For those who are waiting for the price of single-family homes in Chattanooga to start dropping, they should forget about it, said the president of the Greater Chattanooga Realtors Association.
Robert Backer told members of the Downtown Kiwanis Club on Tuesday: “These prices may level off a bit, but they will never come back down.”
Mr. Backer said Chattanooga “had been our own little hidden secret, but now everyone has found out.”
He said people from faraway places like California, Chicago, New York and Florida are moving en masse to Chattanooga.
Mr. Backer said Scenic City is also welcoming many new residents from places like Atlanta and Nashville. He said Nashville is “too crowded and too expensive,” but many find Chattanooga to be perfect.
The influx and soaring house prices occurred during the COVID-19 pandemic, when businesses were forced to let many of their employees work from home. He spoke of a couple from San Francisco who work remotely and moved here where “the cost of living is much lower than in San Fran”.
Mr. Backer said that as a result, the owners of Chattanooga have discovered that they “have tons of equity and can make a lot of money selling their home.” On the other hand, he said, “You’re going to have to pay a lot of money to get another one.”
He said during his 25 years as a real estate agent in Chattanooga, “I’ve seen our market take different directions, but nothing like it. It’s been two crazy years.”
Mr. Backer said that 3-4 years ago, Chattanooga would have between 2,500 and 3,500 homes on the market at any one time. He said it came down to 450 two months ago and rebounded slightly to hit the current 1,047.
He said the median home price had risen by more than 25% in a short period of time, increasing from $ 5,000 to $ 8,000 a month in recent times. He said the median home price in Chattanooga in 2019 was $ 214,000. It was $ 237,000 a year ago, but it is now $ 275,000.
“This market is very frustrating – unless you’re a listing agent. So that’s great,” he said.
Mr. Backer said at one point, “You could put a house on the market for $ 300,000 and then get an offer for $ 280,000 and negotiate on it. He said, “Today you really can’t do that”. above list price – are now the norm. Homes here on the whole are now selling for 100.5% of asking amount.
Mr Backer said that a year ago homes were on the market for an average of 42 days before being sold. Now it’s 17 days, and many sell out within hours or days.
He said in some cases frenzied shoppers forgo pre-purchase appraisals and / or inspections. And he said some sellers are trying to take the frenzy to an even higher level – although those prices sometimes exceed the appraisal when the buyer is looking for a mortgage. But he said valuations were starting to catch up with rising prices as new, higher “coms” came in.
Mr Backer said he had house hunters interested in a home in Timbercrest in East Brainerd with a wonderful pool. He said that by the time they started making their offer, there were 24 offers in front of them. He said the house originally offered for $ 385,000 likely sold for over $ 425,000.
He said Ooltewah, which was kicked off by the Volkswagen plant announcement, “is still the fastest growing market.” He said several apartment projects were underway there and in Collegedale. He said Red Bank “is now a hot spot” and there is growing interest in East Ridge, with its new developments in Release 1. Interest is mounting towards Hixson. Another important growth area is the Southside, including along Main Street towards Ridge.
Mr Backer said many of those from out of town “love old houses” and shop in areas such as Highland Park.
He said money from outside hedge funds definitely affects the local real estate market, especially when it comes to apartment complexes. He said, “A lot of them are selling and the sellers are making a ton of money.” He said the former Mansion Hills Apartments in North Chattanooga made a profit of $ 15 million for a recent buyer turned seller.
Mr Backer said the high costs kept many of the prices away, noting he was struggling to find a home for his young son who is considering a career as a firefighter with his limited income.
He said one idea being explored is to convert commercial space in some downtown buildings into residences.
He noted that some are turning to apartment living, but he said they can cost as much as $ 1,500 to $ 1,800 per month.
Mr Backer said landlords are among those facing dangers in the current COVID situation, with many tenants stopping paying but staying. He said: “This can be devastating for homeowners, who cannot stop paying the banks on their mortgages.”
Entrepreneurs are also facing it, he said, facing skyrocketing supply costs and struggling to find workers. He said a wood kit that previously cost $ 1,800 to $ 2,000 is now $ 10,000 to $ 15,000. The additional costs for building a new home are $ 30,000 to $ 35,000 due to inflation, he said.
Another misfortune of the entrepreneur is having difficulty in obtaining supplies. He said houses that took six months to build could now take nine months.