The relative shortage of available residential homes for sale has driven home prices to record highs in the Greater Chattanooga region.
As I reported in this space last week, the average home sold for $202,894 in January – an all-time record high. This price represented an 11.2 percent increase over January 2016 and was a sharp contrast to December 2016, when homes closed at an average price of $189,067.
To give perspective to the amount of change in home prices over the last few years, one should go back to when the Great Recession dropped the average home price to $154,065 in 2010. The rebounding of home prices began in 2011 with a modest increase of 1.5 percent, and then 2012 saw the average price go up to $164,967 – a 5.5 percent increase.
The average price grew to $168,753 in 2013 and then to $177,555 in 2014. The following year saw the average price grow 8.4 percent and hit $182,149. In 2016, the yearly average price jumped another 6.5 percent to close out at $193,752.
The magnitude of the change can best be gauged when one compares this past January’s high price of $202,894 to the low point of $154,065 in 2010. This increase represents a 31.7 percent rise in the average price of a home sold in the region. Wage growth during this period has not matched this jump, so at some point in the future, affordability will begin to negatively impact home sales.
The rise in home prices is the direct result of five years of increasing sales and a consistently declining inventory of homes available for sale. Again, the contrast is sharp if one compares 2010 to January 2017. There was a total of 6,214 homes available for sale in 2010 compared to 3,072 available in 2017 – a 50 percent decrease in available inventory.
While all of this information is music to the ears of home owners, the question of how long this trend can continue looms. If you’re considering selling a property within the next few years, NOW is the time to contact an experienced Realtor. Take advantage of these record prices while interest rates are still relatively low and buyer confidence and demand remains strong.
The Greater Chattanooga Association of Realtors is the voice of real estate in Greater Chattanooga. The Association is a regional organization with more than 1,700 members and is one of more than 1,400 local boards and associations of Realtors nationwide that comprise the National Association of Realtors.
GCAR services Hamilton and Sequatchie counties in southeast Tennessee, and Catoosa, Dade and Walker counties in northwest Georgia. Go to www.GCAR.net for more information.