Current Trends Affecting Real Estate
Some of our EMTAR members were among those from across the nation who attended or tuned in for parts of NAR’s 2023 REALTORS® Legislative Meetings, May 6-11, 2023, in Washington, DC, with the theme of Home Front: Protecting Rights, Expanding Access, Building Prosperity.
Among the many highlights from this year’s conference, Dr. Jessica Lautz, Deputy Chief Economist and VP of Research for NAR, shared insights on current trends that are having an impact on real estate throughout the US.
As you look at some of those factors below, we would love to hear how you see any or all of them affecting your work with buyers and sellers here in Eastern Middle Tennessee. Please look for our posts on Facebook, Instagram or Twitter and share your thoughts in a comment there.
The Current Environment
The average number of offers received on home sales has declined from 5.5 to 3.2 this year. We know that our market is more active and vibrant than many others. Are you seeing a reduction in the number of offers made on your listings?
The share of non-primary residence buyers (those purchasing vacation or rental properties) has slipped from 22% to 17%. Is this happening among your clients?
All-cash property buyers are trending higher, up to 27% of sales across the US. Have you been part of more cash transactions recently?
The share of distressed sales (foreclosures, short sales) has plummeted from 49% in 2018 to only 1% as of March 2023. Is this a development you’ve observed?
Job gains since pre-COVID high-unemployment conditions have been small, flat or negative in many parts of the country, but Tennessee is among the biggest gainers. From March 2020 to March 2023, jobs rose 5.6% in the state.
In terms of net migration, Tennessee showed the fifth-highest growth among US states, with a net of 81,646 new folks in 2022, an increase of 1.2%.
As of March 2023, 7% of buyers purchased a property based only on a virtual tour, showing, or open house, compared with 13% a year ago.
Staging and Remodeling
Sellers’ agents continue to view home staging as important, with 48% finding a decrease in time on market and 43% reporting an increase in offer prices in staged homes. Does this resonate with you?
The cost recovery of interior projects continues to vary. The best bang for the money spent includes hardwood floor refinishing (147% recovery), new wood flooring (118%) and insulation upgrades (100%), while the bottom of the list includes a kitchen upgrade (67%), new bathroom (63%), and new primary bedroom suite (56%).
Stepping outdoors, standard lawn service showed a cost recovery of a whopping 217%, with landscape maintenance (104%) a distant second. At the bottom were an outdoor fire feature (56%) and in-ground pool addition (56%).
NAR’s 2023 sustainability report found that 63% of residential clients found energy efficiency promoted in a listing was helpful; half of clients said they are interested in sustainability; and one-third of properties with solar panels increased the perceived value of homes.
Millennials are now the largest generation, with Baby Boomers close behind, followed by Gen X a distant third, then Gen Z and Gen Alpha (the youngest current demographic).
That said, Boomers now lead millennials in the share of homebuying for the first time since 2014, with Gen X gradually catching up with millennials.
The reasons Boomers and other older buyers cite for looking to purchase a home include:
- following the grandbaby
- adding space (the downsizing trend has subsided)
- buying a new “forever home”
- Smart-home features
The Importance of Real Estate
The real estate industry accounted for $4.1 trillion or 16.3% of the gross state product in 2022. (Yes, that’s huge.)
The economic impact of a typical home sale was $120,500.
Across all US demographics, home prices have appreciated markedly over the past ten years, another important reason to champion the power of homeownership:
Low-income owners: +$98,900
Middle-income buyers: +$122,100
Upper-income households: +$150,800
In summary, the work you do as a REALTOR® and an EMTAR member is, and will continue to remain, a vitally important contributor to our cities, neighborhoods, and communities. By helping fellow Eastern Middle Tennesseans to achieve the American dream of owning a home or to sell their property in a manner marked by expertise and compassion, you are making our little corner of Tennessee and the world that much more attractive as a go-to place to live, work, play, and raise a family.