The local real estate market continues to challenge both national sales trends and the pundits’ conventional wisdom, according to statistics released Thursday, in both number of homes sold and median price, according to data released by the Multiple Listing Service (MLS) of the Chattanooga Association of Realtors. In June, Southeast Tennessee and the Northwest Georgia area saw the sale of 637 residential units, a 1.4% increase compared to the previous month’s sales and a 12.7% rise over June of last year.

NAR Chief Economist Lawrence Yun said the Homebuyer’s tax credit has broadly stabilized home prices. “Without the tax credit, there will be more aggressive price negotiations between buyers and sellers. The key test on whether the housing market can stand on its own without stimulus medicine will depend critically on private sector job creation in the second half of the year. We’ll also keep a close eye on market conditions on the Gulf Coast.” Many observers believe that a prolonged crisis due to the oil spill could eventually affect other areas economically.

Local Realtors Association President, Randy Durham said that the industry is satisfied and relieved that Congress passed legislation extending the tax credit beyond its original expiration date to finalize closings on existing contracts. “At best, it generally takes about 60 days to close on a home after a contract is offered,” he said. “But so many of these transactions – nationally and locally - required much more time due to a variety of circumstances, usually complicated by added documentation required by lenders in certain types of sales. The additional period from now to the end of September should be adequate for most buyers to get the home they want."

Chattanooga Area MLS President Bobby Teems however, still voiced some concerns about the jobs picture. “Unemployment — especially long-term, almost chronic unemployment — has stayed at levels that would have been considered disastrous only a few years ago. And although our Metro area has witnessed an encouraging decrease down to 8.7%, that’s still over 22,000 people looking for jobs and not finding them. We need to find solutions that don’t involve throwing more good money after bad, and increasing taxes on people who are struggling to feed and shelter their families. Many of those in the most recent statistics were surely census jobs which have now ended, and the economy isn’t yet creating jobs at a pace that will materially help anyone.”

Scott Brown, chief economist for Raymond James & Associates, sees a circular “cause and effect” for the nation’s economic woes. He noted that low consumer confidence impacts spending and in turn, employment growth. However, he believes that a “double-dip” recession is unlikely, as well as a need for further federal stimulus spending.

Mark Zandi, of Moody’s Economy.com tends to agree in most respects. “The economic recovery is losing momentum. Retailing, housing, manufacturing, and most importantly the job market have weakened in recent weeks. Real GDP, which grew 4% annualized during the second half of 2009, has slowed to nearly 3% during the first half of this year and is expected to approach 2.5% during the second half. This rate is below the economy’s potential, and unemployment is expected to drift back up into the double digits.”

With unemployment so high and policymakers increasingly perplexed over how to respond, the risks to the recovery are rising again. The odds of a double-dip recession in the next six to 12 months remain far less than even but are uncomfortably high.

June was a month of record lows for long-term interest rates, according to mortgage finance giant Freddie Mac. Many consider this a sign that investors are seeking safe investments in an economy that continues to appear turbulent.

For the month of June, the local median home price was $130,000. That represents a statistically negligible decrease of 0.4% from last month, and a decline of 4.4% from the median price reported in June of 2009.

“I think that our median price statistics point out the argument we made to the Chattanooga City Council in their deliberations on increasing property taxes,” Mr. Durham said. “It’s very hard to make a sensible case for increasing taxes in an environment where homeowners and business owners are witnessing a decline – at least at the moment – in the value of their property. We had hoped that the Council would have looked at the larger picture, but unfortunately, they did not.”

In terms of the number of average days on the local market, June saw a small decrease of 2 days over figures from this past May, and 19 days from the same period of last year.

AREA # SALES $ MEDIAN SALES
Tiftonia-Lookout Valley-Elder Mountain 6 $150,250
Downtown-St. Elmo-Highland Park-Avondale-Missionary Ridge 34 $84,950
City of East Ridge 29 $95,000
Brainerd-East Brainerd 56 $120,950
Hwy 58-Eastdale-Dalewood-Tyner 23 $109,000
No. Chattanooga-Mountain Creek-Riverview-Rivermont 45 $160,000
Red Bank City Limits 11 $79,000
Hixson-Chattanooga City Limits 23 $120,000
Signal Mountain-Walden-Suck Creek 25 $250,000
Lookout Mountain 9 $360,000
Hwy 58-Harrison-Georgetown 20 $120,450
No. Hamilton County-Soddy-Bakewell-Sale Creek-Middle Valley 50 $152,500
Volunteer Site to Hunter Road 7 $164,000
East Brainerd (Cty)-Ooltewah 33 $220,000
Ooltewah-Snow Hill 25 $221,740
Collegedale (Includes Apison) 8 $174,950

TOTAL 404