A TALE OF TWO MARKETS

As a realtor, I noticed a definitive shift in home buyer behavior at the end of May/beginning of June when the sharp increase in interest rates started. As the year progressed, some buyers were priced out of the market but all lost purchase power with mortgages becoming more expensive. The shift in May/June was mostly due to buyers being nervous that the housing market was crashing. As we have seen over the remaining 7 months, that has not been the case. The market is slower but not slow. 

From January to June, the average days on market was 14 (median of 3 days). From July to December, the average days on market was 20 days (median of 7 days). Overall, the market is much healthier now in terms of decision making. Buyers have time to think about a property, make an offer and mostly retaining appraisal and inspection contingencies. On the flip side, sellers are still selling between 2-4 weeks with the occasional multiple offers. Considering selling? We are here to help!

What should you offer??

A comparison of list price to sale price for Hardin Valley homes built in 2020 and before revealed a ratio of 99.1%. Using the 37932 median price of $527,000, a .9% price decrease is $4,743 under the list price, roughly $5,000 off. 

The newer the house is to the market, the more likely you are to pay list price. As houses get closer to 30 days on the market, sellers become more flexible on pricing. If a house receives multiple offers, offering above list price is still a must.  

Trends Noted

As displayed in the infographic above, Hardin Valley is seeing an increasing percentage of homes being sold in the $600,000-$700,000 (15%) and $700,000 and Above (13.3%), which were only 3% and 4.7% respectively in 2021. This is equally due to homes appreciating at an unprecedented pace and newer, more expensive homes/subdivisions building out this demographic.  

Also, most of the builders in 37932 have transitioned back to build to order from spec homes. A spec home (short for speculation) is when a builder begins construction and chooses finishes prior to having a contract to purchase. Several builders have finished new construction homes that are sitting vacant and have began offering incentives to move the properties. It never hurts to see if you can get them to come down on price on a finished home.

Crystal Ball

The cool down brought on by increased interest rates is upon us! Nationally, other states are seeing declines in home values. Locally, homes are holding their value but we are no longer seeing tens of thousands in appreciation each year. While you may have noticed several price reductions on listed homes this fall and winter, this is mostly due to overpricing that was never supported by a CMA (comparable market analysis); do not be concerned. 

In 2023, we should expect to see modest appreciation ($5,000-$10,000) in home values. At the start of the new year, there are 3,288 houses on the market (see them all here.) The greater Knoxville area needs around 4,500 homes listed to be a balanced market so sellers still have an advantage. Though decreased, out of state buyers continue to choose Knoxville because it is the largest conservative city in Tennessee. Online forums praise Hardin Valley for their schools and nice, new subdivisions. 

Overall, 2023 is a safe and solid year to buy or sell a home. Interest rates are in the 6% range. While higher than they have been over the past couple of years, rates are still historically lower to normal. If you are waiting for 2-3% interest rates to return, remember that they came following The Great Recession and COVID. If we ever get lower rates like that again, it will be after another calamity. In other words, don’t sit around and wait for it unless you are very happy with your current housing. If your home is too small, you need to downsize, or you income justifies fancy new digs, it’s our opinion that you can move forward with confidence on a home purchase or a listing. Happy New Year Hardin Valley and remember to be excellent to each other in 2023! – Adam Wilson