Truth About Chatt Real Estate 12/07
The Truth About the Real Estate Market in Chattanooga, TN
Written 12/5/07 by Nathan Walldorf ABR, e-pro
What have you heard from the media lately about real estate?
The other day I saw the headline, “Market Plunge,” associated with a very positive article about Chattanooga’s real estate market. The title did not fit the news, but how often do we read beyond the title on a busy day?
If the Chattanooga Times Free Press printed the October real estate market report for Chattanooga, the title should read, “October Sales up 5.5% from September.” I doubt you’ll see that in the Chattanooga Times Free Press, since the media thrives on sensationalism and bad news. The National Association of Realtors (NAR) responded to much of the negative media by saying, “The national media, seduced by a few vocal but misfortunate analysts, have been painting the US housing market as one huge national market in the clutches of a meltdown, even though the facts paint a different picture.” The president of the Chattanooga Association of Realtors comments that the “reports of a national industry downturn permeate our real estate psyche and has confused consumers...Our [Chattanooga's] local market is holding steady.”
Chattanooga cannot be lumped together with CA or FL or Detroit or even Arizona. We have not drastically overproduced homes like FL & AR, and our local economy is very strong Our housing prices did not spike like CA or FL, so our adjustment has been more minimal. The truth of the matter is that Chattanooga's median home price has actually risen to $140,000 and has not fallen. We have a pent-up demand that made sales during the first 1/2 of the year slow and has made the 2nd 1/2 of the year be more productive. Demand is still pent-up and there are many signs that point to increased sales in the spring. Some of those signs are new companies that are moving in to the Chattanooga area, economic growth in Chattanooga, rebounding consumer confidence, and the growth of Chattanooga’s popularity as a retirement destination. (click these links to read about Alstom's & T-Mobile's recent moves to Chattanooga 
http://www.chattanoogan.com/articles/article_118416.asp &
http://choosechattanooga.com/index.php?option=com_content&task=view&id=57&Itemid=63)
http://money.cnn.com/magazines/moneymag/bpretire/2006/states/TN.html & 
http://www.chattanoogachamber.com/PDF_Files/11%20Great%20Places%20to%20Live.pdf)
This year in Chattanooga, the $100,000range to the $300,000 homes has continued to sell consistently. Home buyers in that price range typically need housing more immediately. The upper end home buyers in Chattanooga ($400,000 & up) are made up of people who don’t have to move, and they have waited mostly in fear of the “bad real estate market.” Inventory is currently higher than usual. Buyer’s are more picky right now, and they demand that the condition of the property be immaculate (a warning to you seller).
The Chattanooga real estate market has hit its bottom, which equals 2005’s record setting year in volume of sales (not too bad). Interest rates are as low as the upper 5% range. Now is a great time to buy a home that has been on the market for a longer period of time than usual. The market should change for the better over the next several months and some of the deals that are available now may not be there later.
Lawrence Yun, NAR chief economist, shows that buying a home is still an excellent investment in the following words spoken at the NAR national convention:
“Homeownership is not a quick in and out purchase like stocks. Wealth is built over the long term, which is one reason why home buying is heavily subsidized by tax savings and generous loan programs that enable people to get into homes without large down payments. Stocks and houses are not the same. Over 10 years, a $10,000 investment in the stock market at a normal 10% market rate of return would yield nearly $24,000. The same investment as a down payment on a $200,000 home at a normal appreciation rate of 5% would return nearly 5 times the stock market return, or over $110,000.”
As for the mortgage market, Michael Moran, chief economist of Daiwa Securities American, Inc., calls the media reports “exaggerated and sensational” and says that “Less that 3% of the total mortgage market will be affected by the subprime market and the economy should absorb this shock.” 
The national & local/Chattanooga real estate market should stabilize within the year. Have no fear of the real estate market boogieman or the phantom of the mortgage market. Every market has its ups and downs; our market has not been too far up or too far down; and the market should level off shortly. That leaves a buyer in a great position to buy and to get a good deal before the market improves.
We at Walldorf & Co are the oldest and most knowledgeable real estate company in Chattanooga. Let us apply that experience on your behalf to find you the right home or to help sell you home. We'd be happy yo serve you.
Look for "Is Real Estate a Good Investment?" in May of 2008.
