How the COVID-19 pandemic is positively affecting the East TN housing market, for now

Investigations

KNOXVILLE, Tenn. (WATE) — When the novel coronavirus pandemic-related orders directed everyone to remain at home, those who work in housing sales expected the worst.

WATE 6 On Your Side’s Don Dare explains that currently, it’s a sellers market.

There are more buyers in the East Tennessee area than homes for sale, which is why real estate experts are calling it a seller’s market; with the price of an average home in East Tennessee going up by 6%. Mortgage interest rates are also currently low, directing many to buying a home.

During the summer, housing sales generally go up, that’s when most people move. In East Tennessee, there a small supply of homes for sale. Even with the COVID-19 pandemic, most houses don’t stay on the market very long.

“I am really surprised at how strong the market has been. We have not felt a slowdown in our East Tennessee area,” Claudia Stallings, vice president of sales for Coldwell Banker Wallace, said.  
 
Stallings shared a graphic that showed closings did go down as the pandemic began, “The blue line which represents this year, we see a drop in closings. That started in mid-March and has continued through mid-June. So we saw a drop in closings which I think is directly related to COVID 19.”

RELATED: Existing home sales plunge 9.7% in 3rd straight monthly drop

However, with aggressive and new high-tech ways of showing properties, sales of existing homes are expected to go up the remainder of June and through the summer. It’s the economics of supply and demand.

“So we have a low supply. We do have high demand. A lot of that is driven by buyer confidence,” Stallings said.

Another positive for our area — the average price of a home in East Tennessee is on the rise compared to the last two years, with an increase of 6 percent. The average sales price of a home is just under $251,000.

“We are up 6 percent over this same time last year,” Stallings said. “Several things are driving that. First of all, we have low inventory. We really need twice the number of houses that we have for sale to sell.”

A big factor driving home sales — low interest rates; with 375% being the average rate for a 30-year fixed mortgage on a $250,000 home with 20% down — discount points are figured into this rate. Around 2.875% is the average rate for a 15-year fixed mortgage on that $250,000 home with 20% down.

“The high twos, that would include a 1-percent discount fee,” David O’Block with area sales for CMG Financial, said. “Yes, 2.75, under 3%… never thought I’d say that.” O’Block is the Area Sales Manager for CMG financial. He has not seen home interest rates this low since 2009 through 2011 following the recession.

“I would definitely say now is an excellent time,” O’Block said. “Covid has made people want to buy a house, instead of living in an apartment or condo. So, it’s just a great time to be looking.”

“I think that this shows the market is strong, that there is still demand,” Stallings said. “It shows we still need listings to sell. We absolutely are seeing multiple offers on a lot of listings. I just heard about one yesterday. We had 11 offers on it. That means one person gets the house and there are 10 other buyers out there looking.”

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