Fair Market Rents drop in Sullivan, Washington counties; rental affordability up as more developments under way


Rental competition is heating up in the Sullivan and Washington counties.

At least, that’s the take away from U.S. Department of Housing and Urban Development’s 2016 Fair Market Rents and a recent rent v. buying analysis by RealtyTrac. In a nutshell the supply of rentals is increasing while the demand is somewhat of a question mark since the number of rental units under development is increasing disproportionately with population changes. To cap it off, rents are declining from last year’s levels.

While that’s good news for renters, the same can’t be said for folks who bought homes when the market was down with visions of long-term rental incomes or the rush to develop new apartment complexes in Kingsport and Bristol.

Much of the Kingsport apartment development is targeted at attracting some of the population gain in other counties to the Model City. Until recently, Bristol has seen the least amount of apartment development in the Tri-Cities.

The lion’s share of the region’s apartment development for the past several years occurred in Washington County and was driven upgrades in student housing trends.

There was only one instance of an increase in HUD’s just released 2016 Fair Market Rents (FMR) and that came for two-bed room units in Sullivan County. It was up 0.3% (that’s $2 a month) from last year’s FMR.

The big drops come in Washington County where the FMRs dropped 10.9% for on bed-bedroom units, 14% from a three-bedroom and 13.7% for a four-bedroom house. Two-bedroom FMRs are down 9.7% and the efficiency is down 7.6%.

Sullivan County landlords will contend with FMR drops of 6.5% for efficiencies, 2.3% for one-bedroom units, 0.1% for three-bedroom units and 2.9% on the four-bedroom homes.

The RealtyTrac study uses percentile average rental data for 3-bedroom properties in 2016 from the U.S. Department of Housing and Urban Development, along with Q2 2015 average weekly wage data from the Bureau of Labor Statistics(most recent available) and year-to-date home price data from RealtyTrac publicly recorded sales deed data in 504 counties nationwide.

Rental affordability is average monthly wage (extrapolated from average weekly wages) as a percentage of average rent. Home buying affordability is the average monthly wage (extrapolated from average weekly wages) as a percentage of the monthly house payment for a median priced home (based on a 3 percent down payment and including mortgage, property tax, homeowner’s insurance and private mortgage insurance).

That analysis shows the 2016 affordability factor is down 13.8% in Washington County and up 0.4% in Sullivan County.

It also shows renters will use 29% percent of their income on housing in Washington County while buying a home consumes  27% on housing cost.

For Sullivan that rent v. buy comparison is 26% of income for housing for renters and 23% for those who choose to buy.

Some of the other takeaways from the analysis include:

  • The price for a median price home in Washington County increased 2.7% during the study period while change in rents was down 13.8%.
  • The price for a median price home in Sullivan County was up 23.2% while the rental share of income was up 0.4%.
  • The population share of Millennials in Washington County up 1.4% and they account for 21.1% of that county’s total population.
  • Millennials share of the Sullivan County population was down 7.4% and that group accounts for 15.7% of the county’s total population.
  • Baby Boomers account for 24% of Washington County’s population and their ranks are down 7% since 2013.
  • Sullivan County’s population share for Baby Boomers is 26.5%, down 3.1% from 2013.

 

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