Housing Bubble Nowhere to Be Found in Knoxville
Following a sluggish 2006, new home construction in Knox County, Tenn., is expected to improve in 2007 but remain well off the record-setting pace of 2005.
A total of 3,049 residential building permits were issued in the county last year, down 10.5 percent from 3,405 permits the year before, reports the Knoxville News-Sentinel.
The median price for an existing single-family home in the Knoxville metro area in the fourth quarter last year was $153,600, marking a 3.2 percent gain over the fourth quarter of 2005.
With Tennessee mortgage costs remaining relatively affordable, condominium prices in metropolitan Knoxville also were up in the fourth quarter, with a median of $145,400, up 4.9 percent from the same period the previous year.
Despite a recent upswing in mortgage defaults, many real estate observers anticipate similar or slightly higher appreciation rates for the Knoxville metro area’s homes and condos this year.
Compared to Tennessee’s other major metro areas, Knoxville home prices were the strongest in the fourth quarter. Chattanooga’s median rose 1.5 percent to $134,600, while Memphis’ median fell 1.6 percent to $141,900.
Nashville’s fourth-quarter numbers were not available.
Elsewhere in the Southeastern U.S., the median price in the metro Atlanta housing market fell 2 percent to $166,800, while Lexington, Ky., dropped 2.9 percent to $146,300 and Spartanburg, S.C., declined by a modest 3.4 percent to $121,300.
Southeast markets with fourth-quarter price gains included:
- Raleigh, N.C., up 14.5 percent to $226,300
- Charlotte, N.C., up 8 percent to $198,200
- Montgomery, Ala., up 2.4 percent to $139,600
- Birmingham, Ala., up 0.2 percent to $161,700
In its December issue, SmartMoney magazine rated Knoxville “fairly valued” in contrast to some U.S. markets where the average home prices are 51-74 percent “over valued” and prone to a market correction or price decreases.
The cost of a California mortgage loan is often 2-3 times more than what you’d pay in most of Tennessee. That gives you a fair indication of where the Volunteer State stands.
And you can find that kind of overheated pricing (and subsequent declines) even out East. Existing home prices in Florida - one of the hottest markets in recent years - took a beating in the fourth quarter, posting some of the highest percentage declines in the country.
With mortgage loans in Florida costing more than many residents could hope to afford, prices will invariably fall. Knoxville real estate executive Roger Moore was in Destin, Fla., recently and the downturn was evident.
“I must have counted 100 ‘for sale’ signs in a mile drive,” said Moore, president of R.M. Moore Real Estate Co.
Unlike the Tennessee housing market, where homes sold in an average of 79 days last year, according to the Knoxville Area Association of Realtors, it can take much longer to sell a house in overbuilt coastal areast.
“Two years ago, if you wanted something (in Destin) I would have said ‘you better get it now because it won’t be here long.’ But not anymore,” Moore said.
Continue reading this article in the Knoxville News Sentinel.