increases, are still nearly 30% below the U.S. average.
Contact Dave Flessner at email@example.com or at 423-757-6340.
Chattanooga home sales
The number of single-family homes sold by Chattanooga Realtors rose nearly 8.4% last year to a record high, nearly double the sales of a decade earlier. So far in 2021, home sales are up 5.9% to 1,525 homes.
2020 - 11,680
2019 - 10,776
2018 - 10,042
2017 - 9,827
2016 - 9,672
2015 - 8,717
2014 - 7,827
2013 - 7,634
2012 - 7,038
2011 - 5,996
2010 - 5,778
2009 - 5,596
2008 - 5,990
2007 - 7,024
2006 - 7,870
Source: Greater Chattanooga Realtors association multiple listing service