865 Real Estate

East Tennessee Real Estate & Neighborhood Source

Knoxville Home Sellers Are in a Sweet Spot [INFOGRAPHIC]

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Sellers Are in a Sweet Spot [INFOGRAPHIC] | MyKCM

Some Highlights

  • In today’s sellers’ market, you’re set up to win big when you list your house in Knoxville.
  • That’s because Knoxville homes are selling fast, receiving 4.4 offers on average and often selling above the asking price. Then, when you buy your next home, you’ll also win by addressing your changing needs and taking advantage of near historic-low mortgage rates.
  • If you’re ready to make a move, let’s connect so you can capitalize on today’s market and find your next dream home. Contact me, Troy Stavros with CornerStone Realty Associates today at 865-999-0925. My team and I look forward to serving you!

Home Price Appreciation and What It Means for Sellers in Knoxville

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A Look at Home Price Appreciation and What It Means for Sellers | MyKCM

When you hear the phrase home price appreciation, what does it mean to you? Through context clues alone, chances are you know it has to do with rising home prices. And as a seller in Knoxville, you know rising home prices are good news for your potential sale. But let’s look past the dollar signs and dive deeper into the concept. To truly understand home price appreciation, you need to know how it works and why it matters to you.

Investopedia defines appreciation like this:

“Appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates. This is the opposite of depreciation, which is a decrease in value over time.”

A Look at Home Price Appreciation and What It Means for Sellers | MyKCM

When we consider this definition and how it applies to real estate, a few words stick out: supply and demand. In today’s Knoxville real estate market, we’re experiencing high buyer demand and very few sellers listing their homes for sale (see maps below): No matter the industry, anytime there’s more demand than supply, prices naturally rise. It happens because buyers are willing to pay more to secure the scarce product or service they’re looking for. That’s exactly what’s happening in today’s Knoxville real estate market. Buyers are competing with one another to purchase a home, leading to bidding wars that drive prices up. For sellers, the rising prices mean that opportunity is knocking.

A Look at Home Price Appreciation and What It Means for Sellers | MyKCM

According to Quicken Loans, the national average home price appreciation rate is between 3-5% in a typical year. Today, home prices are appreciating well beyond the norm thanks to high demand. Here are the latest expert projections on the rate of home price appreciation for this year (see chart below):

Compared to the normal pace of 3-5% appreciation per year, the current average forecast of nearly 11.5% is significant.

A Look at Home Price Appreciation and What It Means for Sellers | MyKCM

For Knoxville home sellers, this means that with the current rise in prices, your house may be worth more than you realize. That price appreciation helps give your equity a boost. Equity is the difference between what you owe on the home and its market value based on factors like price appreciation. It works like this (see chart below): You can use your built-up equity to power a move into your dream home, or you can put it toward life-changing goals like funding an education or opening a business.

But don’t wait. While price appreciation in Knoxville is strong now, those same experts say it’ll start to appreciate at a more normalized pace next year. If you list your house in Knoxville sooner rather than later, you’ll be in a better position to capitalize on the higher-than-average home price appreciation we’re seeing today.

Bottom Line

If you’re thinking of selling your house in Knoxville, there really is no time like the present. Let’s connect so you can get an expert market analysis of your home and its potential. Contact me, Troy Stavros with CornerStone Realty Associates today at 865-999-0925. My team looks forward to serving you!

With Home Values Surging, Is it Still Affordable to Buy in Knoxville Right Now?

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Housing inventory in Knoxville and nationwide is at an all-time low. Realtor.com just reported that nationally, there are 39% fewer homes for sale today than there were last year. At the same time, buyer demand remains strong. In a recent newsletter, research analyst Ivy Zelman explained:

“Although the headwind of severe supply constraints in most markets has contributed to slight moderation in seasonally-adjusted and year-over-year new pending contract growth for two consecutive months (albeit still growing strongly), the underlying strength of buyer demand, particularly for this time of year, remains apparent.”

Whenever there’s a shortage in the supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the Knoxville real estate market right now. As a result, home values are surging.

This is great news if you’re planning to sell your home in Knoxville. On the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. Purchasers, however, should realize that the price of a house is not as important as the monthly cost. Here’s how it breaks down.

There are several factors that influence the cost of a home. Two of the major ones are:

  1. The price of the home
  2. The mortgage rate at which a buyer can borrow the funds necessary to purchase the home

How do these factors impact affordability?

The National Association of Realtors (NAR) produces a Housing Affordability Index which takes these factors into account and determines an overall affordability score for housing. According to NAR, the index:

“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

With Home Values Surging, Is it Still Affordable to Buy Right Now? | MyKCM

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:The blue bar represents today’s affordability. We can see that homes are more affordable now than they were from:

  • 1990 to 2008
  • 2017 to 2018

Buying a home today is just a little less affordable than it was last year, but still very affordable compared to historical housing market trends.

Note: During the housing crash from 2009 to 2015, distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes still affordable today?

The number one factor impacting today’s homebuying affordability is record-low mortgage rates. There’s no doubt that prices are on the rise. However, mortgage rates have fallen dramatically. Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.72%. Last year at this time, the average rate was 3.68%.

If you’re considering purchasing your first home in Knoxville or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

At this point, home purchase affordability is still in a historically good place. However, we need to watch price increases going forward. As Mark Fleming, Chief Economist at First American, noted in a recent post:

“Faster nominal house price appreciation can erode, or even eliminate, the boost in affordability from lower mortgage rates, especially if household income growth doesn’t keep up.”

Have questions or ready to get the home buying or selling process started? Call/Text me, Troy Stavros with CornerStone Realty Associates today at 865-999-0925 and let’s schedule a time to talk!

With Home Values Surging, Is it Still Affordable to Buy Right Now? | MyKCM

VIDEO: Knoxville Home Prices.. It’s All About Supply and Demand

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As we enter the summer months and work through the challenges associated with the current health crisis, many are wondering what impact the economic slowdown will have on home prices. Looking at the big picture, supply and demand will give us the clearest idea of what’s to come.

What is Really Happening with Knoxville Home Prices?

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What is Really Happening with Home Prices? | MyKCM

Home values have softened over the last twelve months. We are no longer seeing 6-7% annual appreciation levels for the national housing market. The current numbers are closer to 4%. Some have suggested that year-over-year appreciation levels could fall to 3% or less this year.

However, a stronger-than-expected economy and a good spring housing market have changed some opinions. Some analysts are now predicting that home value appreciation may begin to increase as we move forward.

Here are three examples:

Mark Fleming, Chief Economist of First American

“Data on the movement of unadjusted house prices during the early spring home-buying season won’t be available for a few more months, but it’s quite likely that price appreciation will accelerate again.”

CoreLogic’s April “Home Price Insights”

“Home prices nationwide, including distressed sales, increased year over year by 3.7% in March 2019 compared with March 2018…The CoreLogic HPI Forecast indicates that home prices will increase by 4.8% on a year-over-year basis from March 2019 to March 2020.”

Pulsenomics’ Quarterly “Home Price Expectation Survey”

  • The 2018 4th Quarter survey called for 3.8% appreciation for 2019.
  • The 2019 1st Quarter survey raised the appreciation projection for this year to 4.3%.

Bottom Line

Price appreciation has slowed over the past year. However, a strong economy and a good housing market have many experts thinking that home values might re-accelerate moderately throughout the rest of this year. Interested in what the value is of your specific property? Contact me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 and I’d be happy to do the research for you.

Want to see what is happening in your zip code in the Knoxville area? Find your zip code and the info here.

Knoxville and Farragut TN Real Estate Market Snapshot – March

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Here are the most recent (March) statistics for the Knoxville and Farragut TN real estate markets.

Knoxville Farragut Real Estate Market Snapshot

Here are the Knoxville TN real estate market stats for March.  The highlighted stats are:

  • Median sold price of Knoxville homes in March = $153,000
  • Median list price of Knoxville homes in March = $159,900
  • Median days on the Market for Knoxville homes = 74 days
  • Homes sold in Knoxville in March = 1097
  • Homes listed in Knoxville in March = 2569
  • Absorption Rate in March for Knoxville = 8.55 months
  • Year to Date Knoxville home sales are up 4.4% through March compared to last year.
  • Year to Date Knoxville home prices are up 10.74% through March compared to last year.

Here are the Farragut TN real estate market stats for March:

  • Median sold price of Farragut homes in March = $308,750
  • Median list price of Farragut homes in March = $409,000
  • Median days on the market for Farragut homes in March= 42 days
  • Homes sold in Farragut in March = 40
  • Homes listed in Farragut in March = 74
  • Absorption Rate in March for Farragut = 4.23 months
  • Year to Date Farragut home sales are up 24.7% through March compared to last year.
  • Year to Date Farragut home prices are up 14.35% through March compared to last year.

Have questions about the market or anything Knoxville or Farragut real estate related?  Contact me, Troy Stavros with Gables & Gates, REALTORS and I’d be happy to answer any questions you have!