October 2024 Northshore Housing Market Update: Growing Inventory and Shifting Seller Strategies
By Robert C. Baker
As of October 5, 2024, the greater Chattanooga, Tennessee area is witnessing a notable rise in housing inventory, signaling a shifting real estate landscape. There are 3,028 homes on the market, marking a 6% increase since our last update September 8. Even more striking is the year-over-year increase: the three-month average of available inventory has surged by 54.1%. This sharp rise in housing availability suggests that sellers are becoming more eager to list, likely in response to broader market conditions, including mortgage interest rate trends and economic uncertainty.
New Listings Surge as Sellers Eye Market Shifts
Sellers appear to be capitalizing on a still-active buyer pool in a rapidly-changing interest rate environment. Throughout September, Chattanooga has seen a double-digit percentage increase in new listings year-over-year. The three-month average for new listings is up 20% compared to the same period in 2023, indicating that more homeowners are choosing to put their homes on the market, perhaps anticipating further changes in the economy, interest rate fluctuation or housing market dynamics.
While buyer demand remains stable, the influx of new listings could lead to more competition among sellers. For homeowners planning to sell in the coming months, it’s crucial to remain aware of this growing inventory. A greater supply of homes often means longer times to sell, especially for homes that aren’t competitively priced or properly marketed.
Inventory Rises, But Buyers Remain Active
Though inventory is rising, Chattanooga remains a strong market for home buyers, with a consistent level of activity and interest. Homes are staying on the market for an average of 38 days, which is relatively unchanged from earlier in the year. However, a closer look at the data reveals a critical shift: the month’s supply of inventory (MSI) has increased to 3.5 months, marking a 66.7% year-over-year jump. This increase in inventory signals that Chattanooga’s housing market is inching towards equilibrium, where neither buyers nor sellers hold a distinct advantage.
In today’s real estate market, an MSI over 3 months typically suggests a balanced market. As inventory rises and homes take slightly longer to sell, sellers must remain vigilant about pricing their properties appropriately. Homes priced too high may languish on the market, resulting in necessary price reductions and more complex negotiations down the road. Further, sellers need to be actively engaged with listing agents who are social media savvy, and look for ways to market their homes above and beyond placing a sign in the yard and the listing on the multiple listing service.
Northshore Chattanooga: A Vibrant Market in Flux
Focusing on Chattanooga Northshore, one of the area’s most sought-after neighborhoods, the local real estate market continues to perform robustly, even as broader market trends show signs of slowing. As of October 1, 2024, there are 83 active listings in Northshore, 25 of which are apartments or condos. These properties range in price from $239,900 to an impressive $3.85 million. The median asking price for homes in Northshore sits at $585,000, with an average price per square foot of $312, a sign of the area’s desirability and strong demand for prime real estate.
In terms of sales activity, Northshore saw 18 homes close in September 2024, down slightly from 24 homes sold in August. This small decline in sales can be attributed to seasonal factors, but it also reflects the broader national trend of slower sales as inventory increases. The sold homes ranged in price from $322,000 to a substantial $2.425 million, highlighting the diversity of the area’s housing stock, from starter homes to luxury properties.
Notably, 50% of the homes sold in Northshore spent only 7 days or fewer on the market, underscoring that well-priced and strategically marketed homes are still moving quickly. For those considering selling in Northshore, this is a critical reminder that while competition is growing, demand for well-maintained and properly priced homes remains strong.
National Market Trends and Chattanooga’s Insulation
While Chattanooga has its own unique real estate dynamics, the national housing market trends cannot be ignored. Nationally, inventory is on the rise, and homes are sitting on the market longer. According to Redfin, by the end of September 2024, 48% of all homes listed nationwide had been on the market for at least 60 days, up from 43% a year earlier. The average time to sell a home has increased to 37 days, which is six days longer than in 2023.
This trend is partly due to the “locked-in effect,” where homeowners with ultra-low mortgage rates secured during the height of the pandemic are hesitant to sell. Moving would likely mean taking on a new mortgage at today’s higher rates, discouraging many from listing. In Chattanooga, we’re seeing a similar effect, but to a lesser extent, as the area’s relatively affordable housing market continues to attract out-of-state buyers, especially from high-cost areas like California, Illinois, and New York.
The result is a market that’s somewhat buffered from the extremes seen in larger metros but still influenced by national economic trends, particularly rising mortgage rates and inflation concerns.
Economic Outlook: Interest Rates, Inflation, and the Housing Market
As of October 2024, the U.S. economy continues to grapple with fluctuating interest rates, a persistent inflationary environment, and concerns about potential economic slowdowns. The US Federal Reserve, after a series of aggressive rate hikes in 2022 and 2023 to combat inflation, dropped the Fed Funds rate 50 basis points (.5 percent) September 18. Anticipating the drop, the mortgage market saw the 30-year mortgage interest rate fall to 6.11% September 11, (Mortgage News Daily), but as of October 4, that has jumped to 6.53% following a favorable jobs report from the US Bureau of Labor Statistics (BLS) the same day.
For Chattanooga homeowners, these economic conditions create both challenges and opportunities. Mortgage rates, which have hovered between roughly 6.5% and 7.5% for much of the year, could increase further if inflation proves difficult to tame. This has led some buyers to lock in rates now, driving a burst of activity in recent months. On the flip side, higher rates have also discouraged some potential buyers, particularly first-time homebuyers, who may find monthly payments less affordable at today’s prices.
Navigating the Changing Market: Key Strategies for Sellers
While Chattanooga has its own unique real estate dynamics, the national housing market trends cannot be ignored. Nationally, inventory iGiven these shifting dynamics, homeowners looking to sell their property need to rethink their approach. The rise in inventory and longer days on the market signal that buyers now have more power in negotiations. For sellers, this means being proactive and strategic in order to make their home stand out and sell quickly. Here are some expanded strategies for success:
1. Price Realistically to Compete
Overpricing your home is a risk in this environment, especially with the increased competition from other listings. Conduct a thorough market analysis with your real estate agent to ensure your price is competitive. Homes priced right are more likely to attract multiple offers and sell quickly, while overpriced homes will linger on the market, potentially forcing price reductions down the line.
2. Enhance Online Presence with High-Quality Content
In today’s market, most buyers begin their search online. Professional photography, drone footage, and virtual tours are essential in making your home stand out from the competition. If your listing lacks these elements, you may miss out on the attention of serious buyers. Consider creating a virtual 3D walkthrough, which has become increasingly popular as remote buying becomes more common. Northshore home sellers can also have their homes featured on a neighborhood-dedicated website, MoveToChattanooga.com.
3. Highlight Energy-Efficient Features
With rising energy costs, energy efficiency is top-of-mind for many buyers. If your home has energy-efficient appliances, upgraded insulation, or solar panels, these should be prominently featured in your listing. Sellers with older homes may want to invest in energy-efficient upgrades to boost the home’s appeal and make it more attractive to environmentally conscious buyers.
4. Leverage Incentives and Flexibility
If your home isn’t getting the attention you expected, consider offering incentives like a home warranty or assistance with closing costs. Flexibility with move-in dates or allowing for negotiations on included appliances can also help make your listing more appealing. In today’s market, small perks can sway a buyer’s decision when homes are otherwise comparable.
5. Pay Attention to Curb Appeal
First impressions matter more than ever. With increased competition, curb appeal can be the differentiator that gets buyers through the door. Simple improvements such as landscaping, painting the front door, and maintaining a clean and welcoming exterior can boost buyer interest.
6. Stage with Purpose
Professional staging is a valuable investment in a crowded market. A staged home helps potential buyers visualize themselves living in the space. If hiring a professional isn’t an option, consider decluttering, depersonalizing, and rearranging furniture to create a more open, inviting space.
7. Stay Informed About Market Trends
Work closely with your real estate agent to stay informed about both local and national trends that could impact your sale. Market conditions can change quickly, and staying on top of the latest developments will help you remain competitive and adjust your strategy if needed.
8. Don’t Ignore Minor Repairs
Buyers are often put off by visible signs of wear and tear. Address minor repairs before listing your home, such as fixing leaky faucets, replacing worn-out carpet, and repainting scuffed walls. These simple fixes can help ensure your home is seen in its best light.
9. Capitalize on Local Expertise
A knowledgeable real estate agent who understands the nuances of Chattanooga’s evolving market can be an invaluable asset. They’ll not only help you set the right price but also provide insights into the most effective marketing strategies, buyer behaviors, and neighborhood dynamics to position your home for success.
10. Consider Market Timing
While it’s impossible to predict the market with complete accuracy, timing your listing can make a big difference. Historically, spring and summer are peak selling seasons, but local factors such as school schedules, economic conditions, and even weather can influence buyer behavior. An agent with a deep understanding of the local market can advise on the best timing for listing your home.
If you’re considering selling your home, now is the time to consult with a knowledgeable real estate agent who can help guide you through these changes and ensure you’re well-positioned for success in Chattanooga’s real estate market. For further information and assistance, reach out today to Robert C. Baker at Zach Taylor Chattanooga by calling or texting (423) 443-1649.