If you, your friends or family have considered buying or selling a property in the last 12 months, you’re aware that 2022 was a turbulent year for the housing market. Inflation, soaring interest rates and elevated sales prices combined to cause a slowdown nationwide.
This slowing market harmed housing affordability. Affordability challenges have continued to limit national housing market activity, with pending home sales and existing-home sales falling 37.8% and 35.4% year-to-year, respectively, the National Association of Realtors reports.
Higher mortgage rates also are affecting prospective sellers, many of whom have locked in historically low rates and have chosen to wait until market conditions improve before selling their home.
So how does this affect us? Economists predict sales will continue to slow somewhat but expect some welcome relief for prospective buyers in the form of softening housing prices in many markets over the next 12 months. Even more welcomed news is that these prices are expected to drop further in areas where the cost of living is higher.
National inventory shortages will likely keep prices from dropping too much, as buyer demand continues to outpace supply, which remains limited at 3.3 months, NAR reports.
Even if prices fall, many prospective buyers will find it difficult to afford a home in 2023, as higher rates have diminished purchasing power, adding hundreds of dollars to monthly mortgage payments.
Here in the Greater Chattanooga area, new listings decreased 20.3% to 693. Pending sales were down 20.3% to 661. Inventory levels grew 57.0% to 1,780 units.
Prices continued to gain traction. The Median Sales Price increased 5.3% to $300,000. Days on market were up 47.6% to 31 days. Months supply of inventory was up 90.0% to 1.9 months.
There was another bit of interesting news this past week. According to a forecast by the financial services website Bankrate, the interest rate for a 30-year fixed-rate mortgage in the U.S. is expected to drop to 5.25% by the end of this year, which would be 1.49 percentage points lower than the current rate, and nearly two percentage points lower than 2022’s peak rate of 7.12%.
So inventory is increasing, and prices may be starting to ease. These factors are just a few of the reasons why it is absolutely critical to utilize the expertise of a Realtor. We are bound by our Code of Ethics to make sure that our clients’ needs are met responsibly. Realtors work tirelessly for their clients and provide expert knowledge. That’s Who We R.
Founded in 1912, Greater Chattanooga Realtors is the voice for real estate in Greater Chattanooga. A regional organization with more than 2,700 members, Greater Chattanooga Realtors serves Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade, and Walker counties in northwest Georgia. The Association is one of approximately 1,100 local associations/boards of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors owns and operates a Multiple Listing Service (MLS), which is one of approximately 600 MLSs in the country and services more than 3,000 MLS users. Local Association membership consists of Realtors servicing the Greater Chattanooga area and specializing in a variety of disciplines – appraisal, commercial, industrial, land, multifamily, property management and residential. Working alongside Realtors are our Affiliate members, who represent related industries in sympathy with the objectives of the Association. Our Affiliate members include mortgage lenders, home inspectors, title and closing services, pest inspection and control and insurance.