In the midst of the worst economic slowdown since the Great Depression this spring due to business closings due to the coronavirus pandemic, Chattanooga's real estate market has remained relatively dynamic.
Despite a drop in sales in April and May, Chattanooga property prices rose more than twice the year-over-year average in the second quarter of 2020, according to the National Association of Realtors.
The average price of properties sold by Chattanooga Realtors rose 8.6% last year to $ 213,500 in the second quarter. In July, real estate sales by brokers rose more than 20% year over year, pushing the average price of properties sold last month to a record high of $ 235,000, up 11.9% year over year.
"Summer is drawing to a close and schools are starting at their varying capacities, but don't think the real estate market has slowed," said Brandi Pearl Thompson, president of the Greater Chattanooga Realtors Association. "The economy has certainly been impacted by COVID-19, but until then the real estate market has not been negatively impacted."
Although Chattanooga unemployment rose to a record high of 13.3% in April, unemployment has declined in recent months and the economic impact of the job losses suffered this spring has been offset by record incentive measures by Congress and the Federal Reserve that the Maintain income and reduce borrowing costs.
Chattanooga also benefits from its relatively attractive residential property prices due to both lower prices and lower property tax rates than much of the country. Despite an above-average rise in Chattanooga home prices last year, the average Chattanooga home price was still 26.7% below the US median in the second quarter, NAR numbers show.
The rise in property prices is also offset by lower borrowing costs.
"Although real estate prices have risen steadily, taking into account cheap mortgage rates, buying a home in the second quarter of 2020 was generally cheaper than it was a year ago," said Lawrence Yun, chief economist for the National Association of Realtors.
Nationwide, the monthly mortgage payment for a typical home purchase financed with a 30-year fixed-rate mortgage and a 20% down payment rose slightly to $ 1,019 from $ 995 in the first quarter. However, that total is still below the $ 1,078 level a year ago.
Real estate prices are driven by limited inventory. Some sellers remain reluctant to list their homes as they continue to have concerns about COVID-19.
For example, in July, the Chattanooga Realtors' multiple listing service had only 1,623 properties available for sale, a nearly 47% decrease from the number of property listings a year ago and fewer listings than the nearly 2,200 licensed estate agents and real estate agents selling properties in the Chattanooga area.
Yun says record-low mortgage rates will no doubt continue to attract new buyers, but that more homes are needed. "Unless more new homes are built, some buyers may miss or delay the opportunity to buy a home," he said. "In the meantime, prices are showing no signs of falling."
Fifteen metropolitan areas in the US saw double-digit price growth in the second quarter, including Huntsville, Ala., At 13.5% and Memphis at 13.4%.
San Jose, California maintained its spot as the most expensive metropolitan area in the country for the second quarter, with an average home price of $ 1.38 million, up 3.8% year over year. The lowest average price for homes sold this spring in Topeka, Kansas was $ 147,800.