July a pretty good new home month in Tri-Cities despite historical view


By DON FENLEY

There’s an upbeat attitude among many local new home builders that doesn’t show up in the number of privately owned, single-family new home permits.

July

Data source: US Census privately owned, single-family permits

July’s year-to-date performance in the Tri-Cities was the second worst since 1995. That long view shows the local new home market seriously lagging its per-recession level – and what other state markets are seeing –  but that’s only one slice of the data.

On a monthly basis, July was a  good month for the three-county Johnson City MSA – 70 new single-family homes were permitted. As far as Julys go, that was the best since 2008.

Permits in the four-county Kingsport-Bristol MSA also totaled out at the highest level since 2008, but at a lower volume. A total of 31 new home permits were pulled during the month.

Shifting to what new home sales looks like shows the  volume up slightly in the Kingsport-Bristol MSA when compared to last year and so was the average price – $251,091. Metrostudy’s analysis for Builder Magazine shows that at the same time the average mortgage size fell from $222,373 to $213,133.

In the Johnson City MSA, new home sales were also slightly higher and the average value was down – $217,382 to $224,800. The average mortgage also dropped to $192,428 from $225,428.

Another look at the numbers show the construction value of new homes in the Johnson City MSA this July was an average of 18% higher than July last year. In Kingsport-Bristol it increased by 7.5%.

The slack in new home permits when viewed on the 1995 forward long view is an interesting look at the history of new home construction in the Tri-Cities, but many builders don’t pay much attention to it.  They’re focused on the future – not a history  unlikely to repeat itself in the foreseeable future.

No one is predicting where the new normal will settle, but most builders don’t see a market that approaches anything like what the market say in the 2004-2006 high point.

Here’s how Builder Magazine summed up the national view, which parallels with what some local builders are saying. Builders are mostly unimpressed by the spring selling season, “which we predicted would be “good, but not great.”  The summer was equally disappointing.  Our weekly surveys of hundreds of builders nationwide show that in many markets “traffic” is strong, but traffic “conversions” are low.” In other words potential buyers were looking but remaining potential buyers.

Two key factors for the Tri-Cities focuses on the  job market’s so-far anemic performance as it moves into the last two quarters of the year and migration. Builders report they are seeing increasing number of outsiders looking at new homes. It’s a slice of the market, but data show most traditional opt for existing housing and increasing numbers of being drawn to the multifamily market.

A pretty safe bet is to look for more slow growth for the rest of the year and, unless there’s a major jobs shock that pops up, more of the same in 2015.

©Don Fenley

 

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