Knoxville Tennessee Real Estate Blog

It’s the week before Thanksgiving, lets see if the Knoxville area real estate market has any real estate thanks to give.

The Knox County Register of Deeds reports 117 closed transactions in the past week. That about 30 less than average. However the Knoxville Area Association of Realtor’s October sales figures show a 14.5% in October 2009 versus October 2008, go figure.

Here’s the past week’s stats broken down by price points.

Knox County Real Estate transactions recorded

The lower price points are still dominant, there are just less of them.

The chart below tracks the past 5 years sales volume through October 2009, the latest available data.

Knoxville area real estate sales

So far this year sales are bucking the seasonal downturn and remaining steady. This is almost certainly driven, at least in part, by the $8,000 tax credit for new homebuyers. Now that it’s been extended to sellers who then buy, it will be interesting to see if it drives more sales in the upper price points.

Below is a comparison of Knoxville area sales for the 3rd quarters (July, August, Sept.) broken down by bedrooms; 2 or fewer, 3, and 4 or more.

11 year comparison of average sales prices by bedroom size

For buyers financing remains a high hurdle. Lenders are demanding more documentation than ever before in addition to squeaky clean credit. Credit markets are in a very volatile state right now; some lenders have even raised their credit score requirements after approving loans based on the former good scores.

However, don’t let any negative talk discourage you from buying if now is the right time for you to buy. There are mortgage loans available at very attractive interest rates and sellers are more flexible than they were last year.

www.KnoxvilleHomeCenter.com is the place to look at all of the Knoxville area real estate listings for sale.

Please feel free to ask any real estate questions you have or call me to go see some homes for sale.

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This spectacular log home sets amid 6.9 tabletop level acres in a beautiful area of the Cumberland Plateau. $355,000

Congress passed a bill extending the current $8,000 tax credit for persons buying a home who have not owned one in the past three years that was their principal residents. President Obama signed it this past Friday, November 6th, so it’s now official.

But the new bill has an addition for current Knoxville, TN homeowners who want to sell their current home and buy another. If you own your home now, sell it and buy another before April 30th of 2010 you probably qualify for a $6,500 tax credit like the ones buyers have enjoyed this year. ($3250 if you’re married and file separately).

As long as you have a sales contract dated April 30, 2010, you have up to 60 days past that date to get the newly purchased home closed.

The new extension also increased the income limits for all home-buyers. Single buyers can earn up to $125,000 and married couples can earn as much as $225,000.

Before there was no limitation on the cost of your new home; it’s now a maximum sales price of $800,000. I suppose the rationale for this is that the former income limits of $75,000 for a single taxpayer and $150,000 for married buyers was a self limiting mechanism that did not need to be spelled out. Now that selling an existing home enters into the mix with the potential for equity from selling an existing home, I guess Congress felt they needed some sort of purchase price cap.

The income limits were increased in hopes the new higher ceilings will stimulate the purchase of more expensive home. Before the existing tax credit was mostly driving the sales of lower end homes priced at $150,000 and below. With the income limits now increased and current homeowners allowed to participate too that should raise the average sales price of Knoxville and Farragut homes bought with this program.

To cut down on some fraudulent tax returns submitted by taxpayers who did not qualify for the tax credit buyers now have to submit some documentation as proof you actually bought a home and that you qualify for the credit. I believe a copy of your HUD 1 form (closing statement) would qualify as proof but you should check with the IRS or your tax preparer to make sure.

Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns claiming the credit for homes they had not yet purchased. George said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.

He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.

“Some of our findings, while preliminary, are somewhat disturbing,” George said. Among the most striking instances of fraud include 4-year-olds, non-U.S. citizens and IRS employees inappropriately claiming the benefit, he said.

Below is a chart from the National Association of REALTORS® comparing the new tax credit extension to the current one and spelling out the terms and conditions.

Comparison chart showing the existing bill compared to the new, extended version.

So if you’ve been sitting on the fence waiting to buy or, if you couldn’t qualify because of needing some cash for closing costs, this new law levels the playing field for both new buyers and current homeowners who want to sell and buy.

www.KnoxvilleHomeCenter.com is a great place to get started looking at Knoxville and Farragut TN homes and listings for sale. Updated daily and NO REGISTRATION required to search to your heart’s content.

I would be delighted to help you get your current home sold and then buy another either in the Knoxville area or I can refer you to another top notch REALTOR in the city you’re moving to.

Please call or email with any questions about the tax credit or any buying and selling questions.

Knoxville, TN real estate sales and listings

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* NOTE * As of November 1 Congress has not yet officially extended this tax credit; it is still set to expire at the end of this month (November). However confidence is high that it will be extended in some form and probably expanded.

“Senate Dems on Board with Credit Extension
Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed — not closed — by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.

The credit would be cut nearly 10 percent to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.

Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)”

KnoxvilleHomeCenter.com is the ‘go to’ place to see all Knoxville, TN area listings for sale.

This past week had an average for the year number of real estate transfers with 157 recorded.

Knoxville & Farragut TN Real Estate Transfers recorded last week

No sales recorded for properties priced over a million dollars, 3 between $500,000 and a million, and the highest number was the price point between $100,000 to $150,000. No surprises there since the Knoxville area median price for a 3 bedroom home is currently $139,900.

As I recently reported, sales in the Knoxville area seem to be holding up past the traditional seasonal slowdown times. Typically we see sales numbers start to trend downward after July-August and continue downward until the first part of the follow year when they historically have started a climb back to late spring and summer peak sales times. Looks like from the sales figures this year may be a little different.

Knoxville area year to date sales

You will notice on the graph above, sales have been hovering just around a thousand sales a month since June. Normally by this time August and September numbers would be much lower.

I’m guessing that the $8,000 tax credit is driving a very significant portion of those later year sales. Whatever the reason it’s good news for home sellers and buyers as well as Knoxville’s real estate community.

There’s currently lots of talk about extending that tax credit until next year. Your guess is as good as mine as to what’s going to happen there. Congress did vote to extend it until November 2010 for military personnel that have served at least 90 days outside the Continental US at any time during 2009.

Find information on all the listings still for sale in the greater Knoxville area at the usual spot: www.KnoxvilleHomeCenter.com Please call or comment with any questions or concerns.

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The sales figures for the 3rd quarter (July, August, & September) from the Knoxville Association of Realtors is now available online. Let’s take a look at the 3rd quarter of 2009 compared to ones past.

Knoxville's 3rd quarter sales of houses and condos compared to past year's.

As you can see, this year’s 3rd quarter numbers are over 40% lower than a comparable time period in 2005.

Even thought the sales volume for the year is holding up surprisingly well so far the total volume for this year compared to past years is way down. Real estate sales are traditionally very seasonal with a buildup beginning at the first of each year, typically peaking in June, July, or August, and then staring another down trend until the first of the following year. So far that has not happened.

Below is a graph showing the monthly sales to date for this year.

Knoxville Tennessee real estate 2009 month by month sales volume

And here’s another view showing how this year compares to past year’s season rise and fall.

2009 Knoxville real estate sales compared to past years

We’ve talked a lot about sales numbers but how are prices holding up in this depressed market? Fairly well actually. We haven’t seen any really depressed prices compared to some of the harder hit markets like south Florida, California, Michigan, and others. I believe home values have fallen some in the great Knoxville area but not dramatically.

In the Knoxville, Tennessee real estate market a typical sale is a 3 bedroom, 2 bath homes with a two car garage and somewhere between 1500 to 2200 square feet. Here’s how the median prices of those types of homes have fared over the past 10 years.

Median price of 3 bedroom Knoxville TN homes

The median price is simply the price at which half of the homes sold are more expensive and the other half are less expensive, fewer sales of cheaper homes moves the median higher, all else being equal. Since our median price is down to $139,900 in the 3rd quarter of 2009 versus a high of $154,500 in the third quarter of 2007 that means we’re selling more less expensive houses than higher priced ones.

Those statistics are born out by the absorption rates (time to sell) of Knoxville area homes. Today there is a 42 months supply of Knoxville homes priced over one million dollars and only a 9 months supply of those homes priced between $100,000 to $150,000.

Bottom line any way you slice and dice it: Knoxville TN home sales are down compared to the booming market of just a couple of year ago and as long as mortgages continue to be difficult to obtain and unemployment continues to be in the 10% range I don’t see many reasons for our market to improve significantly.

On the brighter side there will continue to be homes bought and sold every day, just fewer of them and probably not for top prices as before.

If you have a house for sale in the Knoxville, Tennessee area right now and it’s been on the market over 30 days here’s some tips you can probably use. More useful home selling tips at www.KnoxvilleHomeCenter.com including a free copy of my 52 page eBook titled: “450 Ways To Make Your Home Sell Faster”.

Looking to buy a house in the greater Knoxville area? www.HomeCenter.com is also a great place to see all the homes, condos, land, and lots of sale. No registration required, just plug in your search criteria and start looking. Search by Maps, addresses, and areas.

Knoxville tn real estate

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Image by volunteerjim via Flickr

It looks like this past week was another above average week for Knoxville and Farragut real estate transfers. The Knox County Register of Deeds office reported 230 property transfers for that week.

I believe that’s only the third time this year there have been over 200 transfers in one a one week period. Let’s hope this trend continues.

230 property transfers is above average for the year.

There was even 2 transfers for over a million dollars; both were around the1.5 million mark.

The #100,000 to $200,000 range still leads the stats with 104 combined which is almost half of the total number of 230.

Lots of talk (and some hard lobbying) for Congress to extend the $8,000 first time buyers tax credit. My guess is it’s even money (50-50) whether that will happen or not.

Congress did pass a bill to extend it for members of the military if they had been stationed anywhere outside the United States at any time during 2009. Those service member will now have until November 2010 to take advantage of the tax credit.

Here’s a great YouTube video I found that explains how the tax credit works. Worth watching for the 2 minutes it runs.

www.KnoxvilleHomeCenter.com is a great place to start your home search, get tips and advice on how to sell your home, and lots of other information including schools and Knoxville area information. Pay us a visit soon.

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If you’re selling or thinking of selling a house in the Knoxville and Farragut, Tennessee area one important fact you must know is what is the current absorption rate in those areas for your price point.

Absorption rate is simply the time it will take a house to sell based on the number of current listings and the monthly number of sales in those price points.

A “normal” Knoxville real estate market usually has an absorption rate of 6 months and neither the Seller nor the Buyer is thought to have the advantage. A Seller’s market usually has an absorption rate of less than 6 months, and a Buyer’s market normally is thought to have an absorption rate of more than 6 months.

The 6 month number in this definition means it would take about 6 months to sell the entire amount of available Knox County inventory in the market if this were a so-called normal real estate market.

Currently in the greater Knoxville area it’s pretty long for the higher end of the market and getting closer to average in the lower end.

Remember:

Sellers market equals less than a 6 month supply of homes for sale

‘Normal’ market has a 6 month supply, give or take 2 weeks each way

Buyers market has more than a 6 month supply of homes currently for sale.

Knox County absorption rates (months to sell)

Spun any way you want, almost all of Knox County is still in a pretty strong buyers market with the upper end price points being a VERY strong buyers market, i.e. there is a 42 months supply currently for sale of homes priced at over 1 million dollars, and a 35 months supply priced between $300,000 to $500,000.

The figures above are why the $200,000 and below price points continue to dominate the sales charts and have all of this year.

Buyers, it’s still a great time to buy. Lots of Knoxville area homes for sale, low interest rates, and you can still get in on that $8,000 federal tax credit if you qualify. Call or mail me with any questions about how you can very easily become a homeowner in 2009.

Sellers, homes in Knox County are selling but they need to be priced very aggressively, in tip top condition, and you need to be willing to negotiate with buyers if you want to sell.

Visit KnoxvilleHomeCenter.com to see all of Knox County and the surrounding areas homes for sale.