Here is what Billy has to say about the Knoxville/East Tennessee Market.
Five Essential Things You Need To Know About the 2015 Fall Home Buying Market in East Tennessee
Most local real estate experts have been trumpeting the Knoxville/East Tennessee housing market’s strength and resilience. Inventory is at record lows, home prices continue to rise, and foreclosure activity has ebbed to lows not seen since before the 2007 downturn. 2015 has been a good year for selling real estate.
Inventory Shortages: The story of the day is on the inventory front. The number of available homes in Knoxville/East Tennessee area has plunged to a record lows, thanks to both an abnormally small supply of existing homes for sale and a dearth of new construction not keeping pace with the current demand. Currently, there are over 1,300 (-10.2%) less homes on the market compared to same time (1) year ago.
Increased Competition: In addition to a dwindling supply of available homes, the number of buyers has surged. And not just traditional buyers – investors have comprised a sizeable chunk of the buyer pool since the downturn and continue to do so. Real estate investors are responsible for about 25 percent of the existing home sales each month. You, the prospective buyer, need to be prepared to move fast if you find a property you’d like to buy. Time and time again, I see buyers getting outbid because of their slow reaction time. If buyers are not 100% ready to buy, then they need to be patient because many will be outbid on one or two houses before they get the right house under contract. I have seen many times this year where we have listed a house and had multiple offers in the first couple of days. This year has been a sellers dream, because many of them sold for more than asking price.
Cash is Still King: Given the steep competition, all-cash buyers who can close a deal relatively quickly offer great incentive to sellers. My sellers are surprised to hear that about 30 percent of home sales each month are all-cash purchases.
The Good News: Being a banker for over 25 years, I have seen the ebbs and flows of easy credit standards to the more difficult ones we have seen the last few years. I have seen lenders more recently make an effort to get more monies into the market places. We have seen much more new construction in the last 12 months as compared to the last 5 years. And I can say there definitely is pinned up demand for folks looking for new home construction.
More Good News: We are seeing a definite correction in the appraisal business. A few years ago, appraisers were consistently under-valuing properties, reacting to the over-conservative nature of their shell-shocked underwriter patrons. Today, we are seeing the vast majority of appraisals coming in at value, killing far fewer deals than in the past.
If you’ve been considering buying a home it’s critical to understand the amazing tax benefits you’ll enjoy. Talk to your CPA to get professional advice, but here’s a brief look at some of the tax benefits of home ownership:
The Purchase. The IRS says that in most cases loan discount points and origination fees are tax deductible to the buyer, regardless of who pays them.
Mortgage Interest. In general, you can deduct interest charged on a loan used to acquire or improve your principal residence in the year that it is paid. In the early years of a loan, most of your monthly payment is interest, so this can really add up. If you are in a 28 percent federal tax bracket, this can have the effect of lowering your borrowing costs by almost a third.
The Sale. If you have owned and occupied your principal residence for at least two of the past five years, you can earn up to $500,000 on the sale of that house and pay no federal income tax whatsoever. That’s assuming you are married – singles get up to $250,000 tax-free. You can do this as often as every two years for the rest of your life with no limit on the number of times you do it! The one restriction is that you MUST own and occupy the house as your principal residence.
Here in the fall of 2015 there is incredible strength in our housing market in East Tennessee. If you’re looking to sell your home this should be very welcome news! The inventory of homes on the market is at an all-time low and prices continue to climb. Call me and I’ll be happy to run a complimentary Comparative Market Analysis on your home to let you know what it might be worth. It’s great information and costs you nothing.
A few tips I always give to anyone wanting to sell their home:
Selling your home in today’s market requires strategy and execution. Here are three tips to help sellers reduce their time on market:
1 Make it shine. Buyers are attracted to attractive homes. Make your home stand out by mowing the lawn, raking the leaves, washing windows, and cleaning the carpets. These are small things that make a big difference.
2 Remove clutter. Not only do clean homes show better, but also tidy homes offer more to the imagination. One person’s treasure is another person’s trash. Removing unnecessary clutter will help potential buyers envision their own potential for the home.
3 Consider removing art and personal keepsakes. Beyond general de-cluttering, some sellers also remove all or most of their personal artwork, family photos and personal mementos to give potential buyers an even better chance to imagine the home being theirs. This can be hard emotionally, but don’t take it personally.
By working with me I will help you know the market value of your home to make it attractive to the market and do what your hiring me to do – SELL YOUR HOUSE. A competitively priced home is the one that sells first, and in this market that counts for a lot. Overpriced homes often end up selling for less or incurring much greater holding costs than if they had been appropriately priced in the first place. The Billy Houston Group has experienced agents that will help you arrive at the most advantageous price for your home.
For years our clients have been buying rental properties in East Tennessee to build their long-term wealth. Our record low vacancy rate is a big driver of why rental property has performed so well. First, the lower the vacancy rates the higher the demand for the property. More demand means landlords can be more selective with prospective tenants and can also charge higher rents. Rents have skyrocketed the past few years because the vacancy rates have remained so low. One of the reasons vacancy rates are so low is that many people still cannot qualify for a loan. I don’t expect this to change in the foreseeable future. We’ve had a huge shakeout in the lending industry and lending guidelines are still much stricter than they were a few years ago. Until lending standards ease up more I expect vacancy rates to remain low and keep my investor clients happy. If you’ve ever thought of investing in a condo or house as a rental property call me and I can show you what the numbers look like and what options you might have.
The mortgage market continues to remain strong with historically low interest rates. Low rates combined with low home inventory are making this a great time to sell your home and move up to a larger home with the same or lower monthly payment. We have several recent examples of clients selling their current homes and purchasing new ones costing $40,000 – $50,000 more with the exact same monthly payment. Drop me a line and I’ll do a free analysis to see if this might be a good scenario for you to take advantage of!