A low inventory of homes for sale hasn’t stopped the 2021 Tyler-area real estate market from surpassing the previous year.
The five counties in the Greater Tyler Area Association of Realtors Multiple Listings Service saw approximately $1.67 billion in home sales in 2021, up $280 million from 2020. The number of home sales homes rose from 5,730 to 6,091, with an average price of $294,377 – almost $40,000 more than in 2020.
The increases came in a market that saw 1,080 homes listed for the year, up from 1,619 in 2020.
“Even with low inventory from the previous year, we still have a lot more home sales than the previous year,” John Wampler, one of the founders of Realty ONE Group Rose told Tyler. He is this year president of the Greater Tyler Association of Realtors.
“What we’re struggling with right now is very low inventory,” he said, explaining that a healthy market would typically have around 8 months of inventory of homes for sale. The market is averaging 2.3 months supply, he said.
“Right now people don’t want to sell because they don’t know where to go,” he said.
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These themes are reflected in the statewide housing market, according to a recent report available from the Texas A&M Real Estate Research Center.
“High demand persisted as homes had been on the market for about a month on average,” the report said. “On the supply side, permits for single-family dwellings rose for the second consecutive month, but housing starts fell as prices for lumber and other inputs rose. The relatively low level of available inventory for sale is the biggest challenge for the Texas real estate market, however, the state’s diverse and growing economy, favorable business policies and steady population growth support a favorable outlook.”
Wampler said there are “so many out-of-state cash buyers” with buyers jumping on properties as soon as they are listed.
“We are very lucky to be in the area where we are,” he said of the state interest. “We are close to all major cities. We have excellent health care and excellent schools. At the same time, we have a lower cost of living than big cities.
While the average home price is nearing $300,000, prices are better than in California or major cities in Texas, he said.
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“You can always get a good deal here,” Wampler said. “People are just looking for that quality of life before COVID hits.”
Bryan Robinson, senior vice president and director of mortgages for Texas Bank and Trust, said low interest rates in 2021 were “very consumer-friendly” and helped balance rising home prices.
Rising prices, low inventories and rising construction costs for new homes were lows in the East Texas market.
“Turning times for assessments were slow due to the high volume of applications and a shortage of assessors,” he said.
Interest rates will likely rise this year.
“We’ve already seen the 30-year-old rate go up about half a percent since mid-December,” Robinson said. “I think it’s realistic to see rates at 4% in the third quarter, at the latest, which is still very low by historical standards.”
One challenge facing the real estate market is inflation. Personal incomes are not growing at the same rate as rising mortgage rates and appreciating home prices, he said.
“Now add inflation, at levels not seen since the early 1980s, to that mix and it has a negative effect on borrowers,” Robinson said. “This affects low-income borrowers the most.”
However, he expects market strength to continue this year.
“We should still see an active housing market with strong demand, still low inventory and attractive interest rates,” he said.
Wampler agreed, noting the large number of buyers and money entering the market.
“We’re going to see a mirror of last year, this year,” he said. “We’re just fighting inventory.”