Knoxville (WVLT) - New home construction is at an all-time low nationwide. This is the second biggest decline on record since the recession of the early 80's.
Volunteer TV's Liz Tedone has more about Knoxville's home market.
Economists attribute the poor housing market to overbuilding, bad credit, too much credit, and the price of oil. The question is, how does Knoxville compare?
The fact is, home sales in Knoxville have slowed, whether new or old, but locally the numbers are not as bleak as the Commerce Department reports. Tim Neal is a builder. He says our housing market has never seen extreme highs or lows.
"And typically as the market recovers Knoxville will recover faster than anywhere," Neal said. "We all like to think we bought at the bottom. The question is where is the bottom? I believe that Knoxville has already seen the bottom, and we're on the way back up."
In other major cities across the country, builders and sellers are cutting house prices by as much as 30 percent, but you won't see that here.
"We don't experience price declines as far as values are concerned in other places, but I think it has put a damper on sales a bit. We don't experience the highs and lows they have other places," First Tennessee lender Mike Simmons said.
We've learned it ultimately comes down to a credit problem. Years ago, a 100 percent loan to value was unheard of. You always had to put 20 percent down unless you were a first time home buyer, but now lending conditions are changing nationally and locally.
"I don't know that you're going to see it cut all the way back to 80 percent, but less 100 percent or a lot more conditions on people who do get 100 percent loans. A lot less interest only loans, they're going to half to make some kind of payment to reduce that principal balance," Simmons said.
And another note about home building. The cost of materials isn't going to get any cheaper because of the rising cost of oil. Tim Neal told us if you're waiting for the bottom, you may have missed it. He predicts home prices to be 10 to 15 percent higher a year from now.