Homes in Sullivan and Washington counties were slightly more affordable during Q3 than they were during the same period last year according to a RealtyTrac market analysis that shows wages didn’t keep pace with home price increases. But while home price increases are outpacing wage increases, it’s not yet a critical factor. A broader look at affordability from other sources shows it costs less for a household with a median income to buy a median-priced home than to rent and pay the current average or HUD fair market rent.
Locally, availability has been a bigger issue than affordability. The inventory of homes for sale is tighter than many real estate officials can remember because pent-up demand has driven sales to a pace that’s higher than new listings coming on the market.
RealtyTrac’s most recent housing affordability analysis puts Sullivan County’s affordability index at 95. That means homes are less affordable than their historic average and a seven point improvement over Q3 last year. The Washington County affordability index is 107, up two points from last year, but still under the historic affordability index level. The affordability index for both counties decreased from the previous quarter.
The analysis also shows buying a home in Washington County required 27.2% of a household’s wage. In Sullivan County, it consumed 19.8%. The index shows homes were most affordable in Washington County during Q1 2012 and Q1 in 2013 for Sullivan County. The index varied three points between the two during those periods.
Another way to look at home prices is CoreLogic’s monthly Home Price Index (HPI) and the Northeast Tennessee Association of Realtor’s year-to-date average price.
The trend line for CoreLogic’s Home Price Indexes (HPI) for the Kingsport-Bristol and Johnson City MSAs moved in opposition to the Northeast Tennessee Association of Realtors Trends Report year-to-date average price trend in August. But the overall picture is one of flat to moderate home price increases.
Since CoreLogic’s and NETAR’s indicators draw from different data sets, some trend variation is normal. The same basic trend pattern can be seen in the charts for all the markets with the exception of the Trends Report for Kingsport-Bristol during January, February and March. In April Kingsport-Bristol’s trend pattern fell into basic sync with the rest of the region.
The only monthly wage data that can be factored into the picture is the average private sector wages. Total wages for the MSA are calculated on a quarterly basis, and the most recent release is for Q1 this year.
So far this year the year-over-year growth rate for private sector wages has increased more than the nonfarm job creation rate every month in the Johnson City MSA and six of eight months in the Kingsport-Bristol MSA. Both have also consistently been on par with or slightly higher than the monthly year-to-date average price comparison.
The August HPI for Kingsport-Bristol increased 4.4% compared to the August 2015 index. The year-over-year comparison for the Trends Report shows a 0.04% increase.
In the Johnson City MSA, the index increased 1.4% while the Trends Report year-to-date average is down 0.2%.
Using just CoreLogic’s HPI local home prices are lagging the national price increase pattern. In August the national HPI was up 6.2%. It hasn’t been below 5% since December 2014. The local indexes have seen some swings above the national pattern, but for most months they trail the national price pattern by a couple of points.
CoreLogic’s HPI is built on public records, servicing, and securities real estate databases and incorporate repeat sales. NETAR’s Trends Report is an average of the price paid for properties listed on the local Multiple Listing Service, which accounts for about 75% of local market sales.