After a decade of underperforming the Tri-Cities existing homes market, builders are stepping up and saying, “it’s our turn.” So far this year, the numbers back them up.
The National Association of Homebuilders said this week that builder confidence in the market for new single-family homes in October surpassed September’s record high. Locally, new permits are increasing, lot development is increasing, sales are up, and builders are struggling to keep up with the demand for new homes.
“Traffic remains high, and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study, and other purposes in the COVID era,” NAHB Chairman Chuck Fowke said. “However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber, and other key building materials are lengthening construction times.”
That fits most of the conditions on the local market, too. Builders report they’re selling new homes as fast as they can build them and their confidence in the market is high.
The housing market as a whole has seen a sharp rebound from the April slump. Some local builders report that between half and 75% of their clients are relocating from other areas. Realtors are also reporting an increasing number of their clients are moving here from outside the region.
Kelly Wolf, Wolf Development, thinks the folks who are relocating look at the Northeast Tennessee market and see “incredible natural beauty, a very stable low cost of living, a low crime environment, and a COVID-19 outbreak record that is lower than some other areas. We present a more stable environment.”
And it doesn’t hurt that record-low mortgage rates have increased the buying power of buyers.
This new performance level for the new home segment of the housing industry is especially welcome because when homes are built, extra jobs are created through multiple cascading effects. Besides the construction and building trade workers, lumber mills and moving trucks get coming with land developers and title companies, according to the National Association of Realtors (NAR) Chief Economist Lawrence Yun. The extra inventory is especially welcome during these days of record-low inventory levels. Combined with the existing home market, the new home market is moving the local economy in a healthier direction while homeownership increases through more choices.
According to Builder Magazine’s October data update, there have been 955 new home sales in the Tri-Cities area so far this year. That’s an increase of 103 closings over the same period in 2019.
The magazine’s data department is also reporting that new homes account for 5% of all home sales in the Johnson City Metropolitan Statistical Area (MSA). That’s up from a 2% share last year.
The new home market share in the Kingsport-Bristol MSA is 3%, up from 2% last year.
Although materials prices have increased and are driving costs higher, many local builders say they don’t expect a cooling off of the new home market in the short term.
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Categories: REAL ESTATE