Originally Published by Chattanooga Times Free Press July 12, 2023
Beverly McGregor has bought and sold four of her own homes in the Chattanooga area over her lifetime, but even with decades of such experience, she said she was surprised to see the higher prices for houses in today’s market.
“I never dreamed that home prices would get this high in our area, but we were able to find a great home that my friend and I are able to buy by both of us selling our previous homes,” said McGregor, a retired special education teacher who moved into her new home in Lakesite in late June.
Although Chattanooga home prices remain nearly 20% below the U.S. average, the median price of homes sold last month by Greater Chattanooga Realtors jumped to a new record high of $339,950 — more than $200,000 higher than a decade ago.
Chattanooga home sales dropped by nearly 15% in the first half of the year as higher mortgage rates are slowing the market from the record levels reached two years ago, according to the Realtors. But home prices remain elevated even with lower sales and higher borrowing costs.
The median price of $339,950 means half the homes in June sold for more than that, and half sold for less.
The average Chattanooga home price, which reflects the total value of all home sales divided by the number of houses sold, was $392,901 in June, according to the Realtors’ multiple listing service.
The price of homes sold in Chattanooga has more than doubled in the past seven years, rising at an average annual rate of more than 15%, according to reports by the Realtors organization.
The price increases have come even as 30-year mortgage rates, which dipped below 3.3% in early 2022, have since doubled to further boost the cost of housing for most homebuyers who finance their purchases.
“Affordability is obviously more of a challenge with higher mortgage rates and prices, but we are still seeing a lot of relocation activity from people moving to Chattanooga and from changing housing needs by those already in the market,” said Steven Sharpe, a managing broker for Keller Williams, who is president of the Greater Chattanooga Realtors. “There are a lot of people who are either downsizing because they are empty nesters with a smaller family size or others that are looking for more room and want to move up, especially with more people
working from home these days.”
BY THE NUMBERS
$339,950: Median price of homes sold in June in the Chattanooga area, up 3.4% from the previous
record high of $328,725 in June 2022.
$436,800: The median price of homes sold nationwide in the first quarter of 2023.
5,929: The number of homes sold in the Chattanooga area in the first six months of 2023, down from 5,100 a year earlier.
30: Number of days a typical home was on the market before selling in June, up from 13 days a year earlier.
1,778: Number of homes listed in the Chattanooga area last month, up from 1,638 a year earlier.
6.67%: Average rate for 30-year mortgages in June, down from the 7.08% peak in October and
double the 3.22% rate in early 2022.
Chattanooga remains an attractive market for many relocating homebuyers, especially those from high-priced housing states like California, “where a basic starter home there is a $600,000 property,” Sharpe said in a telephone interview Wednesday.
The influx of homebuyers from other cities is keeping Chattanooga as a sellers’ market even with the doubling of mortgage rates and higher home prices, said Todd Henon, another local real estate broker who has sold homes and farms in the Chattanooga area for more than two decades.
“I suspect that well over half of our buyers’ pool is coming from out of the area,” Henon said in a phone interview Wednesday.
The U.S. Bureau of Census estimates that between 2020 and 2022, Hamilton County’s population grew by more than 1.5%, adding 7,440 residents, or nearly 10.2 new residents every day. Statewide, the growth pace was even faster, with Tennessee’s population growing 1.8% in the past two years to add nearly 83,000 more residents from 2020 to 2022, or nearly 114 new residents every day.
The median price of homes sold in the Chattanooga area last month was more than 2 1/2 times the median price of homes sold a decade ago.
June 2023: $339,950
Source: Greater Chattanooga Realtors
“We just do not have enough homes for our area,” Henon said, noting that single-family houses continue to sell at more than 96% of their asking price in Chattanooga. “We’re still seeing attractively priced homes get multiple offers, and that pushes prices higher. If a property doesn’t sell right now, it is probably overpriced because there are so many eyes on our market.”
The inventory of homes on the market has grown in the past year and, with the drop in sales, the average time that a Chattanooga house was on the market before selling last month was 30 days, up from the record low of 13 days a year earlier.
Mark Hite, a top-selling real estate agent who heads his own team for Real Estate Partners in Chattanooga, said a healthy market for homebuyers needs more inventory of homes.
“It’s a matter of supply and demand, and we still don’t have a sufficient number of homes being sold on the market to keep up with the demand, even with some slowdown due to higher interest rates,” Hite said in a phone interview Wednesday. “There remains a very strong demand for affordably priced homes in this market.”