By Gary J Venice, Managing Broker/Owner
Welcome to our opinion on the Market Analysis of East Tennessee Real Estate for June, 2012 which looks at and reports on the East Tennessee Real Estate Market. I will be sending this report and updating the Blog routinely with information that I think may be useful to you as another tool to help in your ongoing real estate plans and management.
If this is your first review of this report, our market region is broken up into three components, a north region, an east region and a west region. The east and west regions are divided by the Tennessee River.
The North region generally takes in all of Roane County as well as some of south Anderson and a portion of Loudon County.
The West region encompasses all of Rhea County, areas of North Hamilton, Eastern Bledsoe and East Cumberland Counties.
The East region covers all of Meigs County as well as a small part of North Hamilton (on the east side of the river) and extreme Western McMinn County.
In general the market for our region shows continued trend of improvement over the last several months and the second quarter improvements continue to trend of a positive year for sales. Buyers continue to return to the market in our region, we think due in part to the fact that this area continues to demonstrate its ability to hold its own as compared to the national market stand point; and with interest rates at historic lows, the value here is just compounded. We also believe that the foreclosure and short sale market here will continue to retract through the end of 2012 and should be at what has historically been a low range by years end.
The rate for a 30 year fixed conventional loan in the 3.8 %, a near historical low rate. In addition to the continued low interest rates, buyers are also seeing the inventory levels of properties in all price ranges continuing to slowly decline. Educated buyers are taking note of the trends and are increasingly ready to buy when they find the property they want and there is still a negotiating mind set on the part of sellers.
While mortgage lenders and banks have continued to make some progress on relaxing the tight requirements that are needed to qualify for a loan, there is still a long way to go for these institutions to return to reasonable requirements for lending. Appraisals continue to be an issue as they continue to come in at below market levels. In our opinion, the financial institutions need to continue to take prudent steps to facilitate the flow of money to qualified borrowers. The current method of appraisal selection should also be examined. While the original concept was sound, it has swung to far to one end of the spectrum (low and critical appraisals) and needs to return to a more balanced approach with local appraisers giving local appraisals.
The sale of raw land continues to be somewhat sluggish. Land sales as a component of the total sales was 14% in June. The total sales volume was down in June as compared to May, but the same as June. The best buying opportunities can still be found in the price ranges under $200,000.00 but the entire price range in the region show that sellers understand they are competing in a market with still high levels of inventory and are pricing their property accordingly. A buyer looking for a land or residential purchase has a great selection at prices that will not be this low for years to come.
If you are in the buying mode and you are looking at East Tennessee, my advice is the time to be making decisions is now. This region is always a good value but with interest rates where they are and with still higher than normal inventory available the time could not be better. If you are in the selling mode and located in East Tennessee, our recommendation would be to seriously consider getting your property on the market.
The total number of closings for the month was 51, down from 73, last month and the total sales dollars were $ 6,587,497.00, down 28% from last months total $ 9,115,525.00. The unit average cost (which is the average of all closings) was at $ 129,870.00 which was a decrease of 3% over last months $ 124,870.00. In addition, the raw land component of the total number of closings was 14%.
While the overall market indicators have improved, there remains a higher than normal level of inventory on the market and that continues to be felt. The average days on market when considering all properties is still in the 200+ days range, and that is well above the 170 day target we like to see. The under $ 200,000.00 range of residential properties is still the market leader accounting for 92% of the residential market closings. We have seen signs of the upper end properties starting to fill in and we expect that trend to continue into the end of the year.
On another note, the Federal Reserve Bank in Atlanta has released there 2011 Annual Report. Outlined below is a summary of their comments, as well as a link to the full report which yo might find interesting.
The Atlanta Fed’s 2011 Annual Report Details Four Economic Forces That Shaped the Year
July 16, 2012
The Federal Reserve Bank of Atlanta today released its 2011 annual report, which provides an interactive narrative of four forces that shaped the economy in 2011. According to the Atlanta Fed, these forces including the ongoing process of economic adjustment including deleveraging, certain dynamics in the labor market, a pervasive atmosphere of uncertainty, and monetary policy.
“All these influences were at work in a year of slow progress towards full economic recovery,” said Dennis Lockhart, president and CEO of the Atlanta Fed, in his letter accompanying the annual report. “While uncertainty and factors in the labor market were largely negative, adjustment and adaptation along with monetary policy were forces working to bolster growth, especially in the long run.” Lockhart continued, “Recoveries are never straight-line situations. There are ups and downs, twists and turns.”
In addition to the narrative, the interactive report features eight videos, which provide insights into key developments during the year. The report also allows readers to view and customize many charts and graphs and includes pop-up definitions of important terms, such as “Operation Twist.” The Atlanta Fed’s 2011 annual report is available from the Bank’s web site at http://www.frbatlanta.org/pubs/annualreport/11ar/.
For more information or to discuss how we can assist you with your real estate needs, please contact one of our Real Estate Professionals or you can email us at firstname.lastname@example.org and we would be happy to answer your questions
Market Details Analysis
For the month of June, residential activity in all of the price ranges and areas continued to shows signs of improvements. The land/residential market percentage showed a strengthening of land sales component and the upper end residential properties are starting to show signs of improving.
If we look at the closing data over time we can see a steady increase in the number of properties being closed in our market area. We expect that the average closed sales count to be about 65 by the end of this year.
The total sales volume for the region has been moving up over the course of 2012. With this trend continuing into the end of the year, the total monthly sales would be sustainable above $ 8,000,000.00 in total sales volume.