2012 poised to be a better year for serious, motivated sellers
2012 poised to be a better year for serious, motivated sellers
By CLARISSA HILLS BROWN
If there are benefits to being a qualified, serious buyer poised to wade into local housing market waters during the upcoming peak selling season, there's equal benefit for serious, motivated sellers. Before we get into specific recommendation to achieve that goal let's talk about some baseline local market information. Local is the key phrase because many people get their information from national housing reports so they always have skewed ideas about conditions that affect them most - their local market. Some of what follows is a little wonky, but it's important stuff to get a good grasp on local market conditions and what drives them.
Area wide, the number of homes sold here last year was an improvement over 2010, and the average price was down 5% below the 2010 average.
First and foremost, that's a description of the 11-county market monitored by the Northeast Tennessee Association of Realtors Trends Report. Precise conditions in county or city markets are a little different. That's the local nature of the real estate market. More about that later.
A key market trend indicator is quarterly sales and prices. It shows a less volatile picture than month-over-month comparisons, but illustrates the same trends and is a little easier to follow. But there's one big caveat about last year's comparisons. You have to remember that federal tax credits were still influencing the market until the last two quarters of 2011.
What we see when we look at a regional quarterly average 2010 - 2011 price trend line is the local market hit a two-year low in the first quarter of 2011 then began posting solid gains in the second through the fourth quarters. Those gains put the 2011 prices basically in line with the 2010 average price. The 5% decline in the annual price is the effect of those first-quarter bottoming-out prices.
Another key price indicator is the CoreLogic non-stressed sales index. It showed solid performance during most of last year indicating sellers employed strategic pricing to compete with the market effects of foreclosures and short-sales. It's good news because it shows local non-stressed prices are gaining ground against the drag exerted by distressed sales. The index moved above the zero line in March then posted monthly gains until the end of the year.
And finally, the most current Federal Housing Finance Administration House Price Index shows some local price appreciation. The most noteworthy is the four-county Kingsport-Bristol MSA. It had a Q3 2010 price appreciation of 1.22% - the 18 best in the nation. The difference between the NETAR Trends data and the FHFA index is while both monitor home prices each draws its information from a different data set. NETAR uses local Multiple Listing Service information while the FHFA uses FHA same-sale and refinancing data. The Q4 FHFA index should be out next month.
Another key to an improving upcoming prime selling season is mortgage rates. Currently they are at or just below 4% for a 30-year fixed-rate loan. Industry analysts expect higher rates this year, but they should still remain low. There's also signs that more banks are willing to ease what can only be called overly strict under writing standards last year.
Finally the market indicator that has both national and local market watchers excited is the median home price to the median household income ratio. Nationally it's now trending below its long-term 3-to-1 average after soaring well above 4-to-1. What that means is the national housing market has reached a significant affordability tipping point. And, as with many of the local vs. national market comparison, the local numbers are stronger.
The ratio in all but two of the local county markets is lower than the key 3-to-1 number. Johnson City is slightly higher and Bristol, TN is 3-to-1.
Bottom line: the local market has weathered the recession better than other markets and is poised to make some additional gains this year. Baring some unforeseen economic disaster, the gains should be slow but a continuation of improvement.
During the next several weeks we'll look at how sellers can use all this information to review and tweak their marketing goals to conform with market trends for the upcoming season.
