The Johnson City real estate market remains red hot with home sales up 6.4% from May, and the average sales price increased by 9.8%. The demand among home buyers is high and the market continues to favor sellers. However, there are some signs which suggest the real estate market is slowly beginning to transition. This is good news, especially for the first-time home buyers who continue to struggle to purchase their first property.
Real Estate Nationwide – Latest Update
Nationwide, real estate prices have grown almost 18% according to the year-over-year analysis. Growth in home prices reached an all time-high for three months in a row. Many experts agree that prices will increase more throughout the year. Along with increasing prices, principal and interest payments are on the rise by 18%. Even though mortgage rates remain historically low, the payment-to-income ratio is rising. It is estimated that monthly mortgage payments on the average house makes up 21.3% of the median household income.
About 14% of homeowners, which constitutes almost 7.25 million borrowers in the country, have participated in the mortgage loan forbearance programs. Out of that number, 28% of homeowners remain in active forbearance. Due to the loan forbearance and other government aid programs the rate of foreclosure activity dropped by 2.5% for the month of May.
Rising home values mean greater home equity which is excellent news for existing homeowners. Many homeowners took an opportunity of higher equity available to them and switched from an FHA to a GSE loan in order to lower their loan interest rates and to eliminate mortgage insurance payments.
Johnson City Real Estate Market Transitioning
Home sales in the Johnson City real estate market were up in June comparing to May, but they were lower than home sales in June last year. There were 846 closings last month, down 3.4 percent from last year.
Housing inventory is slowly increasing and construction materials have seen a slight drop in prices. According to the Northeast Tennessee Association of Realtors, the Johnson City real estate market area had a 1.4-month supply of houses in June. In May, the housing inventory hovered at 1.3 months. Housing inventory numbers still remain well below the sufficient amount to satisfy demand.
At the end of June there were 1,192 active listings in the market which is up from 1,048 in May. The number of active listings has been on the rise for three consecutive months. For the first time since September 2020, new listings have outnumbered the number of newly accepted contracts in June.
Additionally, mortgage rates are displaying a slight shift towards a more moderate market. The average mortgage rates at the beginning of the year were at 2.6%, then moved up to 3% and beyond. At the end of June the average rates were at 2.98%. Higher mortgage rates, combined with other factors, can help to slow down rising home prices.
How Today’s Market Affects First-Time Homebuyers
According to Fannie Mae’s latest Home Purchase Sentiment Index (HPSI), most consumers agree this may not be the best time to buy a home. The HPSI’s “Good Time to Buy” component shows that the number of respondents who said it is a bad time to buy a house went up to 64% from 56% last month. When it comes to the question of selling a house, 77% of respondents say now is a good time to sell, which is up by 10% from May.
High prices in the Johnson City real estate market, as well as the rest of the country, are the main reason buyers don’t want to purchase a property right now. The numbers are even lower among renters who don’t think they will be buying a home any time soon. 48% of respondents, up from 47% last month, are confident home prices will go up in the next 12 months.
Consumers who think mortgage rates will drop in the next 12 months make up 6% of the respondents. According to the 57% of consumers, up from 49% from last month, mortgage rates will go up in the next year.
The consumers who remain most pessimistic about home buying conditions at the moment are first-time homebuyers. The affordability issue will not be so much of a factor for people who already own or have owned a house. Experts agree, demand for housing will remain high throughout the rest of the year since mortgage rates are still at very favorable levels.
Should First-Time Homebuyers Wait to Buy a Home?
If you’re a first-time homebuyer looking at properties in the Johnson City real estate market you may be wondering if it’s a good time to buy now. The housing demand is soaring and property prices are sky-high. However, inventory is starting to rebound some which may suggest more real estate options in the next few months.
No two buyers are alike. For some first-time homebuyers it may make sense to stay a little longer with the in-laws or to renew their rent for the next few months. Depending on several financial factors you may or may not be ready to buy a home now. First-time homebuyers should weigh their options carefully without emotions getting in the way.
In order to buy a property you need to have stable income. Since the pandemic began there have been many prospective real estate buyers who couldn’t be too sure about their job security. Fortunately, this outlook is changing. According to the Home Purchase Sentiment Index (HPSI), the number of respondents who stated they were not concerned about losing their job within the next 12 months went up from 87% last month to 88%.
Another job related factor is the type of work you do. You may boast a high income and low debt-to-income-ratio so paying for a house over the asking price may not be a problem. However, if your employer may require for you to move within the next few years, buying overpriced real estate now will almost certainly produce significant losses in the future.
Buying your first home is a long process which can be very exciting or very tedious, or sometimes a little bit of both. It is always a good idea to work with a professional who understands the real estate market now and specializes in helping home buyers find the right home at the right time. Read more about our exclusive buyer agency services here.
If you have some specific questions about the Johnson City real estate market don’t hesitate to give us a call at 423-283-4677, or send us a message, and we will get back to you as soon as possible!