The local real estate market continued its steady, if non-spectacular, upward climb - according to statistics released on Tuesday, in both number of homes sold and median price, according to data released by the Multiple Listing Service of the Chattanooga Association of REALTORS.
In May of this year, Southeast Tennessee and the Northwest Georgia area saw the sale of 628 residential units, a 2.8% increase compared to the April 2010 sales level, and a gain of 29% over the same month of 2009.
“Obviously, we’re very pleased with the May results,” said Association President Randy Durham. “There had been some level of apprehension that, with the expiration of the Homebuyer’s Tax Credit on April 30, sales might have taken a downward turn immediately. That didn’t happen.”
He said, “We’re also glad to see the uptick on median price as well, although those values have yet to return to where we think they should be.”
Chattanooga Area MLS President Bobby Teems concurred with Mr. Durham’s assessment. “We’re thankful to see the sales level pickup,” he said. “But, if you look at historical trends, it should have been much greater, had we not had the crippling recession of the past two years. I cannot call our present condition “growth”, because we’ve only regained ground that the recession cost us in the past 30-40 months. Jobs, as always, are the key, and that topic continues to be a great concern to us.”
The latest available figures from the Bureau of Labor Statistics show a favorable trend for the Chattanooga-North Georgia Market, with a decrease in month-to-month unemployment from 9.5% to 9.0% reported.
However, Lawrence Yun, chief economist for the National Association of REALTORS cautioned against misreading of what appears to be a positive trend. “Unfortunately, (many of the gains) were related to short-term Census jobs while the private sector job creation weakened in the latest month,” he said.
“(BLS statistics) are not based on company payroll data but based on asking people if they have a job. In this household survey, many have left the labor force and are not searching for jobs and hence not getting counted as being officially unemployed.”
Moody’s Analytics expert, Mark Zandi, put it more bluntly. “Businesses are no longer cutting payrolls, but they have yet to resume hiring in a significant way. Unemployment and underemployment, which surged during the recession, remain extraordinarily high and are unlikely to fall meaningfully soon. With continued aggressive monetary and fiscal policy support, the economy and job market should improve further; by this time next year, a self-reinforcing expansion will take hold. Still, it will take three to four years to make up the number of jobs lost during the recession, and four to five years to return to full employment. The unemployment insurance system should remain a key part of the policy response, helping facilitate the return to full employment.”
Mr. Durham also took note of recent developments regarding mortgage interest rates. “Reports from the experts at Bloomberg are now saying that mortgage rates might not be low for much longer. They contend that signs of improving economic conditions could lead Federal Reserve Chair Ben Bernanke to raise key interest rates, driving up mortgage rates. It’s certainly a situation that we will monitor closely,” he said.
For the month of May, the local median home price was $130,500. That represents an increase of 4.4% from April 2010, and a 2.0% increase from May of last year.
Mr. Durham said, “Our National Association has statistics that show a majority of markets are experiencing median price increases. I believe that a return to responsible lending and buying will help the housing market avoid disruptive bubble-bust cycles, and the very painful conditions of the past few years.”