Hamilton Herald Masthead Hamilton Herald

Editorial


Front Page - Friday, January 15, 2021

Low inventory demands top dollar


Buyers and sellers both struggle with reality of current market



If there is one thing that wasn’t hit hard by the pandemic, it’s the housing market.

If anything COVID-19 only caused more people from larger urban areas to seek out Chattanooga as a destination, turning an already hot market into one that is almost downright cutthroat.

Greater Chattanooga Realtors reports inventory shrank to 1,399 units in October – half of what was available a year before.

And while there is a shortage of inventory in almost all price ranges, affordable housing is at a low as prices continue to gain traction, with the median sales price up nearly 20% from last year, to $248,300.

“Since 2015 we’ve gone from $180,00 to almost $250,000, so it’s gone up a huge amount in five years,” says Robert Backer, president of GCR. “So anything $150,000-$200,000 is extremely hard to find. Anything that’s any quality, and they’re going. Our days on market has dropped tremendously because the minute anything good comes on the market, it is snatched up.”

Adding to the inventory issues, mortgage rates are at record lows, which can help offset the mortgage payment increases caused by the rise in home prices caused by buyer demand but does nothing to help the inventory.

And it is a trend Backer doesn’t see easing up in 2021.

“With the interest rates remaining historically low, and all the forecasters have said that our interest rates are going to remain there, it’s going to drive people to still want, but it’s going to also drive the market dollars up,” Backer says. “One of the reasons why inventory is so low is that we’re dealing with a Catch-22, people who want to sell are afraid to sell because they have no place to go. So, if they sell they’re going to make money, but then they really have no place to go.”

One solution is, of course, new construction. But costs on materials are skyrocketing, and builds aren’t happening as quickly as they are needed.

“The obvious, quickest way to build inventory is for builders to build more houses,” Backer adds. “I work with a couple of different builders and it costs them $20,000 to $30,000 more in lumber alone to build the same house as it did at the beginning of the pandemic. So, again, that creates a problem of affordability because they’ve got to add that $30,000 on top of the price.”

Chattanooga’s market is starting from such a strong place in part because it had been somewhat insulated from the rest of the world’s economy, Backer says, especially during the last downturn in 2008.

“We had Volkswagen coming in right then, and then Amazon, and so we had that to bring us through,” he says. “And then of course after that, we were a great stop for startup companies because of our internet speed and our locale being so close to Atlanta and Nashville.”

For those who are looking right now, a good Realtor with boots on the ground in Chattanooga every single day is key, especially for people looking to buy in Chattanooga from out of the area.

“And when something comes available, you better be ready to jump on it,” Backer points out. “Don’t wait until the weekend. Try to be the first one in.”

If you already own a house, Backer suggests trying to get qualified without the contingency of selling first, because contingent offers are just not making it nowadays.

“There’s so many people out there ready, willing and able to purchase without selling that they don’t need to wait on a contingent offer,” he says. “Have your finances in order, be pre-approved so you know what you can buy, have your money ready, and be ready to jump in.”