I always try to keep up with trends and statistics within our local real estate market. I decided to implement some searches today and analyze the data from the sales thus far in 2008 in comparison to 2007. The Great Smoky Mountains Association of Realtors has recently upgraded our MLS Paragon software and I am thrilled with the changes. Not only is the new system much more user friendly, but it allows greater function and enormous capabilities. With the click of a single button I can determine the number of new listings, solds, and price changes within any time frame of the current date.

Of concern with the graphic (pictured at left) is the number of new listings coming on the market compared to the number of sold listings within the past month. For a while now, it has been a buyer’s market in the Smoky Mountains and the entire nation for that matter. From the looks of the past 30 days it seems the trend is continuing as a buyer’s market and perhaps strengthening. There were only 17.62% as many sold listings as new listings on the market. At that rate it would take almost six months to rid the new inventory of the past 30 days…if NO new listings were added. Creating more inventory when there is already a buyer’s market should push prices further down in the future. However, our situation here in the Smokies is unique.

The majority of listings are cabin rentals. With a cabin rental, the necessity to sell is much less than a primary residence. The cabin rental generates income, second home owners are typically in a better financial situation, and there is usually no absolute need to sell due to a job relocation. This scenario causes cabin owners to typically hold a tight line on prices causing the inventory to increase.

Note the homes in 2007 brought 96.02% of asking price compared to 95.05% this year. Also average sale price was down 11.30%

In the past, the laws of supply vs. demand were equalized in the Smokies. Currently, the majority of owners are not slashing prices to force sales. Buyers, who are already in shortage, are now strictly flocking toward foreclosure properties. A large portion of cabin owners in the Smokies focus on the investment aspect as much as the personal enjoyment gained from owning a property in the area. They are looking for a home that will perform well financially. In general the bank owned properties end up being more competitively priced than non-foreclosed properties. However, it does not always start out that way. Banks typically have a methodical process of dropping prices of their inventory over a period of time on the market if it has not sold. Some banks (and asset management companies) price the REO property aggressively from the start and those properties quickly garner contracts.

The vast majority of my clients lately have expressed a strong interest in foreclosed cabins and properties in the area. I must say I agree with them! I have joined RealtyTrac.com - one of the leading nationwide providers in foreclosure information, databases, and maps. It is a tremendously effective tool to determine what stage a home is in during the foreclosure process. The access also allows me to view maps of the area depicting the homes up for auction, short sales, and bank owned properties. This combined with our local MLS and access to online Courthouse tax records enables me to get one step ahead of the crowd knowing when a foreclosure is going to come on the market, its value, and when it is likely to drop in price.

There are certainly many properties worth evaluating and buying in the Smokies in the current market. There are also many still so overpriced it makes me wonder why they go through the time and effort to list property in the first place. In the past, with the real estate boom, some people would come in and buy property without looking at comparables. I think a lot of owners are still holding on to their “pie in the sky” listing prices because they were used to suckering some people in the past.

This was a nationwide occurrence during the real estate boom. It has had multiple effects on our current market. First, the people who grossly over paid for their investment cabins are not able to generate anywhere near a positive cash flow. Some are forced into foreclosure, leading to the real estate market taking a dip. The other effect is the owners who have not sold their property for an outrageous price are still attempting to achieve huge profits, causing the market to be flooded. Fewer cabins can be bought today which generate a positive cash flow. A large portion of these are foreclosures after the owners and bank have taken a substantial loss.

I always think its a good time to buy real estate. If the economy is booming or bust, there are significant profits to be made in real estate. It is just vitally important knowing what to buy and an appropriate price to purchase the property. There is always money to be made in real estate. In today’s market a lot is knowing who has an actual need to sell and determining how much you can “beat them up” on price.

The market appears to have a significant over abundance of listings on the market, creating a strong buyers market. I expect prices to continue to lower slightly as more inventory comes on the market as well as a new flood of foreclosures. The Sevier County market has not suffered from the subprime mortgage crisis as much as many parts of the nation. Our foreclosures are split among investor related defaults and permanent residents. The “doom and gloom” from the news media and the actual situations from across much of the nation seems to have buyers questioning what to do and when to jump in and buy. Let me know if I can be of assistance and lend a helping hand in your next real estate purchase!