Although low supply and tight credit standards are still hurdles to recovery, prices continue to rise in most local areas.
Job growth has strengthened lately, but wage growth has not kept pace with the price gains we’ve seen. Buoyed by stable and continuously lower interest rates, affordability is still historically high yet below its all-time peak.
Rising inventory levels will lead to more choices for qualified buyers, but as the summer reaches toward fall, the prospect of more homes coming on the market begins to wane.
New Listings in Greater Chattanooga decreased 8.9 percent to 1,115. However, compared to July 2013, we are up 1.8 percent year-to-date. And while Pending Sales dropped significantly this month by 30.1 percent to 434, year-to-date numbers reflect only a 6.7 percent decrease in Pending Sales.
Days on Market was down 0.8 percent to 118 days, and sellers are pleased that their homes are spending less time on the market. Another positive for sellers is that prices forged onward in July. In Greater Chattanooga, the Median Sales Price increased 1.6 percent to $155,000. And while the Average Sales Price decreased by 1.6 percent since last month, we remain up for the year, with a 5.3 percent increase to $178,584 since July 2013.
We continue to struggle with inventory, which shrank again this month by 4.5 percent to 5,321 units. One positive about a shrinking inventory is that in both Tennessee and Georgia, there are significantly fewer foreclosures in recent years. Some argue that the decline in foreclosures is a result of banks taking longer to process foreclosures. Others attribute the decline to a stronger housing market and a more qualified buying population. Regardless of the reason, fewer foreclosures means that we no longer can rely on foreclosures to add significant new inventory to the market.
Strict lending standards also attribute to the lagging inventory. At the federal level, Realtors and Home Builders are in conversations with regulators that lending requirements are stricter than needed. This is an ongoing conversation and we are working together to do what is needed to loosen these requirements in an effort to increase inventory levels.
The U.S. Department of Commerce reported that GDP grew at a 4.0 percent annual rate in the second quarter, and that the first quarter was less bad than previously thought. Consumer spending in the first quarter rose 2.5 percent, which is encouragingly in tandem with savings rates. Increased consumer spending means more demand for goods and labor; increased savings rates means more resources for downpayments. With rates still low, rents still rising and private job growth accelerating, it’s becoming more and more difficult to side with the housing perma-bears.
The Greater Chattanooga Association of Realtors, a regional organization with more than 1,400 members, is one of more than 1,800 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. The Greater Chattanooga Association of Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. For more information, visit www.gcar.net.