HomeLoans Blog

Looking again at the general real estate market in TN, GA, and Al, based on a map of national real estate markets listed in the Wall Street Journal, home prices are holding or increasing. Some of the larger markets – Atlanta, Nashville, Birmingham, Knoxville, even Huntsville – all are showing increases in median home prices.

The Chattanooga area has shown a small drop in median home prices since 4Q 2005, but only a little over 1%. This is based on a mean price in 2005 of $133,600 compared to a mean price in 2007 or $131,600.

The hardest hit area seems to be Memphis. The rest of the Southeast, except Florida, is mostly showing an increase in median price.

The national average according to the map shows an almost 9% drop, but this is largely concentrated in California, Florida, Michigan, and the Northeast. I suppose that Florida is suffering the double hit of the hurricane losses and insurance difficulties. Michigan is suffering the double hit of automotive recession.

Not to minimize the struggle of home owners with adjustable rates on subprime loans or the obvious and painful impact of the losses in the mortgage industry, not all of the housing finance problem is the result of mortgage industry problems.

Much of it is normal economic cycles. Some is regional recession. Some is from natural disasters. And the home prices in California boggle the mind, at least my mind. How could such prices not fall at some point?

The most recent statistics for home sales in Chattanooga look very encouraging to me. Home prices in the first quarter of 2008 are slightly down from the peak in 2007, but seem to show a good steady upward trend looking at the most recent 5 year trend.

Significantly the trend over the last three consecutive months shows an steady, sustainable trend of increasing units and increasing median price. The median home price in the last two months is over $138,000.

North Georgia also seems to be beginning to rebound in units sold and in media price.

The Chattanooga market is strong, and stable. We will come out of this down turn. That is unless the federal government overreacts to market crisis caused primarily by the excesses in the three largest markets, where values seemed to be increasing at unsustainable rates.