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Chattanooga homes sales and Chattanooga pending home sales were down in August 2022.  Funny enough, the Chattanooga median sale price was still up 11% despite lower home sale sales.  Housing becoming more expensive due to rising interest rates and low inventory is why home prices are still rising.  Those rising interest rates are also slowing down the real estate market as some people are opting out of buying a home right now or can't afford to buy a home right now.  One bit of good news is that there are now 1,800 homes for sale instead of 600 homes, as there were in March of 2022, in the Chattanooga area.  That is still a long way from the 3,000 to 5,000 homes that we could use to have a balanced real estate market in Chattanooga.

The market is still slightly tilted towards Chattanooga home sellers.  Sellers do have to realize that their homes probably will not go under contract immediately like in the past two years.  Now it is taking a bit more time.  Chattanooga home sellers have more competition at the moment.  The people moving right now are the people who have to move instead of the people who want to move.  Chattanooga home sellers will have to give more concessions and really have to price their homes right. 

Chattanooga home buyers have more options and opportunities right now.  You have to look at the inventory in the price range and in the area where you want to buy.  Those two factors may make you have to make more aggressive offers or they may give you an opportunity to negotiate.  Overall, Chattanooga Realtors are seeing home buyers have more opportunities to ask for concessions and to negotiate on the price.

Call Chattanooga Realtor, Nathan Walldorf, to guide you through your home purchase or sale. 423-544-7700

You also may want to read Home Concessions Are Coming Back

After two crazy years of frantic Chattanooga home sales, home sale concessions are coming back.  In the past two years people were buying Chattanooga homes without asking for help with closing costs, without an inspection contingency, and even without a financing contingency.  Many home warranty companies either went out of business or sold to competitors, because sellers did not have to offer home warranties any more.  A low offer on a Chattanooga home was easy to say no to when several other offers were on the way or in hand.  In fact, small things, like asking the seller to pay for a buyer's title insurance, kept offers from being accepted.  It took an experienced Chattanooga Realtor to help you make your contract as "skinny" as possible in order to be awarded the contract.

Now Realtors are seeing people ask for and get concessions.  Chattanooga home buyers are asking for inspection periods and asking for repairs.  When there were several offers on a property, I do not recommend asking for too many repairs, but sellers are now granting repairs.  Chattanooga home sellers are accepting offers where people need the seller to pay for some of their closing costs out of their net proceeds.  FHA and VA loans attached to a purchase were typically rejected during the past two years due to the potential repairs that the appraiser could ask for.  A seller of mine accepted an offer with a VA loan and with the seller paying some of the buyer's closing costs over the weekend.  When selling a home today, you need a Chattanooga Realtor who has the experienced of selling homes during normal times.  You need a Chattanooga Realtor who will follow up with potential home buyers or their agents and see if there is common ground that you can find that leads to a purchase.  You also want a Realtor who is willing to collaborate with other Realtors to get your property sold instead of get in the way of a property being sold.

You still need to weigh how much inventory is available in the area where you are looking to see if you can ask for some concessions, but overall you have more opportunities to get concessions in today's market.

Call Nathan Walldorf to sell a home or buy a home. 423-544-7700

Also see 1st Time Home Buyers Have More Opportunities to Buy a Home

Charming English Tudor home in Brainerd. Semi-circle driveway and carport to create plenty of parking. Back patio area for grilling. Walk in the home to 9' ceilings and an attractive wood burning fireplace in the living room. 9' ceilings in the office by the living room (which could be used as a 5th bedroom). Spacious updated kitchen with new cabinets, modern countertops, and a new stainless steel oven. 15'X13' dining room wide open to the kitchen and living room.

2 main level bedrooms with vaulted ceilings share an updated full bathroom. Laundry and sitting area on the main level as well.

2 more spacious bedrooms upstairs share the 2nd updated full bathroom. Both upstairs bedrooms have walk-in closets. Hardwood floors throughout. Great lease price for such a large home. Call to make an appointment to see this home. The tenant pays for all utilities and lawn care. 1 year lease only. 1 month's rent due when you move in and 1 month's deposit due at the time of signing a lease.

Call Nathan Walldorf to see this property at 423-544-7700.

Melissa Lutz from the National Association of Realtors (NAR) spoke to home builder and Realtors last week. 

One key thing she pointed out was that First time home buyers have more opportunities to buy a home right now compared to the past 6 months or even the past year.  In the past year, first time home buyers were competing with cash buyer or home buyers from out of state who could outbid them.  Home buyers with the types of loans that require the appraiser to require certain repairs were not being accepted.  Now home sellers have fewer people looking at their homes and 1st time buyer loans are being considered again.  In March of this year, there were only 600 homes on the market in the Chattanooga area.  At the end of August there are 1,766 homes for sale in the Chattanooga MLS.  There are far more homes to choose from right now than 6 months ago.  Closed home sales were down by 18% in July in Chattanooga, so the competition is not as fierce either.  Interest rates have now leveled off as home lenders are feeling more comfortable with the Fed getting inflation in check.  If you took a break from looking for a home, now is a good time to get back in the market.

Call Nathan Walldorf to find your home. 423-544-7700.

Home mortgage rates lowered on Monday after the Federal Reserve announced that it would raise interest rates last week.  The Federal Reserve has been raising interest rates in order to get inflation under control as it was as high as 11.3% in June.  Mortgage broker, Chad Harris, told me that Fannie Mae and Freddie Mac feel as if the Fed's actions, raising interest rates, is working to curve inflation.  Some home interest rates (depending on the borrower's credit) were seen lowering from 5.3% to 4.9%.  According to the National Association of Realtors, home purchasing became 50% more expensive from last year to this year in large part due to rising interest rates.  That makes rates lowering by .4% good news for home buyers.  If you put your home purchase on hold because of rising interest rates, now may be the time to get back into the market.  There is also more inventory available in the Chattanooga real estate market.  

Sources tell me that the threat of a recession, the economy shrinking for 2 consecutive quarters, typically puts downward pressure on home mortgage rates and on commercial mortgage rates. 

Strangely enough, as interest rates have risen, home prices have continued to rise.  Home sales are starting to slow to a more normal pace now.  The days of 6+ offers on a property at one time have probably passed for a while, but do expect more than one offer on entry level properties in the Chattanooga area.

Looking to navigate the changing real estate market?

The Walldorfs have weathered many recessions and are used to change.  Call Nathan Walldorf to buy or sell your home. 423-544-7700

The national median sales price of current homes has reached $400,000 for the first time - 15% higher than that a year ago based on the National Association of Realtors reports.

Even if existing home sales are declining nationwide, the housing supply has been slowly increasing, with inventories thatare drawing upwards for the second month. The rise of prices is anticipated to become moderate as supply increases. However, for the time being, supply is still scarce, and consumers are feeling the pinch of rising costs.

As housing inventory levels show a drastic improvement of 31.9% to 1,638 units, it is a very promising sign that the housing market will soon stabilize, and more homes will have more affordable prices.

The number of new listings in the Chattanooga area rose by 22.4% to 1,633. Pending home sales dropped to 1,089, a 5.1% decline. In our location, costs have been rising steadily to a median home sale price of $328,725.  That is a 19.5% growth. A year ago, the median sales price was $275,000.

As the days on market decreased by 23.5% to 13 days, the months' supply of inventories increased by 25% to 1.5 months. 

Buyers have more choices when buying a home right now, but prices are still high.  The good news for home buyers is that prices are leveling out.

Over the past two years, booming markets have sparked a purchasing craze for everything from stocks and crypto to new housing. The search for safe haven investments is now in full swing with inflation at a roughly 40-year record and with at least three rate increases factored in.

Real estate is one of the investments that can hedge against inflation since there is typically a minimal link between the asset class, equities, and bonds. Therefore, it should come as no surprise that investor's interest is rapidly rising in the face of a scorching hot housing market, a lack of available homes, and rising mortgage rates.

Considering that mortgage rates are still inexpensive, several experts believe that purchasing real estate now—despite a heated and intensely competitive market is a wise move. Some claim that since real estate is still so locally focused, that the returns vary.  Rural locations may not provide the same opportunities as big cities. But in actuality, it depends on a person's situation and time horizon for investments.

You might be wondering, is Real Estate even correlated to Inflation?

Housing is dependent on demographic changes, development, and total supply, inflation is based on consumer pricing. But over time, because of salaries and interest rates, inflation and housing will have the tendency to go in the same direction. Wages are frequently raised by inflation, which raises expenditures for renting and purchasing. Because of borrowing being inexpensive the past several years in the U.S. and in other regions of Europe inflation is occurring.

There is a definite correlation between property prices and inflation, according to Colin Lizieri, the economist and professor of real estate finance at the University of Cambridge.  House prices have generally maintained pace with inflation over the past 100 years.  Industrialized nations have outpaced inflation by 2 or 3 percent.

Real estate is a desirable investment choice as inflation has recently reached levels that haven't been seen in years.

According to Benjamin Miller, chief executive officer of real estate investing platform 'Fundrise', "Real estate is an alternative to the stock market." “People invest in it for the same reason that they invest in cryptocurrencies. They’re worried about the current economic system and they want options.”

What effects may inflation have on someone wanting to sell their home?

It is still a seller's market, at least for the time being. According to the most recent statistics available, home prices increased 18.4% in 20 U.S. cities.  Additionally, real estate app Zillow projects that through November 2022, home prices will increase nationwide by 14%.

In some of the top markets, the quantity of available houses is dwindling yet bidding wars are still going on. 

As per Jeff Tucker, senior economist at Zillow. “As the price of everything else goes up, housing’s recent rise in cost doesn’t look so bad by comparison.” Therefore, it's probable that in the short run, despite inflation, real estate demand will stay high.

This year rising building material costs will cause house prices to rise even higher as home builders transfer those costs along to buyers because of to inflation and persistent supply chain problems. For instance, the cost of lumber and other materials has increased significantly recently. Supply issues are also a problem.

An additional threat from inflation comes from the rise of costs, such as food and gas.  Prospective purchasers could have less money to spend on real estate in that event. However, Tucker forecasts that consumers would reduce their spending on more discretionary items like apparel, entertainment, and traveling, making more room for basics like housing.

Is this the right moment to purchase a home?

Everything is subject to unique conditions. While owning a house might protect you from yearly rent hikes, real estate costs have skyrocketed.

The head of the investment strategy at SoFi, Liz Young, said that “If it’s not a lifestyle situation where you want more space or wants to move to another geographical location, this might be a time to wait it out from buying.” “The risk is that the equity in the home doesn't go up a ton in the next few years because home prices are so high. From an all-time-high price level, there’s downside risk to prices in the near term.”

She suggested to buy a home if you want to reside in a property for over five years. However, it could be best to wait if you believe you might need to sell before then.

Contact Chattanooga Realtor, Nathan Walldorf, to help you hedge against inflation with real estate. 423-544-7700.

Article Source: Claire Ballentine and Alice Kantor, 2022 

https://www.bloomberg.com/news/articles/2022-01-24/is-real-estate-a-good-investment-hedge-against-inflation-what-the-experts-say

Mother Nature is unpredictable, it can damage any person's home and yard. A wildfire or a flood might not destroy your house, but drought, excessive rainfall, hailstorms, high winds, or other elements might harm your yard's curb appeal. Your yard might be set back years if severe weather is present or if it is paired with inadequate maintenance. You may want to rethink your regular lawn and landscaping ideas. Here are five tips to get you going. 

1. Reduce the damage caused by drought

Drought can devastate plants. Drought impacts plant growth, alters plants' structures, makes them more susceptible to diseases, and even leads to plant death. The soil will bake, become dry, and eventually, turn to dust. The dust's pesticides will spread across the wind.

Turf lawns should get at least one inch of water every week, says Luke Lee, a London-based real estate expert who assists homeowners with landscaping design choices. If your home is in an area that frequently suffers from drought, artificial turf (AstroTurf is one example) may be a good option. It will help conserve water and put a damper on grass fires, Lee says.

2. Avoid Damage from Excessive Rainfall

Plants and soil can be harmed by excessive rain and snowfall, says the marketing director of Green Building Elements, Inc., a Manchester, Connecticut-based firm. A monsoon-like downpour can unleash a torrent of stormwater pollution, which can kill plant roots, according to Monson.

A flood may also deplete the landscapes of a lot of nutrients, moreover, if they remain submerged for too long, the water will suffocate them of air. If plants die, growth can be hampered or slowed, in addition to being killed by extreme weather, such as heavy rains, according to McKenzie. This grading can result in erosion when combined with extreme weather, Monson says. Monson recommends that homeowners who live in areas with severe weather ensure that water drains properly. A considerable number of homeowners have customized drainage systems to prevent flooding, but many have not installed drainage systems, putting their yards at risk. 

3. Defend Your Yard Against Strong Winds

Gusts aren't just dangerous to homes and vehicles; they're also no friend to landscaping. Winds have been known to uproot smaller plants. After a windstorm, your yard might look like a disaster zone if it is covered with fallen trees, pine needles, and fallen leaves. Even gentle winds have the potential to erode the soil. That stunts the growth of landscaping and causes harm to it.

Landscapers suggest several measures. Before a storm, tie-down any loose or dead branches on trees and shrubs, secure outdoor furniture or decorations that may be blown around your lot, and prune any branches that might fall on them. Reduce the number of decorative trees or bushes, or stay away from trees that are susceptible to being uprooted by strong winds. even if you have to cut down a few. 

4. Prepare Your Yard for a heat wave

Extreme heat has the most lethal impact on humans, according to statistics. It can also be harmful to yards. This weather pattern might cause dead leaves, dormant grass, stressed shrubs, and infestations of insects and diseases. This weather pattern can cause stress to plants. To maintain a lush lawn in spite of the summer heat, consider replacing some areas with water-saving plants. You might install Spanish lavender, aloes, aloes, pride of Madeira, rockroses, and junipers, for example.

An expertly pruned plant prevents plant diseases from spreading to the healthy portions of your garden. Look for signs of infection, such as unusually growing branches, or indications of pathogens, such as insect larvae or microbial mucus. The stems could get a little mushy, and you might see yellow leaflets with white dots.

5. Safeguard Your Landscaping Against the Brutal Winters

Long, cold periods might leave your lawn vulnerable, especially if they occur at the same time as wind chills of -20 degrees Celsius or lower. By spreading seed over your lawn and keeping it safe during cold months, you can ensure that it thrives. Mulch, which also keeps plants healthy, provides insulation, regulates root and soil temperature, and keeps plants healthy, is another excellent option. 

Always clear away any trash and dead leaves. By this, you can stop your plants from withering and becoming infected with fungal diseases and pathogens. Mother Nature may occasionally be harsh and the key to landscaping is prevention.

In conclusion, spending money and effort on your yard can serve as a solid insurance policy against bad weather. Landscape maintenance may help keep your yard lush. By repairing issues that may have been prevented, you could also be able to save some money.

Source: Houselogic, 2022

https://www.houselogic.com/by-room/yard-patio/5-ways-to-keep-severe-weather-from-doing-a-number-on-your-yard/

After the Federal Reserve raised interest rates on 6/16/22, the media went crazy with stories about the real estate market collapsing.  I did a deep dive to see what economists (mostly economists outside of the real estate industry) are saying about real estate.  Below is what I found.

Fannie Mae predict that 11.1% fewer homes will sell in 2022 compared to 2021 because of rising interest rates combined with constrained inventory.  The National Association of Realtors (NAR) has been producing about the same drop in sales since the beginning of the year.

Matt Argersinger with the Motley Fool agrees that the the price decreases seen in some areas of the country are due to rising interest rates, which are raising the costs to own a home.

Lawrence Yun the NAR chide economists says, “It’s painful that on the same $300,000 mortgage, the monthly payment rose to $1,800 today from $1,265 in December. Consequently (it) will shrink the buyer pool.  Sales could fall even further with some inventory sitting on the market for more than a month like in the pre-pandemic days.”

Economist predict sales will continue to soften in the near future, which MAY put downward pressure on home prices.

Zillow is showing 5% of homes in its platform have seen 5% to 10% price drops.  5% is not a large number, but I would agree that home sellers who thought they could get a huge price for their house are having to adjust to the market by reducing their price to a more reasonable price for their house in order to actually sell their home.   Home buyer are a bit more cautious at the moment.  There is a demand to buy but less urgency.

In Chattanooga, the number of new listings grew in May and in the last week’s local real estate report. That is a good thing for home buyers.  The inventory of homes for sale has gone up as well.  Pending homes sales were up in May by 4.5%, but down during last week’s report.  The median home sale price in Chattanooga is still up by 21.2%, so home prices are not going down too much in Chattanooga yet.    

Matt Argersinger of the Motley Fool feels like housing will not take the brunt of a coming recession; “If we are entering a recession, I don't think the housing market is one of those areas of the market that's going to be hit too hard. There is that humongous demand/supply imbalance that is still there. Even though the housing prices have risen, interest rates are higher, there are millions of people who would rather own a house than be renting, or living with their parents, or whatever they might be doing at the moment. I think that demand is not going to go away. It's very demographically driven. If we do hit a recession, whatever that looks like, I think it's other factors that are going to be hit harder than the housing market in this particular time.”

The Chattanooga real estate market is softening some.  The market is slowing with less people putting in multiple offers on properties.  People who wanted dream prices for their homes are having to re-strategize if they really want to sell their homes right now.  It seems like we have hit the top of the market with some possibilities of prices decreasing to a small degree.  The one game changer is that the Chattanooga real estate market only has 1/5 of the number of homes for sale that they need to have in order to have a healthy real estate market.  The market still favors sellers.  The sky is not falling on real estate, but a shift is occurring. 

Contact Chattanooga Realtor, Nathan Walldorf, to help develop your home sale strategy or your home purchase strategy. 423-544-7700.

Other related articles:

The Real Estate Market is Starting to Shift

Real Estate Deceleration, Not Deflation

Real Estate Deceleration, Not Deflation

Fortune.com is starting to dub the current real estate market as the “Great Deceleration.”  The Fed raised interest rates which cause mortgage rates to go form 3.11% to 5.09%.  According to Freddie Mac, that has made principal and interest payments go up by 35%.  The National Association of Realtor’s chief economist says that the American Dream is now 55% more expensive than 1 year ago with the rise in home prices + the rise in interest rates.  The sharp rise in interest rates and a shortage of homes for sale has fueled a national slow down in the real estate market.  The Moody Analytics chief economist predicts that prices may decrease by 5-10% in this housing correction in significantly “overvalued” housing markets like Charlotte.  Most industry professionals do not see housing prices decreasing too much with the inventory of homes being so low.  Lance Albert from Fortune.com writes, “But homebuyers shouldn’t get too excited-yet.  While inventory levels are rising fast percentage wise, they’re still far below pre-pandemic levels.” We do see home buyers having more options now, which is good.
The Chattanooga real estate market now has around 1,060 homes for sale, which is a 40% increase since the beginning of the year, but a healthy real estate market for Chattanooga would have 5,000 homes for sale.  Chattanooga home prices were up by 20.5% in April, so we are not seeing a large scale decrease in home pricing right now.  There were 2.6% less pending home sales and 4.2% less closed home sales in Chattanooga in April.  Our “declaration” has not been too drastic.  In Chattanooga, we actually have a good number of people siting on the sidelines waiting for their home to come on the market.  I don’t foresee a sharp drop in home prices in our area, but there will be some correction.