LoveTNLife.com 11/22/2022 -- With the Fed raising rates and a market that was too hot even for a game of hot potato, many assets have eased back in parallel with the sell of in global equities. But real estate is a dynamic complex market. Just as in equities, you have some assets holding up well better than others. Hot markets like Las Vegas, Los Angeles, South Florida and others are obviously pulling back more than others. Tennessee stands out as an interesting market, listings prices are holding steady. The number of listings increased from February until July and then has held steady. The sold to list ratio is dropping, and homes are staying on the market longer - so TN is not unaffected by the market. However, compared to other markets, pricing is holding up strong, with only a slight downtick in the Listings Prices, according to Knoxville Area Association of REALTORS.
See the data:
|Oct-22||Oct-21||% Chg||2022 YTD||2021 YTD||% Chg|
|Average List Price||$557,460||$454,126||22.75||$439,111||$361,428||21.49|
|Median List Price||$403,000||$309,900||30.04||$339,000||$279,900||21.11|
|Average Sale Price||$395,632||$352,168||12.34||$386,648||$328,360||17.75|
|Median Sale Price||$315,000||$285,000||10.53||$320,000||$270,000||18.52|
Clearly, every market is different. Zero Hedge reported as early as August 2022 that prices in Boise Idaho had dropped:
"They priced too high because their neighbor's home sold for an exorbitant price a few months ago, and expected to receive multiple offers the first weekend because they heard stories about that happening."
As the winds in the pandemic boomtown shifted this summer, she advised sellers to "price their home correctly" to market conditions and understand things are slowing.
The common denominator in all of these cities is that an influx of demand during the early days of the pandemic sent home prices quite literally 'through the roof' because city-dwellers figured out they could remote work to low-cost areas.
Now the boom is ending in the frothiest of markets because the Federal Reserve's most aggressive interest rate hikes in years to quell the highest inflation in four decades has sent mortgage rates north of 5% in such a short period, sparking what we've been warning about for months of an emerging affordability crisis.
The good thing about real estate, you can't manufacture it. Regardless of how much money the Fed prints, land is land. Fed policy affects interest rates which impacts mortgages so real estate is no simple hedge, but it is a physical asset that has limited supply.
Whatever the factors, whether it's demographics, the pandemic driving people to red states (so called "Red Shift") or other factors - there clearly are some states still seeing net positive inflows (other states include Florida, Texas, North Carolina, and South Carolina).
For more insights on Real Estate and Tennessee, checkout Love TN Life.