Funny how a person’s perspective changes everything. I recently spoke with a potential buyer about their opinion of the near-term prospects for our Gatlinburg real estate market. He was very pessimistic, pointing to recent poor auction results of foreclosed property and the abysmal state of our national economy. On both points he was quite accurate and there really was no intelligent argument that I could offer. Then he went on to say that real estate prices were destined to fall another 50% from their already depressed levels and that they would wait for the drop before buying anything.
Not long after this conversation I spoke with a potential seller about our Gatlinburg real estate market and the prospects for selling his Gatlinburg vacation home. Not surprisingly, he had several really good arguments for Tennessee real estate becoming more valuable in the short term future. His reasons were as follows:
- Tennessee is one of only 5 states that has no income tax.
- The cost of living in the Gatlinburg area is very affordable.
- People will continue to flee economically disadvantaged areas like Michigan and other rust-belt states and will come to the stronger economies of the southern states.
All of this is beyond argument as well so with perfectly accurate facts two astute real estate investors have reached diametrically opposing conclusions.
The key is that people will always assume what will benefit them the most. Potential property owners who don’t yet own Gatlinburg area real estate propose that prices will drop sharply from their current levels and that the real bargains haven’t been seen yet. Investors who already own Sevier County real estate will be more optimistic and are likely to argue that the worst is over and that prices will soon begin to rise. In reality it will never be possible to spot the bottom until prices are on the way back up and the low point has already been missed.
I myself believe that we have likely pretty much seen the worst already and that most, if not all of the price drop in Gatlinburg area real estate has already occurred. The economic shenanigans of Washington will eventually produce very significant if not massive inflation which will naturally cause hard assets (such as real estate) to appreciate nicely. In that event, all real estate values nationally should increase including those here in East Tennessee. Of course, I do personally own a lot of Sevier County real estate which might tend to color my opinion somewhat…