Farragut’s beautiful neighborhoods, excellent schools and convenient shopping, dining and recreation have always generated interest from home buyers. But what we’re seeing right now is a massive seller’s market, says Eric Whitener of Farragut-based Knox Fox Real Estate Group. He’s never seen anything like it.
“If a house lists for $250,000, it’s on the market for two days and has 20 offers. It’s not normal.”
Not that there’s much available in that price range in Farragut. According to a market summary from March, the average sale price in area code 37934 was near $600,000.
The problem, if you happen to be shopping for a house, is historically-low inventory. A year ago, the area’s absorption rate, or how long current inventory would last if no other homes came on the market, was 2.5 months. Now, it’s closer to two weeks. If you’re the seller, this is great news, and you can expect a quick sale at a premium price.
Eric tells new customers to be prepared to act fast if they want to land a new home in this climate. They have to be ready to look as soon as a home is listed and be willing to make a competitive offer if they’re interested because most houses are selling above list price. Some buyers are also willing to take on risk, like forgoing an inspection, to sweeten their offers.
“I tell them, if you see it and you like it, know that there are 10 people standing in line behind you,” he says.
It may seem nonsensical that a real estate frenzy like this could happen in conjunction with an economy-crushing pandemic, but long hours spent at home and fear of the virus helped set the stage. Eric has worked with many customers who are relocating from other states – primarily California, Michigan, Illinois and New York – who are attracted to Tennessee’s relaxed approach to the pandemic, low taxes, and scenic beauty. One California customer plans to drive to Tennessee to avoid having to wear a mask on the plane.
While East Tennessee has become attractive to outsiders, current residents are settling in, Eric says. Many spent the quarantine working on their homes and have no desire to let go of remodeled kitchens or new patios. Seniors who might otherwise be looking to move to retirement communities are nervous about living in close quarters, so they’re staying put. Empty nesters who would like to downsize are delaying because they’re afraid they won’t be able to find a smaller house. All of that means less turnover than normal.
In addition to low turnover, home construction is just now rebounding from the 2008 Recession. That housing crisis was a result of too much construction and buyers who weren’t properly vetted. Now, with interest rates low and shoppers flush with quarantine savings, there aren’t enough homes to go around.
Eric doesn’t think this market is a bubble, but he does think the current level of appreciation will eventually reach a point that will make it impossible for people to buy, especially when interest rates go up, which they will.
Once the pandemic is behind us, he thinks the things that normally motivate people to put their homes on the market will return, leading to more inventory and less chaos.
“I feel like this will phase out. People will begin commuting again and decide to change school districts again. As the pandemic gets further away, people will be more likely to make that move.”
Town of Farragut marketing and public relations coordinator Wendy Smith is your reliable Farragut insider.