Tri-Cities 2020 home sales up 7% in city markets – prices find a new sweet spot

Tri-Cities’ existing-home sales in the primary city market areas were up 7% in 2020, and higher-priced home sales led the way. The new sweet spot is $200,000 to $399,999. That’s based on existing home sales for the 12-month period ending on Dec. 13.

The city sales growth rate doesn’t include county-level sales.

ANNUAL GROWTH RATES

Greeneville had the highest annual growth rate compared to the same period last year.

Annual growth rates were:

Greeneville – 11.6%

Kingsport – 9.9%

Johnson City – 4.9%

Bristol TN-VA – 4.3%

The actual increase in sales was 502.

Kingsport- 196

Johnson City – 147

Greeneville – 103

Bristol TN-VA – 56

MARKET SHARE

Johnson City continues its domination of market share in every price range. Compared to previous years, Kingsport and Greeneville have made some impressive gains this year. However, Johnson City still dominates the regional market.

Regional total market share:

  • Johnson City – 41.3%
  • Kingsport – 28.2%
  • Bristol TN-VA – 17.7%
  • Greeneville – 12.9%

Market share by price range:

$200,000 and under

– Johnson City 37.1%

– Kingsport – 30.9%

– Bristol TN-VA – 18.6%

– Greeneville – 13.4%

$200,000 – $399,999

  • Johnson City – 46.7%
  • Kingsport – 25%
  • Bristol TN-VA – 16%
  • Greeneville -12.3%

$400,000 – $599,999

  • Johnson City – 50.6%
  • Kingsport – 21.8%
  • Bristol TN-VA – 16.3%
  • Greeneville – 11.3%

$600,000 – $799,999

  • Johnson City 55.6%
  • Bristol TN-VA – 20.4%
  • Kingsport – 14.8%
  • Greeneville – 9.3%

$800,000 – $1 million-plus

  • Johnson City – 63.9%
  • Bristol TN-VA – 19.4%
  • Kingsport – 11.1%
  • Greeneville – 5.6%

HOME PRICE GROWTH

One of the biggest changes in the local market has been the increase in resale prices. The supply/demand situation is driven by a shrinking inventory and record-low interest rates that increased consumers’ buying power. It also set the stage for an accelerating affordability issue. Affordable is defined as the average worker having the buying power to buy a median-priced home. Since local home prices have been increasing faster than wages, affordability in the Tri-Cities is declining.

These market forces have resulted in a sharp decline in sales in the $200,000 and below price range. Since 2008 – the year before the Great Recession hit the Tri-Cities – resales in the $200,000 and below price range have declined from 81% of all local existing home sales to 60%. During 2020 resales in that price range were down 236 homes from the previous year.

At the same time, resales in the $299,999 to $399,999 price range increased to 33% of all sales from a 13% market share in 2008. Last year sales in that price range were up 515 over the previous year.

Sales in all other price ranges also increased last year.

The largest 12-month 2020 growth was 109% in Johnson City’s $800,000 to $1 million-plus sales.

The largest 12-month growth across the board was in the $600,000 – $799,999 price range. During the year there were 108 sales in that price range, up from 58 the year before.

  • Regional total, up 86.2%
  • Johnson City – up 87.5%
  • Kingsport – up 77.8%
  • Greeneville – up 66.7%
  • Bristol TN-VA – up 18.2%

HOMES SELLING FASTER THAN EVER

During that 2008 pre-Great Recession market, local markets typically had an 8 to 10-month inventory of homes on the market. In 2020 the hot market years of 2016 forward absorbed the excess inventory. And since the new home sector was performing at less than half of its pre-Great Recession capacity, a lot fewer new homes were coming on the market.

The result is today’s record-low inventory. Local real estate professionals who have been in the business for 20 years or more affirm that inventory is now tighter than they have ever seen. And those on the market are selling faster than ever before.

In November, the region had a 2.1 month supply of homes on the market, according to the Northeast Tennessee Association of Realtors’ (NETAR) Home Sales Report. Inventory in the over-all city markets supply ranged from 2.4 to 2.9 months of inventory in the most active price ranges.

It was much tighter in the individual city markets. The most demand was a 1.3-month supply in the $700,000-$799,999 price range in Bristol TN-VA to an 18-month Kingsport supply in the $1 million-plus price range.

Five to six months of inventory used to be cited as balanced market conditions. That level hasn’t existed in the Tri-Cities in two years.

2021 OUTLOOK

Expect more of the same for Q1 and Q2.

There could be some price growth rate – but not price total –  moderation due to buyer fatigue and more stringent qualification requirements from lenders.

There’s also talk about a $15,000 buyer tax credit from President Biden’s administration that could moderate any sales moderation. It’s aimed at helping Millennials and GenZ first-times while sustaining sales volumes.

Mortgage rates are expected to increase to the 3 and 3.5% range.

Builders will continue struggling to meet increased demand. Both the prefab modular and manufactured sectors are expected to continue picking up their growth rates to meet demand in the lower price ranges.

So far, the real estate industry has been the stable star in the Tri-Cities economic recovery. It should retain that position next year.

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Categories: REAL ESTATE

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