Everyone knows we’re in – some think at the tipping point – of the hottest local real estate markets on record. But if you think it just applies to existing and new home sales, think again. Judging from some number crunching about what’s going on in the apartment industry shows things are just as crazy. And the Kingsport one-bedroom apartment situation is the craziest of the crazy.
Look at it this way: The local real estate market took off like a rocket in 2016. Since then, the median existing-home sales price has increased 28%. Sales depleted the inventory while demand continues a strong run. The same thing is happening in the apartment business. During the same 2016-2021 period, the median rent on a one-bedroom apartment in Kingsport has increased 58.5%. It’s up 28% in Johnson City and 16.7% in Greeneville.
Remember, the median is the price where half the rents are higher and half are lower.
A couple of years ago, when there was a rush to build high-end or luxury apartments in the Model City. There was a long line of skeptics. There’s no reason to be skeptical anymore. The new additions have assumed a commanding position in the market. In fact, some officials think we need more luxury apartments to take care of the demand the four newest complexes are not meeting.
Here’s a case in point.
Kingsport’s Town Park Lofts website, where the least expensive one-bedroom units can run up to $1,000 a month, has a “no availability” notice for its one-, two- and three-bedroom units. Not only have they hung out the “no vacancy” sign, but they’re also 108% preleased and have suspended waiting list applications. And all of that is on the heels of a rent increase. There are some options at the other Kingsport high-end complexes. But the current models for their websites have “call for availability” notices. Ditto if you’re shopping prices. What the public does know is occupancy rates are high. The Johnson City market has consistently had one of the highest occupancy rates in Tennessee and the new Bristol communities saw immediate demand.
The Class B and C apartments have openings. Some landlords – especially those with multiple apartment communities and the larger complexes – are also four-square in the rent increase mode. The same thing was noted by Apartment Guide’s 2021 State of the Rental Market Report. “On the national level, we’re noticing a shift in recent patterns. Studios and one-bedrooms are showing some recovery in price, possibly reflecting growing demand.” And a report from data firm Yardi Matrix says multifamily rents on a national basis posted the highest year-over-year increase since the onset of the pandemic in April.
Some of the current Kingsport one-bedroom lease renewals carry 11% or better price hikes to make up for rent incentives enjoyed by long-term tenants. Increases ranging from $60 to $100 a month first started popping up in the Class A sector, but also extend to some of the Class C one-bedroom apartments that appeal to a sensitive demographic. It includes singles who are in their first home outside the childhood bedroom, seniors, and many of the folks who work in the area’s lower-paid jobs. It’s a sticking point in the housing affordability status and a component in the region’s ability to attract new residents to offset the downward pressure on the labor force and population from a rapidly aging demographic. Back-of-the-envelope calculations show that about 20 NE Tenn. residents will turn 65 every day for the next eight years.
Here’s what the current median one-bedroom rents and their year-over-year change looked like in a Zumper Research survey. Since much of the data is based on listings, it’s representative of local market conditions but not inclusive of all rentals. It’s also weighted to the larger apartment communities, and there’s a healthy local contingent of small complexes.
One-bedroom rents and change from last year:
Greeneville – $525, down 4.3%
Johnson City – $635, up 1%
Kingsport – $650, up 8%.
Two-bedroom rents and change from last year:
Greeneville – $525, up 19%
Johnson City – $696, up 18.5%
Kingsport – $582, up 10.5%
Three-bedroom rents and change from last year:
Greeneville – $723, up 27.9%
Johnson City – $895, up 31.3%
Kingsport – $899, down 16.6%
Some of those year-over-year comparisons are as much of an issue of occupancy instead of a precise pricing trend.
Another segment of the local rental industry will be on this site in the next few days. It will examine the occupancy rates of the more than 110,000 single-family and condo rentals.
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