Local home prices rise, but below U.S. average
Chattanooga’s prices are up but remain more affordable than most cities
“I’ve never seen the inventory of homes as tight as it is today and we’re often seeing multiple offers for properties — sometimes even above list price.” KATHY TUCKER, A REALTOR FOR THE PAST 42 YEARS
Buying a house in Chattanooga is getting more expensive and difficult for many moderate-income families, but the local market remains a bargain compared with much of America, according to new figures compiled by the National Association of Realtors.
The typical house sold by a Chattanooga Realtor this summer was priced 5.5 percent more than a year earlier as home prices continued to grow nearly twice as fast as the 3 percent average
gain in worker wages.
But housing prices in Chattanooga still remained nearly 30 percent below the U.S. average and below most other Mid-south markets, helping to keep the affordability of homes in Chattanooga better than most of the country.
“I’ve never seen the inventory of homes as tight as it is today and we’re often seeing multiple offers for properties — sometimes even above list price,” said Kathy Tucker, a Realtor for the past 42 years who serves as managing broker for CryeLeike Realtors in Hixson and president of the Tennessee Realtors association. “But Chattanooga is still an extremely affordable market compared to most of the country. People moving here are often pleasantly surprised by our prices.”
In the third quarter, the median sales price of homes sold in the Chattanooga area rose to $187,900, according to the Greater Chattanooga Realtors Multiple Listing Service. Chattanooga home prices rose 5.5 percent in the past year, outstripping the nationwide average gain of 4.8 percent in the past 12 months.
The typical Chattanooga home was on the market in September for only 42 days before being sold — 25 percent less time than a year earlier and less than a third as long as the average sales time during and after the Great Recession.
The tight inventory, combined with an uptick this summer in mortgage rates, cut the number of closed home sales in September by 5 percent below a year ago, according to the Greater Chattanooga Realtors Multiple Listing Service.
“Although residential real estate should continue along a mostly positive line for the rest of the year, rising prices and interest rates coupled with salary stagnation and a generational trend toward home purchase delay or even disinterest could create an environment of declining sales,” Geoff Ramsey, president of the Greater Chattanooga Realtors, warned in a report on the latest MLS sales figures.
Nonetheless, the typical Chattanooga home was still priced $79,000 less than the U.S. average and, even with lower median incomes in Chattanooga, the home affordability in Chattanooga was better than in most of the country, according to a new study by ATTOM Data Solutions, an online property database.
Nationwide, an average wage earner would need to spend 37 percent of his or her income to buy a median-priced home in the third quarter, well above the historic average of 34.1 percent. But ATTOM calculates that in Chattanooga, the average wage earner would need to spend only 27.5 percent of his or her income to buy the typical home.
“Rising mortgage rates have pushed home prices to the least affordable level we’ve seen in 10 years, both nationally and at the local level,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Close to one-third of the U.S. population now lives in counties where buying a median-priced home requires at least $100,000 in annual income.”
The National Association of Realtors said the most expensive housing markets this summer were on the West Coast, including San Jose, California where the median existing single-family price was $1,300,000; San Francisco at $989,000; Anaheim, California at $830,000; Honolulu at $818,600 and San Diego at $650,000.
In Tennessee, median home prices jumped 12.1 percent in the Nashville area in the past year to $262,600, or 28.6 percent above the median home price in Chattanooga.
“Aspiring middle-class home buyers continue to face affordability issues, as buyers are increasingly being priced out in the West while the much of the rest of the country struggles, too,” said Lawrence Yun, chief economist for the National Association of Realtors. “The market desperately needs homebuilders to begin constructing more moderately priced single-family home and condominiums to help satisfy demand and mitigate rapid price growth.”
Yun said housing inventories are more than adequate for upper-priced homes, but he said the supply of moderate and lower priced homes is “insufficient” for today’s market demand.
At the end of the third quarter, there were 1.88 million existing homes available for sale nationwide, including 2,917 homes in Chattanooga. The local Realtors MLS said the inventory of local homes on the market was down 12.2 percent from a year earlier.
“A strong economy and consistent job growth should be driving up home sales; however, would-be homebuyers are struggling to find a home they can afford,” said Yun. “As mortgage rates continue to rise, reaching the decade’s highest rates this quarter, an increase in the supply of affordable homes has become even more important to help temper price growth across the country.”
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340
“Chattanooga is still an extremely affordable market compared to most of the country. People moving here are often pleasantly surprised by our prices.” KATHY TUCKER