The Wave That We Just Experienced
You wouldn’t believe what the housing market just went through in Middle Tennessee. You’ve probably heard the stories by now, right? Massive upswing in home values. Some people are blaming Inflation? Some blame stimulus checks. What’s my opinion? I’ll share that with you below. Check out these stats before we dive in:
We all remember the infamous Covid Lockdowns that shut down most of the World, let alone America. It had an impact. The data on that could be its own Blog Post.
( Contact me if you’d be interested in learning more about that and I’ll create that post for you! )
For now, you can trust when I tell you that the impact in the Nashville region was actually minimal? Home Buyers that would have bought between April and June in 2020 ended up buying in July through December. There was an uncharacteristic spike in the number of homes sold in the later months of 2020. Our Home Expert Teams in both Georgia and in Tennessee experienced Buyers who were forced to pause their home searches due to temporary job “pauses.” They weren’t laid off necessarily, but they were given less hours and were forced to stay home, which changed their Debt-To-Income Ratios. But the overall momentum of the Real Estate Market chugged on like a loaded coal train smoking across the plains in 1900.
The first thing that stands out in the 2021 stats is the Average Sales Price and Median Sales Price… Both of those were higher than List Price compared to 2020. There were homes in ALL of the major suburbs – Nashville, Franklin, Murfreesboro, Gallatin – selling for more than $100k, even $200k over Asking Price in some cases.
However, if we examine homes sold in Franklin in May (5/1 thru 5/31), 20 of the 66 homes closed between $500-700k sold for more than $50k over Listing Price, or 30% roughly. There was a large density of homes in Franklin in 2021 in this price range. Very common.
In Nashville with the same price range, 23 of the 208 properties sold at $50k or more over – around 11%.
This instigates the question: What did those properties have that the others didn’t? I have another Blog Post on Increasing Your Homes Value.
The Point: There is a recurrent theme with the properties that are selling that high over asking price… They’re all “turnkey,” or well-renovated. They also are very “in tune” with the latest Home Trends for 2021. The best renovations leads to the best sales prices, period. You can’t expect maximum results with minimal upgrades. Even in a blazing market like this one, this notion still holds true! That’s why working with an experienced, professional Realtor is so important. We look at homes for a living! We’re on top of the market trends constantly. We study and research this regularly. And our Marketing Strategy exposes your home to more Buyers. That’s what makes us so successful. We’re market experts.
U.S. Census Bureau Charts
So What Is Happening? And Why?
If you journey over to the U.S. Census Bureau website and do some digging, you’ll find that there isn’t a true “Mass Exodus” of people fleeing California. There have been many speculations, including Press Releases, claiming this. But the data doesn’t confirm that hypothesis. It reflects that most Californians (and many other states for that matter) are committing to in-state migrations, unless you’re in San Francisco… Check out this California Policy Lab article containing numbers from the University of California Consumer Credit Panel.
New York is experiencing a vast return to residency, according to a Report by Unacast.
If Mass Migration to Tennessee & Georgia doesn’t actually hold validity, I think the appreciation rate that we’re experiencing is more long term and stable! If no outside phenomenon is causing the spike, that seems positive to me. Are we experiencing inflation? Absolutely. Gas prices have risen. Cost of grocery goods have risen. But jobless claims are falling at the moment (July 2021). Americans are going back to work. Rental bans from tenants not having to pay rent due to Covid-19 are being lifted and evictions are rampant. That added cash flow circulating through the Middle Class will benefit the economy, mark my words. And yes, there was a swing in Supply/Demand last year. Buyers and Sellers both exited the market but recently returned in full force. I’d argue that most Markets tend to be cyclical (not just real estate) and the overflow of Buyer Demand will re-stabilize. So I expect lower numbers in 2022. Will we see the same surge in home prices in 2022? What’s your opinion?
Mark your calendars for July 2022 and call me out if I predict this incorrectly! I predict that we’ll experience a market “stabilization” where homes appreciate at just slightly less than what they appreciated for in 2021.
Stay tuned to this Blog for useful information related to real estate.