KNOXVILLE, Tenn. (WATE) — A new report is shedding light on Knoxville’s current housing market. Right now, home sales are at their lowest since October 2017.
Home sales decreased nearly 16% from September to October this year, according to the ‘Market Pulse’ report from the Knoxville Area Association of Realtors (KAAR).
Real estate experts believe the decline in home sales is because of affordability. In the report, buyers needed to make more than $98,000 to afford the typical home listed for sale in October.
The income needed to buy a medium-priced home has risen about 57% in the last year and recently mortgage rates have risen the fastest they ever have in United States history.
“It’s had a big impact on affordability,” Hancen Sale, KAAR Government Affairs and Policy Director, said. and a lot of homeowners are locked in with rates below six percent.”
The median household income for Knoxvillians is a little more than $41,000 but in order for a home to be considered affordable, the cost of your home must be under 30% of your household income, as defined by the federal government.
A medium-priced home in Knoxville is about $310,000 but an above-average mortgage rate didn’t stop Jared Hencke from buying his first home.
“What if I could have bought over the summer with all that competition with a little bit less interest rate,'” he said. “But the time is good, if you’re looking to avoid some of the rushes, some of the crowds, and heartache from the multiple offer situations, the time is good now.”
For Hencke, he and his wife had enough saved to purchase their first house. But it’s a different story for many other potential buyers.
“It’s not that people don’t want to purchase a home, they just can’t afford to right now,” Sale said. “That’s not going to change unfortunately in the near term as interest are still probably going to stay elevated for another year at the least.”
Even though home sales are plummeting in Knoxville, the price of one continues to rise.
Sale added, “There’s really no indication that we’re going to see a significant drop in prices at this point. Given some of the demographic factors, the migration to East Tennessee, and the fact most people have fixed mortgage payments and that’s a good thing, we’re not going to see anything like we saw in 2008.”
Sale predicts home sales will be down next year. He added Knoxville’s hot housing market is cooling off from something that could not be sustained.