Existing-home sales in the $200,000 and below price range are still a staple in the Northeast Tennessee housing market. But when you take a long view there have been some major – and significant – changes for both the region and the primary city submarkets.
During the 12 months ending in mid-July resales in the $200,000 and below price range were up 6.2% from the previous year. They had a market share of 69%. Resales in the $200,000 $399,999 increased 21.2% and had a 27% market share. For some context, consider this: In 2016 – that’s the year the market began its current record-setting pace – sales in the $200,000 and below accounted for 76% of all existing home sales. The $200,000 – $299,999 range had a 21% market share.
Twelve-month growth rates for the higher price ranges are even bigger. It’s the hallmark of a recovering housing – and growing – housing market sans the Covid-19 effect.
- $400,000 – $599,999 up 39.8%
- $600,000 – $799,999 up 37.5%
- $800,000 – $1 million plus up 55.6%.
The number of sales in those price ranges are in the double digits, and the market shares range from 3% to less than 1%. Overall, there was an increase of 180 sales in those top price tiers over the 12 months ending in July 2019. By itself, that’s enough to boost the overall average sales price for the region, which has steadily increased for the past four years.
In June, the regional average sales price was $207,699, up 13% from June last year, according to the Northeast Tennessee Association of Realtors (NETAR) Trends Report. The median sales price was $172,500, up 7.8% from last year, according to Realtor Property Resource (RPR).
From a market trend perspective, the $200,000 – $399,999 price range is slowly becoming the regional sweet – and hot – spot.
The same is true in the primary city submarkets, but the individual market share growth rates vary. For instance, in the Twin Cities market, the $200,000 – $399,999 market share has increased from 17% in 2016 to 27% this year. The Kingsport market share increased from 19% to 23%, and in Greeneville, it was 17% to 21%. Johnson City, which has dominated the market share in this price range, grew from 25% in 2016 to 33% in July.
This is good news for the increasing new home market because the starting new home price point is competitive with used homes that are on the market. From a marketing perspective, it’s a matter of, “Do you want a new home or a used home?” New home construction has ramped up during the pandemic and some builders are now focused on spec homes instead of custom orders. New home starts picked up in June with fewer wet-weather days. That’s expected to continue.
On July 17, there were 824 homes in the $200,000 t0 $399,999 price range on the market for a 36% share of the total inventory. There were 1,109 in the $200,000 and below price range for an inventory market share of 49%.
While this dynamic is good for the existing home prices, it’s worrisome for the region’s affordability status.
Attom Data Solution’s Q2 Home Price Index was a first for Washington County TN. It was necessarily the kind of first regional leader wanted to see. For the first time, an average wage earner in that county did not have the purchasing power to buy a median-priced home. That was based on the county’s median home sale price, annualized wages for the county, and assumed a 3% buyer down payment and 28% debt-to-income ratio. According to the report, the average share of income for a median-priced home was 30%. That’s on the stressed housing baseline.
Sullivan Co. fared better in Attom’s study, but home prices in both counties have been increasing faster than wages for the past two years.
Affordable housing is a hot button topic because it’s in the price range for many of the workers in the now dominant service economy can afford.
Categories: REAL ESTATE