08 Mar Need a place to live?
Number one, residential home construction is growing faster here than anywhere else in Tennessee. Secondly, the cost of renting in the area is getting more affordable.
According to THDA, the total number of construction permits issued in the Kingsport-Bristol MSA increased by 41 percent, from 705 to 992, from 2015 to 2016 (the most recent numbers available).
That’s the biggest jump in any metropolitan area in the state.
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“The performance of the Kingsport-Bristol housing market has and continues to be a consistently viable part of the metro area’s economy,” said Aaron Taylor, president of the Northeast Tennessee Association of Realtors. “We see continued jobs growth and the new home market as adding to the vitality that the existing home sales market has seen in the past several years. It’s especially encouraging to see an increase in some new homes priced in the $200,000 range. If you need any convincing that we need to build more low-priced new homes take a look at the resale supply. Last year’s inventory was at record lows and the hardest hit price tier was the $200,000 and below which accounts for more than 70 percent of all local resales. Inventory in that range has been steadily declining for almost two years – the same period sales have been at record highs.”
The Northeast Tennessee Association of Realtors Trends Report for January is reporting the number of new listings is slowly increasing as the market begins ramping up for the prime buying and selling season.
“Local real estate professionals are expecting a busy, and competitive market this year,” Taylor added.
Homebuilder Travis Patterson continues developing homes in Chase Meadows and Old Island developments in Kingsport.
Current market conditions, Patterson said, make it possible “to sell houses faster than we can get them built.”
Patterson is building a 2-and 3-bedroom floor plan that’s one level. Price point is $275,000 to $289,000.
“The 55+ market is driving our Chase Meadows activity. Barely get them framed up and someone buys them so they can finish them as they want,” he stressed.
Close to Kingsport, the Patterson-Petzoldt Build Fund LLC is reviving the Surgoinsville Allenwood development idled by the Great Recession. The developer has acquired 20 lots from the Appalachian Credit Union, and Patterson Homes plans to build new homes targeted to buyers looking to spend $200,000. The original development had 34 lots. Some of the lots were sold, but only four homes were built.
Times News columnist Don Fenley, a NETAR spokesman, said there was also an increase of foreclosure sales in Sullivan County last year which boosted the overall sales total.
“The share of homes with a mortgage that are equity rich were among the highest in the Tri-Cities region at the end of the year,” Fenley said. “Equity rich is defined by Attom Data Solution’s year-end underwater and equity status report as a mortgage home with a loan value of 50 percent or less.”
Fenley also noted that Dale Akins, president of the Market Edge in Knoxville, told Kingsport homebuilders at their October meeting that his projection for new residential permit growth in the Tri-Cities for 2018 is 17 percent.
Also, the median hourly wage in the Kingsport-Bristol MSA is rising, and the median rent is declining, which means renting is getting more affordable in the area. Kingsport, in particular, has two new apartment complexes – The Overlook and Riverbend – open with Town Park Lofts in the downtown area under development.
Home prices in Tennessee, meanwhile, are at a record high, according to THDA.
Tennessee’s median home price grew by 5.4 percent in 2016, reaching a record $185,000, and the annual growth rate accelerated to more than 7.7 percent in the first half of 2017.
“As far as home prices go, we are finally leaving those pre-recession records behind and forging into new territory,” said THDA economist Hulya Arik.
According to THDA, the number of single-family homes sold in Tennessee jumped 10 percent in 2016, reaching the highest number since 2006.
“Broadly speaking, we found a lot of good news for people who already own their home and much more mixed results for Tennesseans who currently rent,” said Arik.
Among the good news, only 4.4 percent of Tennessee homeowners owned more on their mortgages than their homes are worth as of the first quarter of 2017, a sharp decline from the 6.2 percent of Tennessee homeowners who were “underwater” just one year earlier. That number reached nearly 17 percent at its peak in June 2010.
On average, 76 percent of homes sold in Tennessee in 2016 would have been affordable to a family earning the state’s median income, a slight improvement over the 75 percent for 2015.
Among Tennessee’s renters, 45 percent of households were cost burdened in 2015, compared to 48 percent nationwide. Among Tennessee homeowners with a mortgage, 29 percent were cost burdened, compared to 32 percent nationwide.
Income growth among Tennessee’s renters has not kept pace with rent hikes. In fact, average monthly rent has continued to increase steadily since the housing market crash began in December 2007 despite the fact that average household income for Tennessee renters did not recover to pre-recession levels until 2015.
Privately-owned housing units authorized by building permits in 2016 in Tennessee increased by 12 percent over 2015. However, THDA reported the number of building permits issued has not returned to its peak level reached in 2005.