Market Temperature is Relative
Chattanooga is a very desirable mid-size city that buyers from all over the country are considering as their relocation destination. This increase in buyers has shifted our market to the point that any day that ends in “y” is a good day to list a home. Although the housing market is still expected to favor sellers, we may be at a tipping point. Prices have risen so dramatically that buyers appear to be backing off, and homes sales seem to have slowed. After two years of record-setting activity, we are seeing signs that nationally the housing market might be cooling. High home prices and a surge in mortgage interest rates are slowing buyer activity, with home sales declining for the third consecutive month under the weight of soaring homeownership costs.
Even with slowing sales, we are still seeing bidding wars and cash offers over-asking price. These will likely continue, especially for valuable properties in desirable locations. What we are experiencing now is probably a softening of the housing market. Days on the market for properties are increasing, the amount of price cuts (or price improvements) is going up, and properties are sitting for a bit longer in general- especially if they aren’t the best of the best. All of this is thanks to a slight decrease in demand and a slight increase in inventory.
Since the 2008 housing crisis, house building has not kept up with demand, but there is currently more inventory on market than a few months ago but it’s still not enough for the average loan buyer.
So what happens now?
Annual home value growth continued to accelerate through the spring of this year, but will continue to gradually slow through January of 2023. By the end of January 2023, the average home value is expected to exceed $380,000. This is due to continuous tight market conditions and the demand for homes sitting well about the supply. However, more than 6.2 million homes are expected to still sell in 2022.