By Andy Hodes, Realtor, Andy Hodes & The Scenic City Team
Recent statistics from the Chattanooga Multiple Listing Service (MLS) continues to show weaker sales and median home values clearly pointing to the fact that we continue to operate in a “buyer’s market” where pricing and terms are much more favorable to buyers than sellers. A buyer’s market is typically defined as having more than seven months of inventory available.
In February 468 housing units closed, a 15.2% decline from the 552 units that closed in February 2007. In the last six months (September 2007 thru February 2008) we averaged 481 closed units a month, a 21% decline from the average of 609 monthly closed units for all of 2007. It was reported that from January 2007 the median home price (the amount at which half the homes sold for more and half sold for less) slipped from $135,700 to $127,000 at the end of January 2008, a 6.4% decrease. These statistics were reported by the Chattanooga MLS.
In Chattanooga affordability is key with our median price of $127,000 being significantly less than the national median home price of $201,100, as reported by the National Association of Realtors.
Even though our median values slipped during 2007, my primary concern is the imbalance of supply and demand. At the end of February the MLS showed 5,593 active listings on the MLS. Using 481 as the average number of closed transactions for the last six months, that’s 11.6 months of housing inventory if no new homes were listed for sale. In February 2008, the MLS reported that over 1,100 homes were newly listed for sale. This imbalance will not correct in the near future even if buyer transactions return to 2006 and early 2007 levels.
Homes that sold in February 2008 sold for 96.58% of the list price and were on the market for an average of 122 days. Homes that haven’t sold have been on the market for an average of 156 days. With homes selling for nearly 97% of the list price, it clearly shows that only those homes priced correctly have a chance of selling; bargains are found in the list price. In the last six months only 8% of homes listed have sold in any given month - 92% do not sell. Motivated sellers need to take a hard look at what price it will take to sell in this market.
On the other hand this market is an ideal opportunity for buyers with lower prices, great interest rates and plenty of homes available. Don’t wait - interest rates are expected to increase which will make your purchase more expensive every month you pay your mortgage. As well we don’t know when the real estate market will shift with prices increasing a lot faster than the have fallen in recent months.
So, the bottom line for Sellers is to focus on pricing and making sure that your home is in tip top condition. Buyers need to move forward to take advantage of the great opportunities that are available right now.
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