Wallace Real Estate COO Claudia Stallings recently sat down with WATE's Veronica Ogbe on the Living East Tennessee show to chat about the local real estate market. Check out her interview below, and scroll to read more of her insights about what we saw in 2023, and what's to come for East Tennessee real estate in 2024!
What happened to the market in 2023?
Claudia Stallings, Wallace Real Estate COO: The total number of homes that entered the market for sale was down over previous years, likely due to rising interest rates, and sellers deciding to hold on to their current lower rates and stay put rather than making a move. Likewise, the number of homes that buyers put under contract and ultimately purchased was down over previous years due to three things: 1) fewer homes available for sale; 2) higher sales prices; and 3) the higher cost of borrowing due to interest rates.
The thing is, that we’ve come off of such an unusual high sales period during and immediately following Covid, that 2023 feels like it was a slow year, even though statistics show that sales this year were similar to those we saw in 2016, 2017 and 2018, three years when we felt like the market was pretty balanced.
How long might it take your home to sell in 2024?
Claudia: Homes certainly sold faster in 2021 and 2022, however, this year, our area’s average time on the market was 34 days. The way those days are calculated in our Multiple Listing Service is from the time a home is placed on the market to the time it closes. And, for a smooth closing without any hiccups or delays, it can take between 20-30 days for the home inspections, appraisals, title work and mortgage information to be processed, which means a home may only be on the market for a week before a buyer and seller come to an agreement in the form of a contract.
The first week or two are the most important for a seller. If a home is priced fairly according to today’s market, then any buyer who is actively shopping for a similar home will likely want to take a look. That means that the first few days will be the busiest for showings and thus, increased buyer competition for the home. However, if a home is overpriced and is rejected by those who are currently in the market, then the only audience it may have will be for buyers who are just beginning their search and it may lengthen the time a home is for sale.
What about sellers who might be wondering if selling now will cause them to lose money?
Claudia: While the market price of a home varies by location, condition, and size, in 2023, our area set record highs for the median sales price, which is around $340,000. In general, if you purchased your home earlier this year or in any previous year, you are likely to find that you can sell it for more than you paid for it. However, it’s important to know that, compared to 2020, 2021 and the first half of 2022, that prices increased much faster than we are seeing today, as higher interest rates have more recently slowed demand. So, while we have seen annual increases since 2020 in the 15-20 percent range each year, 2023 saw a 6 percent increase. If properly priced, homes in our area are selling for 98-99 percent of their asking price, and it’s still true that some areas are seeing homes sell for more than asking price.
Should you wait for home prices to go down before you buy?
Claudia: It is predicted that our area will see a price increase of around 7 percent for the Knoxville market by the end of 2024. So, while interest rates have recently been going down and the prediction is that they will continue to fall, buyers are likely to pay more for a house the longer they wait. Season also plays into this decision. During the winter, fewer homes are available for sale and fewer buyers are actively searching for homes, as everyone waits for the “spring housing market.” That means that buyers have both fewer choices, but they also have less competition for homes right now so prices may be relatively stable. In the spring and into the summer, they will have more selection, but warmer weather also brings out more buyer competition and demand causes price increases.
What are some predictions for the 2024 market?
Claudia: A lot of buyers who were in the market pushed pause when interest rates kicked up in 2022 and 2023. That means that there are buyers out there who want a house, but who have been dormant. In other words, there is pent-up demand. If interest rates go down, those buyers will likely become active again. Because we still expect to have more demand than supply in our area, we are anticipating that will only cause prices to rise.
Housing affordability is a concern in our area, and homes listed below our median price will likely sell quickly. I am hoping that, if we get relief in interest rates, that more sellers will opt to list their homes for sale. As for the luxury market, it has remained relatively stable, as our area is such a beautiful, desirable place to live.
I think sellers will need to be reasonable with their pricing, and that buyers may have a little more ability to negotiate price and repairs, depending on the situation. But, this is what happens when we begin to enter a more balanced market, which is where we are headed.
At Wallace Real Estate, our agents are always looking at market movement and trends, so to have insider knowledge on how your home may perform in the market if you list it, or to get guidance on how and when to buy, it’s best to reach out to one of our professionals. Monitoring the market by watching what’s for sale and what’s being sold is also a good way to understand what’s happening, and anyone can do that at WallaceTN.com.
