Strong employment gains in Northeast Tennessee, combined with record-low mortgage rates, have buoyed up the area’s housing market, according to the latest home sales and prices from the Northeast Tennessee Association of Realtors.
Regional home sales for the month of July, totaling 384, were almost 26 percent higher than in July 2010, and the average sales price has increased by about 24 percent to $176,064 in the same time period, NETAR said. In the 11-county area monitored by NETAR, sales rose in nine counties and the average price increased in eight. Sales also increased in six of the cities monitored by the report and the average price increased in all seven cities.
The most recent numbers are “especially encouraging” because July was the first month in 2011 when sales and prices could be compared to a 2010 month not influenced by tax credits offered as incentives, said NETAR President Gwen Lilley.
“The last closing date that people could use the tax credit last year was June 30, and of course that gave some first-time buyers the initiative to purchase a house because they were getting the credit,” she said. “But then July of last year there was no tax credit in place, so starting July and on, all comparisons from last year to this year are on a more normal scale.”
Year-to-date data for the area show the average sales price is 12.4 percent higher than in the first seven months of last year, though sales are 5.5 percent lower. In 2011, 2,146 previously owned homes have been sold, compared to 2,271 from January through July 2010.
Nationally, existing home sales fell by 3.5 percent in July from the previous month, but still remain notably higher — 21 percent so — than in July 2010, according to the National Association of Realtors. The median existing home price was $174,000 in July, down 4.4 percent from July 2010.
Lilley said the Johnson City area escaped the housing bubble, and by doing so escaped the ensuing crash.
“Our area luckily didn’t see appreciation like other places in the country. We had more of a steady and slow appreciation,” she said. “When the big housing bust happened, we weren’t so high that people lost money in their houses. We had been more of a realistic market, so that has helped us all through this.”
Still, what was happening all over the country put the brakes on home sales in Northeast Tennessee.
“People from all over the country want to come here, but they couldn’t sell their houses. They wanted to come but couldn’t make it happen,” Lilley said. “So our sales volume went down.”
In July 2006, 67 homes were sold in the Science Hill High School zone; in July 2011, that number was 48, representing a 28.3 percent drop.
Prices were less affected, as Johnson City and Kingsport have both held strong, she said.
As other areas see their housing markets improve, that will also help buoy parts of NETAR’s market, Lilley said. Already, the average number of days a home has stayed on the market in the area has fallen from 190 in January to 166 in July, a 2011 low. Nationally, there is a 9.4-month supply of houses at the current sales pace, the NAR said.
“It’s still a buyer’s market any time you have more than six months of inventory on the market,” Lilley said.
Yet, according to the NAR, it’s not the house selection, prices, or the quantity of people ready to buy that are holding back the market from recovery.
“Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” said NAR’s chief economist, Lawrence Yun. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”
Were banks lending at normal standards, it would boost home sales 14 percent to 20 percent, NAR said.
Even without that boost, Northeast Tennessee is holding strong, making a slow but steady climb upward, Lilley said.
“We’re not back yet, but whenever you see improvements for several months in a row, it’s starting to look positive,” she said. “We have seen some trends show we’re moving in the right direction.”