KNOXVILLE, Tenn. (WATE) — It has been roughly one year since the pandemic put the housing market on hold last spring, but it didn’t last very long.
While the sale of existing homes dropped and realtors were unable to take prospective buyers house hunting a year ago at this time, the market has rebounded; shifting into high gear last summer and maintaining momentum.
The housing market in East Tennessee bounced back in 2020 much faster than other sectors of the economy across the state. Low interest rates, as well as low inventory of homes, but a high demand for them has kept realtors busy and buyers snapping up homes.
The housing market in the greater Knoxville area has not slowed down since last June. The pandemic-driven demand has sent 2020 home sales to the highest level since 2006. And for the first quarter of 2021, the sale of existing homes is off to a strong start.
“It should be a good year. We are seeing a lot of sellers who want to upsize,” Claudia Stallings, vice-president of residential sales for Coldwell Banker Wallace, said. She keeps close tabs on the existing housing market for the General Knoxville Area.
Multiple Listing Service records show the number of homes that sold increased by 9% last year.
“We’re the dark blue line right at the top. In 2020, starting in March, April, and May we had a dip. This is due to the COVID shutdown,” Claudia Stallings said. “But starting in May we did nothing but set records the rest of the year and we continue to set records on our closings board.”
In East Tennessee, potential buyers are bumping up against barriers in today’s housing market.
What’s happening? Record low supply and record high demand is driving home sales.
“The active listing, the actual listings we saw come on the market and remain available is far down from where we were last year. We are down 26 percent. We’re seeing that in January through March of last year we had almost 11,000 homes on the market. This year right around 8,000,” Claudia Stallings said. “So, that is the supply problem. The demand problem is when we get into our pending sales. Demand is up 19 percent so almost 20 percent… This is quite a difference when you figure supply was down 26 percent.”
Another big difference since the pandemic began is the sales price of an average home in the greater Knoxville area.
“We have never seen an increase like this in the history of our MLS. So what we saw — this time last year, the average sales prices was right around 243,000 (dollars). This year, 300,000 (dollars). We are up 23 percent in sales price.”
She also said this was a historic high.
We reported last month how the construction of NEW homes in the area is up. In some counties, the issuing of permits increased by 25 to 50 percent.
“We are selling them at a faster rate than we can build them,” John Cook, president of Cook Brothers Homes, said. “On our scatter lot side of the company, we are sold out until October on our starts.”
John Cook builds high-end luxury homes, many over half a million dollars. Since the pandemic began, lots of people are purchasing new and existing luxury homes.
“This time last year in our area we sold about 270 luxury homes. That’s about 500,000 or above. This year we have sold 526 luxury homes that is a 94 percent increase.”
While the vast majority of people can’t afford a luxury home they are snapping up average prices homes.
“What we are seeing is that there are still going to be far more buyers than there are sellers,” Claudia Stallings said. “Low supply and high demand and that’s going to last for a while.”
The National Association of Realtors reports millennials make up the largest share of homebuyers in the U.S. according to a 2020 survey. Nearly 5 million millennials are turning 30 this year and will continue to do so for the next three years. The main challenge for housing is meeting this upsurge in demand with a declining supply.
For those moving to East Tennessee from larger cities and flush with money, realtors say the competition is so tight — more and more buyers are making all-cash offers.