After several hours of analyzing market data from our MLS database the market trends for Smoky Mountain real estate are unmistakable. During every one of the months of the first quarter of 2006, the number of units, the total dollar volume, and the average sales price for closed residential transactions were all higher than those values for the same period last year. During the second quarter, only in April was the 2006 total dollar volume lower than during 2005 but the number of units sold were lower during two months of the quarter. In the third quarter of the year, total closed dollar volume and the number of units sold were lower than the previous year during two of the months. Now that we are 2/3 of the way through the 4th quarter it is worth noting that the total dollar volume, the number of units sold, and the average sale price were ALL lower during the months of October and November and not only by a small amount. The number of units reported by member firms as being sold during these two months is almost 23% below the same period last year and the total dollar volume of sales during the months of October and November combined was over $31 million lower than during the year before. While it may be possible that December will mark a turnaround that remains to be seen. For my full chart based analysis of the prices for residential real estate in our area please click here.
What are we to make of all of this? Obviously this isn’t great news for sellers of real estate that can’t wait until a kinder and gentler market takes form. Like most of the United States, the Sevier County area is significantly below the unsustainable pace of last year. If however you are a potential buyer you really couldn’t ask for better circumstances. With many houses on the market for a longer period of time sellers are willing to take less and the super hot market of last year seems a distant memory. Remember the buyers of last summer who were frustrated because every time they made an offer on a home it was already sold forcing them to make offers on property sight unseen and with no contingencies? The sad part is that folks who were successful in purchasing property almost anywhere in the United States during 2005 are likely not going to be in a positive position if they need to sell at current prices. Of course, real estate has traditionally been a long term investment, not one suited for short term holding periods. The real estate flippers of the past few years are pretty much gone now – as likely is that opportunity for the near term future.
All of the news isn’t negative however! I have noticed that activity levels have picked up recently and our firm continues to be number one in our market as you can see by following this link to the sales ranking of all of the firms in our area. If you are interested in purchasing properties at prices that we haven’t seen in a while please contact us before they move back up!!
Jeff – Thanks for the great Sevier Co. real estate summary and market analysis. Your 2005-2006 sales analysis is hard to find is one is not a member of the local MLS. We came down to decorate our cabin in late Nov. and had a chance to chat with a local business that furnishes “turn-key” new rental cabins. Her comment was: “Did you see the new Land and Homes magazine for the Smoky Mountain area? It’s the 2nd largest edition . . .second only to the Orlando FL catalog!” I also noted MANY cabins for sale in the area where our cabin is located. I presume that with the over-building (rental cabins) that many are not able to provide the sort of income necessary for the owners to keep them on rental programs. I would think that the Gatlinburg/Pigeon Forge area is in for a period of “correction”? AND as you noted . . .this could be a great time for long-term investors to pick up some “good deals”.
Brian J.Davis
http://www.AppraisalScoop.com
http://BearsDenGatlinburg.blogspot.com
Thanks for the insightful comments! Actually, our Homes and Land magazine is THE largest in the nation of all of their markets and has been now for about the past year. I completely agree with you that long term oriented investors will have an excellent opportunity soon as folks won’t start retiring to other areas and they won’t stop vacationing either. The baby boomer generation will continue to power second/vacation home markets for quite a while, likely the next 10-15 years!
Brian, actually rentals are up in the Gatlinburg area and we have had a substantial increase this year compared the past two. More people are staying close to home and choosing to vacation in the US and our cabin owners have been lucky enough to enjoy the benfit of this. The investment is in the cabin itself and the biggest issue for new buyers should be finding good quality cabins and to avoid the cookie cutter cabins that are stacked on top of each other. Guests are becoming far more savey when it comes time to choose their vacation spot and they want everything they have at home then some. If you find a cabin in a good location and it is well built you basically can’t go wrong. With the low taxes and the low cost of insurance here you will enjoy the cabin far more than you will if it was a home in Orlando with just the opposite and add the lower rental rates in Orlando you just get a bad mix. The thing about Gatlinburg that keeps bringing people back year after year is the small town atmosphere and this will not change. People want to escape to the woods and find nature and this will also not change. With all the activities and the local crafts that are everywhere here Gatlinburg will remain solid for some time to come. I would like to also add by the way that when you are looking for a rental cabin to invest in consider what you truly have to spend out of pocket compared to a million dollar cabin that you might pay for without any rental income. In this day and time it would be a hard feat to carry two mortgages without the added income, plus it makes it much easier if you have a management company taking good care of your property while you are out of state and not able to do so yourself.
Ricki Landers
http://www.hickorymist.com
Gatlinburg Cabin Rentals