Coronavirus and the East TN housing market: Prices, demand remain high

Investigations

KNOXVILLE, Tenn. (WATE) — Despite economic upheavals that the coronavirus pandemic has created, the average price of a home in the greater East Tennessee area is at an all-time high.

Although growth in housing activity eased during the first week of November as attention turned to the elections, buyer interest remains high and home inventory remains low.

Since the pandemic began, the supply of homes are at record lows in East Tennessee and buyer competition is showing continued strength. In turn, sellers have newfound leverage, enabling the fastest listing price growth recorded in more than two years.

The coronavirus pandemic also created a surge in virtual home tours. A lot has changed in the East Tennessee realty market since the spring when stay-at-home orders led to fewer buyers looking for homes and fewer sellers willing to list their properties or allow strangers to enter their homes during a pandemic.

“We are hitting area records as far as active sales price. We are almost at an average sales price of $300,000,” Claudia Stallings, of Coldwell Banker Wallace, said. “The average price of a home continues to go up. We have set records every month in 2020.”

Since May, when stay-at-home orders for the pandemic were eased, homes sales prices have sharply increased. In May, the average price of a home was $251,000 according to the Knoxville Area Association of Realtor Multiple Listing Service.

In June, the average price jumped to $260,000; up to $271,000 in July; up again to $286,000 in August; $289,000 in September and finally, $298,000 by October.

So what has fueled this growth?

Supply and demand.

“There is extreme high buyer demand because of low inventory. Builders can’t keep up. We just have a lot of activity in the market this year,” Stallings said, then showed us the pending sales graphic.

“So pending sales have really taken off. The pending sales are the best predictor of future closings. And the pending sales, with the exception of a dip we had in March and April likely due to COVID, just continue to rise. We have set records with the number of homes that are under contract waiting to sell,” Stallings said.

A five-year snapshot of listings — or supply of homes, shows fewer for sale.

“Fewer and fewer listings are available for sale,” Stallings said. “Fewer choices for the prospective buyer. So competition is fierce.”

While a seasonal dip in sales is expected over the next few months, since the pandemic started prospective home buyers have become selective in the type of home they prefer.

“So a lot of people want a home with a home office now. We’ve also seen a lot of people who are able to choose where they want to live because they are working remotely. And, because of that, they are choosing our beautiful East Tennessee area,” Stallings said.

Generally, home sales decline in the winter months and demand saw a slight softening these past three weeks, nevertheless, it continues to remain elevated.

With 15-year and 30-year fixed interest mortgage rates still under 3%, the coming weeks should paint a clearer picture of demand through the winter which indirectly will affect the average price of a home in the greater East Tennessee area.

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