Market Update – November, 2012
By Gary J Venice
Welcome to our opinion on the Market Analysis of East Tennessee Real Estate for November, 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.
The market for our region shows a continued trend of improvement over the last nine months. 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 and we expect that to continue here through the end of 2013.
The rate for an average 30 year fixed conventional loan in the 3.32 %, 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 now the potential that new taxes and government regulations could have a detrimental effect on a market that is just now starting to show improvement. (See my commentary on the war on home ownership at http://www.gvenice.wordpress.com) 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 7% in November. 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 67, and continued to show an improving market over the last nine months, Last month and the total sales dollars were $ 9,017,360.00, up 10% from last months total $ 8,185,566.00. The unit average cost (which is the average of all closings) was at $ 134,587.00 which was an increase of 23% over last months $ 109,140.00. In addition, the raw land component of the total number of closings was 7%.
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 89% 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.
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 email@example.com and we would be happy to answer your questions
Market Details Analysis
For the month of November, residential activity in all of the price ranges and areas continued to improvement. The land/residential market percentage showed a lag 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 75 by the end of 2013.
The total sales volume for the region has been moving up over the course of 2012. With this trend continuing into 2013, the total monthly sales would be sustainable above $ 8,000,000.00 in total sales volume.
The average sales price is important because it shows trending in home and property value over time. As mentioned previously, the slipping back and forth will prove to be a continued trend and we are still expecting that trend to continue to move higher through the end of the year.
If you would like a detailed analysis about our market regions performance you may contact us at firstname.lastname@example.org and request additional information.