Lately is seems the news has been full of ‘doom & gloom’ stories about the bursting housing bubble and how real estate prices have fallen; dramatically in some areas.

The major flaws in so called “Housing Bubble” stories is that

  1. There is no such thing as a “national housing market”; all real estate sales are local and dependent to a great deal on local conditions.
  2. Generally two conditions are necessary in an area for prices to soften or decline; 1. an oversupply of homes for sale, and 2. weak local economic conditions sometimes against an overall economic weakness, recession or high interest rates.

Here’s the third quarter sales statistics for the greater Knoxville, Tennessee area for the past 3 years.
 

3rd quarter average sale prices for 3 bedrooms homes

  • 2004  $145,000……….Average days on market…..80
  • 2005  $157,400……….Average days on market…..65 
  • 2006  $169,300……….Average days on market…..78 

Steadily increasing prices and no significant increase in days on market (time to sell).

tennessee home price appreciation chart

 Historically Tennessee has average 3-5% housing appreciation for as long as I can remember.

Latest unemployment figures for the area are 4.4% unemployed; not too shabby.

And, according to Southeast Home Mortgage, our in-house mortgage bankers firm’s manager Zan Wyatt, interest rates remain very attractive too.

Zan says their 30 year, fixed rate product has a current 6% interest rate, FHA 30 year fixed is 6.125 and the product she recommended if you’re not going to be in the house too long is their 5 year fixed, interest only mortgage with a current 5.875 rate.

If you’re going to be in the house long term obviously the 30 year fixed is the way to go.

But if you’re going to be transferred or moving in the next 5 years or less, then the 5.875 percent, fixed for 5 years, interest only mortgage would be worth letting Zan crunch some numbers for you.

Moving to the great Knoxville, Tennessee area or already live here and thinking of buying a new home?

If so now is a great time; no housing bubbles, burst or otherwise and very, very attractive interest rates to keep your monthly payments affordable.

Call or e mail Zan or me today and let’s talk about what we can do for you.

Jim Lee, Knoxville REALTOR®

Toll free: 1-800-662-2488, extension 163

PS & BTW, there are a few areas that, unfortunately have a genuine bursting real estate bubble, California and South Floirda are two prime examples.