One key question that’s top of mind for homebuyers in East Tennessee this year is: why is it so hard to find a house to buy? The truth is, we’re in the ultimate sellers’ market, so East Tennessee real estate is ultra-competitive for buyers right now. The number of buyers searching for a home in the Greater Knoxville area greatly outweighs how many homes are available for sale.

While low inventory in the East Tennessee housing market isn’t new, it’s a challenge that continues to grow over time. Here’s a look at two reasons why today’s housing supply is low and what that means for you.

1. New Home Construction Fell Behind for Several Years

The graph below shows new home construction for single-family homes over the past five decades, including the long-term average for housing units completed. Builders exceeded that average during the housing bubble (shown in red on the graph). The result was an oversupply of homes on the market, so home values declined. That was one of the factors that led to the housing crash back in 2008.

Since then, the level of new home construction has fallen off. For the last 13 straight years, builders haven’t been able to construct enough homes to meet the historical average (as illustrated in green on the graph). That underbuilding left us with a multi-year inventory deficit going into the pandemic.

2. The Pandemic’s Impact on the Housing Market

Then, when the pandemic hit, it fueled a renewed appreciation and focus on the meaning of home in East Tennessee. Having a safe space to live, work, school, and exercise became even more important for Americans throughout the country. So, as mortgage rates dropped to at or below 3%, buyers eagerly entered the market looking to capitalize on those low rates to secure a home that would fulfill their changing needs. At the same time, sellers in East Tennessee hesitated to put their houses on the market as concerns about the pandemic mounted.

The result? The number of homes available for sale in East Tennessee dropped even further. A recent article from realtor.com explains:

“Last month, the number of home listings dropped 26.8% compared with the same time a year earlier. This meant there were about 177,000 fewer homes listed in what’s already typically a slower month due to the holidays and colder weather. . . .”

What Does All of This Mean for You?

For a buyer in East Tennessee, low inventory can be a challenge. You want to find the home of your dreams, and you don’t want to settle. But what if there just aren’t that many homes to choose from?

There is some good news. Experts are projecting more homes will soon become available thanks to sellers re-entering the market. Danielle Hale, Chief Economist at realtor.com, shares this hope, but offers perspective:

“We expect that we’ll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we’re looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away.”

Basically, inventory in East Tennessee is still low, very low, HISTORICALLY LOW, even though more homes are coming. But you shouldn’t put your plans to buy a home on hold because you’re waiting for those additional houses to hit the market.  Instead, stick with your search and persevere through today’s low inventory. You can find your next home if you’re patient and focused.

Remember your goals and why finding a home is so important. Those things should be the driving force behind your search. Share them with us and be clear about your priorities. Your trusted advisor is your greatest support as you navigate today’s low housing supply to find the home of your dreams.

Bottom Line 

If you’re planning to buy this year in East Tennessee, the key to success will be patience given today’s low inventory. Let’s connect to discuss what’s happening in our area, what homes are available, and why it’s still worthwhile to prioritize your home search today.

Contact us, the Troy Stavros TEAM at CornerStone Realty Associates today with any questions or to talk about getting the process started.

The East Tennessee housing market is starting off 2022 with 20% less inventory than a year earlier. In addition, the number of newly listed East Tennessee homes for sale fell 6.7% year over year.

We’re kicking off yet another year with a whole lot of buyers whose home search has been going on for months, and they are as eager to buy a home in East Tennessee as ever. This month, the stage will be set for the 2022 housing market, and we’ll be closely watching whether prices climb like they typically do in January or whether they start off high and then slow down due to rising mortgage rates.

Over the last year, the median home sales price in East Tennessee rose 20.16% year over year to $279,000.

Homes with a Knoxville, TN address saw prices rise 17.41% to $290,000.

Farragut, Tennessee, a higher-priced suburb saw median homes prices increase 26.6% to $524,750.

We also saw the average price per square foot of a home sold in East Tennessee rise from $146.62SF to $179.22 year over year.

Both pending and sold homes in East Tennessee witnessed increases. Year over year there was a 6.4% increase in homes pending sales and an 8.5% increase in homes sold.

Another result of the low inventory/high demand conditions is the decrease in the median number of days a home that sold in East Tennessee sat on the market. A year ago, this number was at 13 days, but during the four-week period ending December 31st, it was only 5 days days. A 61.54% decrease!

Homebuyers, however, do have some reasons to be optimistic. While we can’t expect prices to decline, as we head into spring, agents are expecting more listings to come on the market.

Have questions? Want to talk about buying or selling a home in East Tennessee? Call/Text the Troy Stavros TEAM at CornerStone Realty Associates today at 865-999-09825.

Are you one of the many renters in East Tennessee thinking about where you’ll live the next time your lease is up? Before you decide whether to look for a new house or another apartment, it’s important to understand the true costs of renting in 2022.

As a renter, you should know rents have been rising since 1988 (see graph below):

In 2021, rents grew dramatically. According to ApartmentList.com, since January 2021:

“. . . the national median rent has increased by a staggering 17.8 percent. To put that in context, rent growth from January to November averaged just 2.6 percent in the pre-pandemic years from 2017-2019.”

That increase in 2021 was far greater than the typical rent increases we’ve seen in recent years. In other words – rents are rising fast. And the 2022 National Housing Forecast from realtor.com projects prices for vacant units will continue to increase this year:

“In 2022, we expect this trend will continue and fuel rent growth. At a national level, we forecast rent growth of 7.1% in the next 12 months, somewhat ahead of home price growth . . .”

That means, if you’re planning to move into a different East Tennessee rental this year, you’ll likely pay far more than you have in years past.

Homeownership Provides an Alternative to Rising Rents

If you’re a Knoxville area renter facing rising rental costs, you might wonder what alternatives you have. If so, consider homeownership. One of the many benefits of homeownership is it provides a stable monthly cost you can lock in for the duration of your loan.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“. . . fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”

If you’re planning to make a move this year in East Tennessee, locking in your monthly housing costs for 15-30 years can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases.

Homeowners also enjoy the added benefit of home equity, which has grown substantially right now. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $56,700 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage, you grow your wealth through the forced savings that is your home equity. Maybe it’s time to stop paying off your landlord’s mortgage and start paying off your own.

Bottom Line

If you’re thinking of renting this year in Knoxville, it’s important to keep in mind the true costs you’ll face. Let’s connect so you can see how you can begin your journey to homeownership today.

Contact the Troy Stavros TEAM at CornerStone Realty Associates today at 865-999-0925 to talk about your alternatives and to formulate a game plan to get you building wealth and saying goodbye to rent increases.