In previous years, Presidents Day weekend marked the beginning of the spring real estate market. A typical spring real estate season would mean many new properties coming onto the market and an abundance of open house events. However, this year, even thou we are still few days away from Presidents Day, it seems like the spring rush started weeks ago in the Northeast Tennessee real estate market. Many home buyers began searching for their dream home right after the beginning of the year in order to get the best deal possible. All this frenzy may leave some prospective buyers wondering if 2022 is the right time to look for a house.
2022 Tennessee Real Estate Market Update
The end of 2021 was marked as one of the strongest home selling quarters in the Northeast Tennessee real estate market in a decade. Even though overall home sales were down in January this year by 6.7% there was a 25% increase in sales of properties between $400,000 and $500,000, and 55% increase in $500,000 and up. This in turn raised the region’s monthly average price to $244,234 which is about $60,000 more than a typical sales price.
Moreover, the inventory in the Northeast Tennessee real estate market remains low with many areas offering only a month’s worth of housing inventory. On the other hand, builders are getting busy in some parts of the region such as in Kingsport where they recently announced plans for new single-family homes and townhome developments. They claim 2,500 lots in some stage of development. Washington County and Johnson City are also looking into adding new developments.
Real Estate Market Nationwide
Across the country home buyers have been fiercely engaging in bidding wars since the beginning of the year. Homes are selling faster than ever before with an average property staying just 61 days on the market. The time spent on the market is even shorter for large metropolitan areas, e.g. in Nashville TN the average home spent only 29 days on the market.
The housing inventory is at its lowest with new listings in January down by 9% year-over-year, and total inventory down by 28%. Builders have a hard time keeping up with the demand since they face rising costs of materials and land. There is also a shortage of qualified workers. Many builders may purposely slow down the sales of their houses to make sure they can deliver them on time.
Mortgage Rates On the Rise
One of the reasons many prospective home buyers rushed into the market ahead of the spring season is rising mortgage rates. The average mortgage rate for 30-year fixed-rate mortgage went up from 3.72% to 3.78%. Mortgage applications to purchase a house increased by 4% but they are lower by 7% comparing to the same time a year ago. Meanwhile, experts agree mortgage rates will go even higher this year.
High mortgage rates and low inventory prevents sellers from listing their homes. Home sellers know the inventory is lean out there and there are not many great deals to be found. Additionally, most of the homeowners now have a mortgage rate of around 3%. Purchasing a property now would mean higher mortgage rate and higher monthly payments.
Homeowners Enjoy High Equity Gains
Home sellers who sold their houses last year have made some substantial profits. Due to bidding wars and buyers competing alongside investors, the gain on a typical home sale last year was just over $94,000. This number is up by 45% from the profit in 2020, and up 71% from the returns seen in the pre-pandemic years.
Home sellers are not the only ones who are seeing major gains. The majority of people who own a Northeast Tennessee real estate property were considered equity-rich at the end of last year. When an owner is considered equity-rich it means they owe half or less on their mortgage comparing to their property value.
Should You Consider Buying a Northeast Tennessee Real Estate Property in 2022?
Buying a real estate property in 2022 differs tremendously from the house hunting experience of the previous years. The low inventory created a strong sellers market and bidding wars are now a new normal. Additionally, houses in the starter-home category are at record lows which is a major concern for typical first-time homebuyers with incomes between $75,000 and $100,000. However, the most successful home buyers who managed to find their dream home in recent months were the ones who used stimulus checks and pandemic restrictions to save money for a down payment. If you are disciplined when it comes to your finances you should definitely consider purchasing a property in 2022.
Why You May Not Want To Wait
- One of the reasons you may not want to wait to purchase a home are rising mortgage rates. The rates are high now but the Federal Reserve is considering raising the interest rates to deal with inflation. A few months delay may mean a much higher monthly house payment and less purchasing power.
- Rents are on the rise. Across the country, the average monthly rent is 14% higher comparing to last year. Experts predict rents will go up even more in 2022. If you don’t want to worry about how much rent you’ll have to pay next year think about becoming a homeowner this year. At least if you purchase a house you’ll know exactly what your monthly payments will be for years to come.
How to Find Your Dream Home in 2022
If you’re serious about buying a Northeast Tennessee real estate property you need to concentrate on your finances this year. Making sure your credit score stays high and paying off any debts should be your primary focus.
- Before you contact an agent make sure you have been preapproved for a mortgage.
- When you see the house you like you need to be prepared to make an offer immediately. At the same, make sure you’re only offering what you can afford and don’t go over your budget.
- You have to be ready to put up a 20% down payment. If you offer anything less than this you will need to pay for private mortgage insurance which can be anywhere between $50 to $100 a month.
- Just because you qualify for that big mortgage doesn’t mean you should take it. Think about your other loans and monthly expenses to ensure you can handle the financial burden of a house payment.
- Buy a house you want to live in for many years to come. Long-term planning is a key to successful homeownership!
Our experts at A Buyer’s Best Choice Realty can help you decide if this is the right time for you to dive into homeownership. Give us a call at 423-283-4677 or send us a message to learn about our exclusive buyer agency services.
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