Christine Christmas of Covington Realty and Auction and Tamara Harrald of Exit Realty Blues City have each been selling houses in the Tipton County area for more than 20 years.
They’ve never seen a market like this one.
“What we’re seeing we’ve never seen before,” Christmas said. “You put a house on the market and 14 offers later many of the offers have letters from the buyers pleading to the seller, ‘Please choose my offer.’ I’ve never dealt with that in my 20-plus years of selling real estate. And then for it to sell $30,000 above list price …”
Harrald helped a client sell a house in Burlison that had 26 offers. In a normal market a house gets two or three offers.
“Think about the other 25 people who really wanted a house that couldn’t get one,” Harrald said. “I do think it’s slowing down just a little bit. Some have stayed on market a couple days. It would be nice to have a little more inventory.”
Inventory, or lack thereof, is the issue.
According to the Memphis Association of Area Realtors, which tracks home sales in Shelby, Fayette and Tipton counties, inventory has dropped almost every month since mid-2019. The number of houses of houses sold has remained steady, however. Houses are being sold, they are just much more expensive and hard to get.
For the first five months of 2018 in Tipton County, 408 houses sold with an average price of $161,000. The following year, during that same period, 368 houses sold with an average price of $172,000. In 2020 it was 359 at $178,000. So far this year in Tipton County 436 houses have sold with average selling price of $203,000, which is $25,000 more than last year.
Christmas attended a class at MAAR last month. She was told there were approximately 1,400 active listings in Shelby, Fayette and Tipton counties. A decade ago that number was about 12,000.
“There are more than 2,500 Realtors in that organization, so you can see not a lot of them are working because there aren’t enough houses to sell,” Christmas said. “It’s just unreal how low inventory is right now.”
Harrald said three or four years ago a buyer could offer to pay list price and ask for some closing costs. That’s almost certainly is not going to get it done right now.
“It hurts young couple which might not have much money for a down payment,” Harrald said. “It kind of pushes them out because if you ask for anything like that they’ll just go to the next offer. If a house is listed at 180,000 you may have to go 20 or 30 thousand over to win the bid. A lot of people just can’t do that.”
Some buyers are waiving appraisals and offering to pay the sellers’ closing cost.
“It makes it hard to know what to list it for,” Harrald said. “It’s really awful.”
Why is inventory so low? There are various theories. One, of course, is 2020’s pandemic, which almost certainly played a role. However, this has happened in other markets over the past two decades, most famously on the West Coast.
“My brother lived in California and this was happening 20 years ago there,” Christmas said. “Now, to see it here, it’s just crazy. Will it last? No, it won’t. This is an unusual market we’re in right now. It’s interesting. That’s the great thing about selling real estate. There’s never a dull moment. It’s always changing.”
Lack of inventory makes people hesitant to sell their house because they have nowhere to go, which make the problem worse and worse, like a snowball rolling down a hill.
“The minute a house hits the market it’s being snatched up,” Christmas said. “I think some people are not putting their house on the market because there’s nowhere to go. The first think I ask them is, ‘Do you know where you’re going?’ You can’t count on finding a home. You have to know where you’re going.”
Harrald said some people have tried to take advantage of the seller’s market, striking while the iron is hot. She advises people to be careful when doing that.
“Some people are bragging about how much they made on their house, then turn around and call me looking to buy land and build,” Harrald said. “Wood prices are through the roof. I know one guy paying $1,700 in rent while he was looking for a place. You made all that money, but did you really? If you have a place to go it’s a perfect time to sell, but you better have a plan laid out. The money you make on the front end is going to be affected by the cost of anything on the market.”