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Understanding Real Estate Affordability at the End of 2023 in Knoxville TN and beyond: A Deep Dive

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As 2023 draws to a close, the real estate market continues to be a hot topic, especially concerning affordability. Troy Stavros has recently shed light on the current state of affordability in the real estate market, referencing a comprehensive Redfin research article. This blog post delves into the key points from that discussion, providing insights into where we stand, how we got here, and what the future may hold for prospective homeowners.

Affordability Crisis in 2023:

The year 2023 has been particularly challenging for homebuyers. According to the Redfin research highlighted by Stavros, only 15.5 percent of homes were affordable for the typical U.S. household — the lowest share on record. This stark decline in affordability is a significant drop from 20.7 percent in 2022 and over 40 percent before the pandemic-induced home-buying boom. The factors contributing to this downturn include soaring home prices, elevated mortgage rates, and a general tightening of the housing market.

The Research’s Premise:

The Redfin article digs into the affordability of homes across the 97 most populous U.S. metropolitan areas. It defines an affordable listing as one where the estimated monthly mortgage payment is less than 30 percent of the local county’s median household income. This metric is a standard guideline for housing affordability and reflects the financial strain many families face in the current market.

Spotlight on Metropolitan Areas:

Stavros highlights the significant disparities in affordability across different areas, with a special focus on Tennessee cities like Nashville and Knoxville. For instance, Nashville saw a mere 3.4 percent of homes deemed affordable in 2023, a dramatic decrease from 8.8 percent in 2022. Knoxville experienced similar trends where they saw a 10.7 percent of homes deemed affordable in 2023, a dramatic decrease from 22.7 percent in 2022.. These figures illustrate the severe affordability issues plaguing not just these cities but many metropolitan areas across the country.

Looking Ahead:

Despite the grim current state of affordability, there is a glimmer of hope. Discussions around potential federal interest rate reductions in 2024 could lead to lower mortgage rates, possibly increasing the share of affordable homes. This prospect offers some solace to those struggling to find affordable housing in today’s market.

Conclusion:

The current state of real estate affordability is undeniably challenging, with 2023 marking a record low in accessible housing options for many Americans. However, understanding these trends is crucial for navigating the market effectively. As we look forward to potential economic shifts and policy changes, staying informed and prepared is key to capitalizing on future opportunities in the real estate market.

Have questions? Want to talk about your specific situation? Contact Troy Stavros with Cornerstone Realty Associates at 865-977-9700 or text him at 865-999-0925 today. We look forward to serving you!

Dreaming of a Bigger Home in Knoxville? Why Not Buy It This Year?

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Dreaming of a Bigger Home? Why Not Buy It This Year? | MyKCM

Are you clamoring for extra rooms or a more functional floorplan in your Knoxville home? Maybe it’s time to make a move. If you’ll be able to work remotely for the long-term or your overall needs have simply changed, it’s a great time to sell your house and move up. Why? With mortgage rates in their favor and higher-priced home sales powering more moves across the country, sellers in today’s housing market are finding the space they need (and have always dreamed of) by purchasing a home in the upper end of the Knoxville housing market.

With so few homes available for sale in Knoxville and high demand from today’s homebuyers, sellers are profiting in major ways this season. Bidding wars are gaining traction, driving up the sale price of more and more homes throughout the country. This means sellers in Knoxville are able to leverage extra cash from higher-priced sales while also taking advantage of today’s low mortgage rates when they purchase their next home. It’s the perfect scenario to move up into a true dream home. According to the April Luxury Market Report from the Institute for Luxury Home Marketing:

“The Institute’s recent analysis of sales in 2020 for homes over 5,000 square feet support the continuing preference for larger homes. The analysis determined that there was a 17% increase in the number of 5,000+ sq ft homes sold when compared to the number of sales in 2019.

Luxury home prices continue to see record highs in the majority of affluent ex-urban communities, as the influence of being able to work from home is still driving buyers away from living in high density areas. Low interest rates also remain in play, allowing buyers to realize the affordability of owning a larger property, which further reinforces this trend.”

Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), also explains:

“The market is hot pretty much everywhere and across all price points . . . The only area where there is sufficient inventory is in $1 million-plus homes . . . .”

While this price range certainly doesn’t fit every budget, if it’s in your reach this summer, you may want to make your move sooner rather than later. Today, more homes are available in this segment of the market, but as the report mentions, more buyers are investing here too, so competition may heat up sooner rather than later.

Bottom Line

If you’re planning to sell your current home to move into a larger one, let’s connect today. We’ll discuss your current situation and the opportunities in our local market.

Call or Text me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 tdoay. My amazing team is here to serve you.

Knoxville Buyers Are Finding More Space in the Luxury Home Market

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A year ago, additional space and extra amenities had a very different feel for Knoxville homebuyers. Today, the health crisis has brought to light how valuable more square footage and carefully designed floorplans can be. Home offices, multi-purpose rooms, gyms, and theaters are becoming more popular, and some families are finding the space they need for these upgrades in the luxury market.

The Institute for Luxury Home Marketing (ILHM) explains:

“With quarantine concerns still top of mind for many luxury buyers, we see large, sprawling estates making their comeback.

For instance, the last six months have seen a resurgence in the buying of mega mansions and estate-size homes – specifically properties that offer space (both inside and outside), separate home offices, gyms, and private amenities such as swimming pools, yoga studios, and recreation rooms.”

This was not the case at this time last year, as the most recent Luxury Market Report from ILHM emphasizes:

“Exactly one year ago, we reported that demand for large properties, mega mansions, private estates, and luxury ranches had reduced significantly over the previous few years; especially from the younger generation of luxury property buyers.”

For today’s buyers looking for larger homes in Knoxville, steady increases in equity might be what makes a move possible. Leveraging home equity makes it easier to afford the down payment on a luxury home, and current low interest rates are making mortgage payments more affordable than they have been in years. The report from ILHM also notes:

“Luxury real estate prices may continue to strengthen further into the third quarter, as the affluent continue to see large investment returns from the currently strong stock market.

Coupled with the low interest rates, the policies granting (and insisting) on working from home implemented by many employers, and the concerns of the pandemic, all translate to the affluent increasingly trading in their city lifestyle for a home that has it all.”

Clearly, today’s strong gains in home equity paired with record-low interest rates make fall a great time to move up into the Knoxville luxury market to meet those changing needs.

Bottom Line

If you’re ready to gain some breathing room in a larger home, let’s connect so you have the guidance you need to find more space in the Knoxville luxury home market.

VIDEO TOUR: Take a walk through 11468 Woodcliff Drive in Farragut!

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UNDER CONTRACT!
Beautiful, updated, 3 story home in the heart of Farragut at 11468 Woodcliff Drive, Knoxville, TN 37934. The super convenient location is minutes from shopping, parks, schools, the lake, and more. The interior of the home has a spacious kitchen featuring freshly updated quartz counters. The welcoming family room has space for friends and family and allows easy access to the expansive deck which overlooks the park-like backyard that was brought to life by the owner who is a master gardener. The 2nd level features 4 bedrooms and 2 additional baths, then venture up to the 3rd level for a large bonus room/or 5th bedroom and additional bath. The Inverness Subdivision features a clubhouse and community pool. Offered at $450,000.
Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 for more information or to schedule a private showing.

Why Home Office Space Is More Desirable Than Ever in Knoxville

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For years, we’ve all heard about the most desirable home features Knoxville buyers are looking for, from upgraded kitchens to remodeled bathrooms, master suites, and more. The latest on the hotlist, however, might surprise you: home offices.

In a recent article by George Ratiu, Senior Economist with realtor.com, he notes how listings with an office are selling quickly:

“As more companies have been embracing remote work, buyers are driving demand for houses with home offices higher. Homes featuring the term ‘office’ are selling 9 days faster than the overall housing inventory.”

Today, more and more people in Knoxville are working remotely, and that’s not just because the current pandemic is prompting businesses to operate virtually. According to the same piece and the most recent data available, the number of employees working at home was fairly steady from 1997 – 2004 but has been climbing ever since (see graph below):Why Home Office Space Is More Desirable Than Ever | Simplifying The MarketClearly, the work-from-home population in Knoxville is growing, and technology is making it possible. Just last month, according to an article on Think Google, searches for telecommuting hit an all-time high, and that’s certainly no surprise given our current situation.

People all over the U.S. are looking for answers on how to be most effective at home, and it’s making the ideal workspace more and more desirable. In fact, best practices from seasoned work-from-home professionals, like Chris Anderson, Senior Account Executive at HousingWire, tout that having a dedicated space is a must for productivity.

With today’s increasing demand for home offices, it’s a great feature to highlight within your listing if you’re selling a house that may meet this growing need. From bright natural light with large windows to built-in bookshelves or a quiet and secluded atmosphere, whatever makes your office space shine is worth mentioning to buyers when you’re ready to list your house.

Ratiu concludes:

“For housing, the continued increase in the share of remote workers implies that demand for homes with offices or dedicated work spaces will continue to increase. The current coronavirus pandemic offers a dramatic indication of the fact that companies and employees will have to develop plans and clearer policies for remote work beyond the current crisis.”

Bottom Line

Remote work may become more widely accepted as this current crisis teaches businesses throughout the country what it takes to function virtually. So, what seems like a business challenge today may be more of the norm tomorrow. With that in mind, if you have a home office, your house may be more desirable to buyers than you think.

5 Reasons Why This Summer Is A Good Time To Sell Your Home

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5 Reasons to Sell Your House This Summer | MyKCM

Here are 5 compelling reasons listing your Knoxville home for sale this summer makes sense.

1. Demand Is Strong

The latest Buyer Traffic Index  from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other for the same home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still well under the 6-month supply needed for a normal housing market. This means that, in most of the country, there are not enough homes for sale to satisfy the number of buyers.

Historically, the average number of years a homeowner stayed in his or her home was six, but that number has hovered between nine and ten years since 2011. Many homeowners have a pent-up desire to move, as they were unable to sell over the last few years due to a negative equity situation. As home values in Knoxville continue to appreciate, more and more homeowners are granted the freedom to move.

Many homeowners were reluctant to list their home over the last couple of years for fear that they would not find a home to move in to. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you to decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. Buyers know exactly what they can afford before home shopping. This makes the entire selling process much faster and simpler. According to Ellie Mae’s latest Origination Insights Report, the time to close a loan has dropped to 43 days. (Last numbers available.)

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has created a buyer’s market. This means that if you are planning on selling a starter or trade-up home, it will sell quickly, AND you’ll be able to find a premium home to call your own!

According to CoreLogic, prices are projected to appreciate by 4.8% over the next year. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

5. It’s Time to Move on with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to these questions. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to start living the life you desire.

That is what is truly important.

Ready to get the process started or sit down and talk about what it might look like? Call/text me, Troy Stavros with CornerStone Realty Associates today at 865-999-0925  and let’s set a time to get together.