While we are still FIRMLY in a sellers market things are rapidly shifting. Less than 60 days ago we had 650 homes on the market. As you can see from the chart above we've seen a nearly 33% increase in homes actively listed. There's always a summer jump but this is more than just a seasonal bump. While that is an unusually high rate of increase it is important to remember, as the chart above highlights, a balanced market would have approximately 2500 homes listed. We have a long way to go before we achieve balance and interest rates are going to be a factor in the rate at which the market shifts.
With interest rates in the low to mid 5% range, an economic slow down occurring and inflation running amuck, there is virtually NO ONE predicting a decline in interest rates in the near to midterm.
That being said, we are still seeing very high demand for homes in Chattanooga with very little change to what sellers can expect. It looks like the housing market nationally will slow with the rate of equity gains definitely decreasing this year over last. The big caveat for those in TN, Texas, and Florida is the mass influx of new residents which is the X factor for us locally. As long as migration continues at the rate it has been and interest rates stay below 6% we should be able to expect our equity gains, while moderating a bit, to still be very respectable.
So....Should you buy/list now or wait? Are you worried that lower rates are right around the corner and you should wait for them to drop? Unfortunately it looks like 5%+ interest rates are the new normal for the foreseeable future. I don't hear anyone saying interest rates will return to below 5%. If you wait to buy/sell in the future you are likely to get the same rate OR higher. The silver lining is, if the rates do go down after you buy, you could refinance and take advantage of those lower rates. The one thing I am virtually certain of is our local housing costs will be higher in 5 years than they are today, making now the time to buy and sell.
We still believe it's an amazing time to both buy and sell a home but we do so see potential headwinds on the horizon.
Until next time..
David Henson & the Chattanooga Roots Property Team
Keller Williams Greater Downtown Realty