Despite higher mortgage rates and a slowdown in home sales across the country, Chattanooga real estate agents continued to sell more homes last month and at a record high, with the median value jumping more than 21% over the past year to $315,000. .
The number of homes sold through the Greater Chattanooga Realtors Association rose 5.5% year-over-year, while pending sales also rose 4.5% year-over-year, even with record high prices. The average Chattanooga home was on the market for 14 days in May, or less than a third of the time it took for homes to sell just a couple of years ago, and only a fraction of the time most homes were on the market ten years ago.
“I think what we saw in May is one of the last full seller markets that we have been in for the past few years and the last panic run for the door to shut it down before interest rates get even higher.” Jay Robinson said. , head of the Robinson team at Keller Williams Realty and the top selling residential real estate agent in Chattanooga last year. “I think across the board we will continue to see the market slow down across all price ranges.”
In phone interviews Friday, Robinson and other real estate professionals said they expect the Chattanooga market to be better than the nation as a whole and homes continue to sell, but perhaps a little slower than the record levels of the past two years. Price increases may also slow as mortgage rates increase borrowing costs and limit what many homebuyers can afford.
“We had a couple of months of slower sales in March and April and saw a slight rebound in May,” said Mark Hite, who leads one of the city’s largest home sales teams at Real Estate Partners in Chattanooga. “It’s like when you throw a ball and it bounces first. But it doesn’t bounce back as high with each successive dip, and I expect sales to ease off in the coming months and rising interest rates put pressure on affordability for buyers. “
Hite said he also expects house prices to stabilize or grow at a much slower pace in the near future.
“But if homes are priced right, they will still sell almost immediately, and I think our market will remain relatively vibrant even if rates go up this year,” Hite said.
This week, average US long-term mortgage rates posted their biggest weekly jump in 35 years as the Federal Reserve raised its key rate by three-quarters of a point in an attempt to tame high inflation. Mortgage buyer Freddie Mac said on Thursday that the 30-year rate rose from 5.23% last week to 5.78% this week, the highest since November 2008 during the housing crisis.
Home sales in May in numbers
– $315,000 – The average selling price is up 21.2% year-over-year.
14 is the number of days a typical home was on the market before selling, down 36.4% from a year ago.
— 1138 — Chattanooga area home sales closed, up 5.5% from a year ago.
– 1,162 pending home sales, up 4.5% from a year ago.
Source: Greater Chattanooga Realtor Multiple Listing Service.
The Fed’s rate hike on Wednesday was the biggest since 1994.
The sharp jump in rates, along with a sharp rise in home prices, is pushing potential home buyers out of the market. Mortgage applications are down more than 15% year-over-year, and refinances are down more than 70%, according to the Mortgage Bankers Association.
“With mortgage rates well above 5%, refinancing activity is still more than 70% lower than last year,” Joel Kahn, associate vice president of economic and industry forecasting, said in a report earlier this week. .
On Tuesday, online real estate broker Redfin, under pressure from a cooling housing market, said it was laying off 8% of its workers. Another real estate firm, Compass, said this week it was laying off 10% of its employees “due to clear signs of a slowdown in economic growth,” a spokesman said in a statement. At the end of 2021, Compass employed about 4,800 people.
But Chattanooga’s housing market appears to be more resilient.
Chattanooga real estate agent Linda Brock, one of the top-selling luxury homes in Chattanooga, said both the number of homes and home sales rose in Chattanooga this spring.
“We’ve become so spoiled that if a property doesn’t rent out within the first week, we wonder what happened,” Brock said.
In 2019, prior to the COVID-19 pandemic, there were 49 home sales in Chattanooga worth over $1 million.
“To date (just under six months), 80 properties have already closed for over a million dollars this year, with 58 under review,” Brock said. “Within 72 hours, in the last 10 days or two weeks, I have signed contracts worth between $1.5 million and $2.5 million, each bought by Chattanoogan residents who own houses here, but they do NOT need to sell them. to buy. got up.”
Hite said that as rates rise, agents and sellers are dusting off old scenarios, including forcing buyers to take out FHA loans when possible or using adjustable-rate mortgages for lower starting rates. If there is a slowdown in the future, rates are likely to fall again.
Even with mortgage rates rising this year, mortgages are still well below past peaks, Hite said. The strong market also contributed to an increase in new housing developments in Chattanooga.
And despite a local jump in house prices, the average Chattanooga home price in May was still 29.5% below the $447,000 median list price for all homes nationwide, according to the National Association of Realtors.