Median Kingsport home size up, Johnson City down


By DON FENLEY

The current Kingsport version of the American dream is a little bigger while it’s smaller in Johnson City. That assessment is benchmarked by the median square footage of new homes in the region’s two primary city markets.

Kingsport sq ftAlthough there were almost double the number of single-family homes permitted in Johnson City last year as Kingsport, the annual median square footage was down to 2,230 compared to 2,507 in Kingsport. And, the Johnson City numbers don’t include the large townhome projects that would have dropped the median even lower. They were not included because even though they are permitted as single-family residential, they will be initially being rentals.

Kingsport’s median size home came just above the national median for Q4. Nationwide it was 2,385 in Q4, down, from 2,414 in Q3, according to Commerce Department data.  The median now stands 106 sq. ft. smaller – about the size of a small bedroom – than the all-time peak of 2,491 in the third quarter of 2013.

The Kingsport median of 2,507 sq. ft. took a big drop from 3,015 in Q3, and 2,507 sq. ft. is also the annual median.

In Johnson City the Q4 number was the smallest of the year, 1,914 sq. ft., down from 2,155 in Q3. It has steadily declined from the Q1 median of 2,660 sq. ft.

There are several drivers behind these changes.

Johnson City has three communities developing that have small lot sizes thus the homes are smaller.  But, there’s enough building in those communities to pull down the city’s overall median sq. ft. data.  Builders are also working on more cottages for the Johnson City market than in previous years. That’s a market shift that rounds out the community’s new home inventory with market demand

In Kingsport there’s an emphasis on higher-end home, and since fewer new home are being permit that has bumped up the sq. ft. medians.

2014 trendThe national median is retreating from recession levels when builders focused on larger, more expensive homes for well-heeled buyers who had the capital and credit to take advantage of the lower material and construction costs. That inflated market square foot data. It also fits a traditional pattern seen during the past two recessions. A pattern that gives way as the economy improves and construction costs increases. While that dynamic was active locally it gave way to the current market earlier than the national pattern.

 

But that doesn’t mean the Tri-Cities new home market is booming. Small-market builders were all but been kicked to the side of the recovery road by regulatory lending practices that are only now beginning to improve.  It’s also noteworthy that the regional new home sector managed slow growth despite a negative labor market sector and a population picture that is flat to negative.  Another noteworthy point is much of the grain was driven in the Johnson City market where the labor and wage sectors have been negative for almost two years.


 

Kingsport-Bristol new home sales flat, cost per sq. ft. only increasing metric

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Another factor in the smaller home trend is builders are beginning to see some first-time buyers who typically prefer smaller, less expensive homes.

Eric Kistner, managing broker at Ridgepoint Real Estate and Auctions, says his firm currently has a couple of first-time buyers. But most of their current homes are in the larger class that target doctors, and other professionals.

Economists have been waiting for the new-home market to kick into gear since it’s a big contributor to construction hiring. Last year’s national tally of new-home sales amounted to only 58% of the average annual output since 2000. That aligns with new permit performance in the Tri-Cities. A total of 752 privately owned, single-family permits were pulled in the tri-Cities last year. That was 20 more than during 2013. It was also the third straight year new permits have increased in the region; however, permits are performing at slightly less than half the market’s 2006 capacity.

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