JOHNSON CITY, Tenn. (WJHL) – People looking to buy a home in the Tri-Cities are facing fierce competition as realtors say inventory is low and moving fast. Although July brought a brief cooling-off period, realtors expect this trend to last a while longer.
Karen Randolph with Century 21 Legacy in Johnson City said housing prices have reached a 40-year record high. Even with those high prices, she and other realtors in the area are seeing about 52% of homes sell for above the asking price.
“When I look at the numbers in our MLS (Multiple Listing Service), we are approximately up 17%. So when I put that in numbers for you, if a home sold last at this time for $100,000, the same home, identical home, no improvements, we’d sell for $117,000 today,” said Randolph.
Randolph said that change is not only reducing the amount of affordable housing but increasing the demand for higher-priced homes as well.
“It’s causing that upper-end market to gain that momentum because where people can afford that home, they’re going to have to buy it because that $350-400 has already been absorbed by someone who is tapped out at that price point,” said Randolph. “The overall market for over $500,000 is up 164% year over year. So that market is gaining more activity than what we are accustomed to.”
That drive-up in cost can also be attributed to out-of-staters moving into the state from more expensive areas who are often able to afford more and pay with cash.
“You know if you sell your house for $800,000 you can buy the same here for $300,000. They can just drop in with their cash and it’s hard to beat cash. It has to be something that’s really important to the seller to beat out that cash,” said Kristi Bailey, President of North East Tennessee Association of Realtors (NETAR).
Bailey said about a third of her sales this year have been in cash. Normally, cash sales only make up 5% of her sales. Even though cash can be hard to compete with, realtors said there are other things to consider like when the seller is looking to move out and how fast they want to close. Bailey said even if you want to keep prices low, there are certain things you should not compromise on.
“I would never suggest you give up a home inspection because nobody really ever knows what they’re buying. Sometimes the sellers don’t know the problems that their house has, and so it’s just better if you do that upfront so you can get that taken care of,” said Bailey. “We’re all not home inspectors, they have a license for a reason.”
If you’re hoping this will slow down anytime soon, Bailey predicts this will continue for at least the next few years.
“Some people won’t put their house on the market until they find somewhere to go, and it’s so hard because it’s a vicious cycle of trying to figure out what’s next,” said Bailey.
However, if you do need to finance, both Bailey and Randolph say now is a good time to buy, however, because interest rates remain low, currently sitting at around 3%.
Christina Burt just recently bought a home in Johnson City. She said she and her husband started looking seriously about four months ago and they had certain aspects they wanted in a home and neighborhood.
“We wanted to be in the Johnson City School System, I wanted to be in a neighborhood with sidewalks,” said Burt. “I like to walk, I like to run, we’re an outdoors family. My husband wanted street lamps.”
Burt said they put in offers on three other homes and knew they lost out on those offers due to other buyers offering cash. When they found the home they finally purchased, she said the process moved quickly. She said they had the home within 48 hours, but they did have to make some concessions.
“Nothing is perfect, and the seller wanted a 60-day close. So being seven months pregnant when we signed, and then having to wait 60 days to move into being nine months pregnant, that wasn’t ideal,” said Burt.
However, unlike other home buyers, Burt said although they paid above the asking price, the home was assessed for more than what they ended up paying. She said working with a real estate agent made the difference.
“You have an idea of what you want, but is that idea realistic? And is that idea realistic in this market?” said Burt. “To get a real estate agent that you know, that you trust, that is a good communicator, is an absolute must.”
There are things you can do to make your offer more enticing, like getting a pre-qualification letter rather than a pre-approval letter.
“That pre-approval tells me that not only you know what you can buy, but that you talked to the lender and you’re ready to go,” said Randolph. “So if you’re in a multiple offer situation, we’re going to be looking at those pre-approval letters versus a pre-qualification letter, and every single time we’re going to know that that buyer coming in with that pre-approval is stronger than the buyer coming in with pre-qualification. It may not be the case, but that’s what we see on paper.”
As for sellers, agents said if there are little things you need to get done, do them. They said those little things could prove to be bigger issues for buyers.
Randolph said she know the market is tough right now but encourages buyers to stay the course.