Chattanooga area housing market rebounds – reported by the Times Free Press newspaper
The forced happy talk is gone, and the thin, tight smiles of years past have given way to genuine relief.
Though their ranks and wallets are thinner, the real estate agents of today are the survivors, the ones who made it through the worst housing downturn in their lifetime.
“We’ve finally turned the corner here in Chattanooga with sales,” said Harold Crye, president of Crye-Leike.
Last year marked the first actual turnaround for a market that had previously shown no signs of stopping its free fall. The upswing was marked by a 17 percent jump in sales in 2011, as the number of units sold bounced up to a 5-year high of 6,675 homes sold through the Greater Chattanooga Association of Realtors’ multiple listing service last year.
Total Chattanooga home sales in 2012 peaked above $1 billion for the first time since 2008, growing to $1.1 billion from $886 million the prior year, according to Realtors reports. Home inventory is at an 8-year low, and the number of rental households has climbed almost 25 percent in the last decade, straining current capacity.
Taken together, it was enough to convince Crye to resume the company’s big annual summer conference, which has been suspended for two years due to lack of funds.
“Times are finally good enough that the agents have a couple extra bucks,” Crye said.
He’s also spending millions of dollars on long-postponed copy machines, computers and renovations.
“We’re doing our part to stimulate the economy,” he quipped.
He’d better get in line. Construction companies across the nation have already added 98,000 jobs in the past four months, the best hiring spree since the bubble burst in 2006, and economists forecast even more jobs could be added this year, according to the Associated Press.
“People eventually get sick of living with their sister, and they move out and buy a home,” Crye said.
There’s no one cause for the uptick in home purchases, Crye said, but rather a handful of trends working in concert to lift the fortunes of real estate agents across the region. Homeowners with enough cash to talk bankers into lending them money have found great deals on homes that they could have never afforded during the market’s heyday.
But the record-low interest rates, low prices and rental backlog won’t last forever. Homeowners waiting for the perfect time to buy may have already missed their window, statistics show.
Higher home sales have reduced housing inventory, which takes time to develop and build. That in turn, has driven U.S. home prices higher than they’ve been in 6 1/2 years according to CoreLogic. Home prices rose 8.3 percent in December compared to the prior year, the biggest annual gain since May 2006.
The rising prices should encourage homeowners to sell, builders to build and developers to develop, re-starting the dormant real estate engine that once drove America.
“All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery,” Anand Nallathambi, CEO of CoreLogic, told the Associated Press.
Sales of distressed homes, which have made up as much as a third of all home sales in 2010 and 2011, are projected to fall to 5 percent by 2015, according to the National Association of Realtors.
“You’ve got to start talking about new lots, those new lots are going to be sold at a higher price, and it takes a year, sometimes longer to develop a subdivision,” Crye said.
In Chattanooga, Crye-Leike sold houses worth a combined $405 million for 2012, roughly in line with pre-recession levels in 2002.
However, the recovery hasn’t come without its casualties — 12,000 agents have left Crye-Leike during the downturn, leaving the company short of its 34,000-agent peak. And there’s still a long way to go before the company hits the $714 million mark it notched in Chattanooga during 2006, Crye acknowledged.
“We may not ever see those days again, but we’ll eventually get back to those numbers on our sales volume,” he predicted. “It’s time to start planning for a normal market.”