An update on the past, current, and future trends in our housing market.
Within the last year, the average home value in Knoxville has risen by 25%, leaving us with a current average of $274,440. The average number of homes on the market was 1,200 at the beginning of 2021, but in the fourth quarter of this year, inventory is almost double that. Keep in mind that interest rates are still very low. That means there’s not a huge difference in how affordable your mortgage will be.
For buyers, that means there will be more options for you to choose from and fewer multiple-offer situations to deal with. New inventory hits the market every week, meaning you won’t necessarily have to offer above asking price to succeed. We’re even beginning to see price reductions among sellers whose properties have been sitting on the market for longer than usual. The average days on market is still under 30 days in Knoxville.
The price per square foot is now above $140; just a couple of years ago, it was at $120. However, this increase is understandable. The cost of materials has gone up for everything, including fuel.
Many people are concerned that our market conditions seem to point to a market crash in the near future. However, I want to shed some light on that. Back in 2008, we had the largest financial crash since the Great Depression. The average homeowner in America at the time was sitting on an adjustable-rate mortgage, which is fixed for a certain period and then becomes subject to increases or decreases. Because so many people were defaulting on mortgages, the interest rates went up, so the average homeowner saw significant increases in their interest rates. Some of them could no longer afford their payments.
“ Our market isn’t anything like the one after the market crash in 2005.”
I don’t think for a second that we’re going to be in the same situation as 2005. If anything, we’re heading for a market correction. Instead of home values going up 27%, they may come down a little bit to be around more normalized levels. The good thing about our economy now is that it’s strong, and the vast majority of government-backed loans are 30-year fixed mortgages that have much stricter requirements for qualification. Many mortgage companies are requiring more down payment money, which ultimately puts you in a better debt-to-income position and gives you a better loan-to-value for the property.
Experts project that interest rates will go up next year, meaning that homes will sit on the market for a little longer, and people will likely feel more comfortable listing.
If you have any questions about what’s going on in today’s market or what we expect from the future, don’t hesitate to give us a call or send us an email. We’d love to help you.
