There's a big article in the new MetroPulse about the state of the Knoxville housing market. The article quotes several Knoxville real estate insiders, including an anonymous source, "John Smith." Apparently John Smith, a recent Knoxville home buyer, wouldn't give his name, because the deal he got was so dang good. That's just wild.
But I digress. The article is not all doom and gloom and makes several good points.
1. The Knoxville housing market is not nearly as far in the toilet as other markets around the country.
From the MetroPulse:
Exactly!The one trend Knoxville is not sharing with areas like California, not even a little, is decreased home values. Yes, people are pricing some homes below their appraised value so they’ll sell quicker in an excess inventory environment. And true, the median Knoxville metro area home price—$146,000—dropped 2.7 percent from the last quarter of 2007 to the first in 2008. The April report from KAAR goes on to say that the median price of a home with four or more bedrooms fell more than 12 percent to $240,000.
But—and this is an important distinction for the average home owner who has a reasonable mortgage and doesn’t need to sell anytime soon—these statistics mean only that the averages of the prices of homes that sold were lower. Local real estate values have not been affected.
2. Local foreclosures are not out of control.
MetroPulse:
Knoxville’s foreclosure rate of 0.6 of a percent and year-over-year increase of 46 percent is only high enough to place us 72 on a list of the 100 largest metro areas.
And as we've seen week after week in Foreclosure Watch, the number of active, pending, and closed foreclosures, at least in the Knoxville MLS, is remaining more or less steady, not skyrocketing like some national media outlets would lead you to believe.
And don't forget. our market is considered so stable, Knoxville was named the 7th best place in the US to invest in foreclosures.
3. Out of control lending was partly to blame for the current market.
From the article:
Ouch. True, but ouch.“In 2005 and 2006 we saw the trend where the appraisals were too high and the amount of money being loaned became 100 percent of the value of the home or even higher," says Jim Slyman ... "So if the market for the home you paid $300,000 to buy slips even 10 percent, you now owe more than $30,000 over and above your loan."
Along with traditional high-end home buyers, many average folks got bitten. “The reason there have been so many foreclosures is a lot bought houses who should never have been able to qualify..."
4. The correction of out of control lending practices has knocked a lot of buyers out of the market.
MetroPulse:
“This time last year, you could still get a zero-equity deal, but lenders have tightened their guidelines," says [Jim] Lee..."It’s tougher to quality for a loan right now.”This is very true. I had a client a few months ago who qualified for a loan and then got knocked out of the market 3 weeks later when minimum credit scores were raised. This client was not able to buy a home and won't be able to for another year - and that's only if they can manage to clean up their credit in that time. Last year, I would have sold that client a home. This year I won't. Pretty basic cause and effect, no?
The article has a lot more to say about Knoxville real estate, and you can read the whole thing here. After you do, come back and let me know what you think about the Pulse's take on our local market. I'd love to hear your thoughts.
