Residential real estate investors seeing higher vacancy rates in most local markets


  • Tightest rental markets for renters are Washington and Johnson counties TN and Washington Co. VA.
  • Bristol, VA has highest non-owner occupied vacancy rate in the area.
  • Greeneville has the highest non-owner occupied vacancy rate in NE TN.
  • Five local markets have non-owner occupied vacancy rates of 5% or higher.

 

While one part of the NE Tennessee housing market is contending with higher demand and fewer listings another is beginning to feel the pinch of too many vacancies.

Existing home sales have moved at a brisk pace for the past nine months while the inventory shortage has stubbornly stayed 6% to 7.5% below last year’s monthly levels. So far, increased demand and less supply has not moved the average sales price in proportion to sales. The average sales price was up 6.9% in January compared to January last year, according to the Northeast Tennessee Association of Realtors Trends Report. However, the current average sales price annual comparison shows it was 3% higher than it was in 2014. The small increase was despite record sales levels that began in May and continued until December.

The other side of the story emerged with RealtyTrac’s current residential vacancy analysis.

At the beginning of this month, the vacancy rates for non-owner occupied investor properties in six of nine local markets were running higher than the national rate. The exceptions are Johnson and Washington counties in NE Tennessee and Washington County VA.

According to the report, there are 97,540 non-owner occupied investment properties in the region. Of that, 4,352 were vacant at the beginning of the month.

Nationwide the vacancy rate for these type properties is 4.3%. In NE Tenn. it was 4.6%. The Bristol VA rate was 8.5% while Washington County VA had a 1.4% rate.

In the two largest counties offer different pictures for investors. It’s better than average in Washington County Tenn. and a little worse than average in Sullivan County.

Some Sullivan County landlords are complaining about poor showing for rentals that have been on the market for longer periods than past years. There are a couple of likely reasons at play.

The first is the supply in the multifamily and rental market has increased. Investor activity increased during the recession when there was an increased supply of foreclosures at attractive discount rates. A signal of that new supply coming on-line is this year’s reduction of fair market rents in Washington and Sullivan counties by The Department of Housing and Urban Development.  That contrasts with what happened with the fair market rents at the beginning of 2015.  Washington County saw the largest increase in Tennessee while Sullivan County was tied for the second largest.

The second is new large multifamily developments are coming online in Bristol and Kingsport this year while multifamily development growth in Washington County has slowed.

Here’s how the current non-owner occupied vacancy rates stacked up in NE Tennessee:

Greene – 5.7%.

Hawkins – 5.5%.

Unicoi – 5.4%.

Sullivan – 5%.

Carter – 4.4%.

Johnson – 3.4%.

Washington – 3.1%.

Methodology

RealtyTrac matched its address-level property data for nearly 85 million U.S. residential properties — including foreclosure status, owner-occupancy status, and equity — against monthly updated data from the U.S. Postal Service indicating whether a property had been flagged as vacant by the postal carrier. .

 

 

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