On the cusp of the prime home buying season, the region is dealing with record low inventory, according to the Northeast Tennessee Association of Realtors.
In a press release, the organization said the region’s active inventory of 761 listings is about 25% lower compared to 2021, which was itself a tight year. The region had less than a month of inventory at the end of February, and some local markets had just over half a month left.
Home sales ended up being flat in February, NETAR reported. There were 566 closings, which is down 1.6% compared to last year. Meanwhile, the average sales price, $255,599, is up 17.8%. the organization said.
On average, homes that sold in February spent 59 days on the market, which is up three days from the January average.
“So far, the housing market has held up, and consumers have been resilient despite the fluid economic conditions created by the crisis in Ukraine, high inflation reports and higher fuel prices,” NETAR President Rick Chantry said in the release.
“Mortgage rates have declined for two weeks in a row, giving buyers a little more leverage against higher prices.”
According to NETAR data analyst Don Fenley, a persistent lack of inventory is driving prices higher.
Fenley wrote in a blog post that February’s pending sales have reversed a five-month decline and new listings have increased, but pending sales continue to outnumber new listings.
“For the first time, the region had less than a month’s inventory on the last day of January,” Fenley wrote.
“Five to six months’ inventory is the benchmark for balanced real estate market conditions. The last time the region had balanced market conditions was in the first quarter of 2018.”
Builders are trying to construct new homes to fill those gaps, Fenley said, but supply chain issues and increased costs are slowing that process.
If conditions stabilize, the local market could return to “moderately balanced conditions” by 2024.
How are the prospects for young homebuyers?
Over the last few decades, homebuyers under age 25 have chiseled out a toehold in the housing market. According to a report by the Inspection Support Network, 6.9% of new Johnson City homebuyers in 2020 were under 25.
That’s based on an analysis of home purchase loans authorized in the Johnson City metro area. It’s a slightly higher share than the United States at large.
About 4.6% of home purchase loans in the U.S. went to adults under 25 in 2020. Most originate from homebuyers in the 25-34 age range.
Young adults in Johnson City received a total of 148 home purchase loans in 2020, with the median loan amount being $115,000.
The median “loan-to-value ratio” for homebuyers under the age of 25 in Johnson City was 97%. That ratio measures the percentage of the home value covered by the loan.
