The sales volume for existing homes sold via the regional multiple listing service (MLS) has been over $2 billion for the past three years. This year’s volume will also be in that range. That economic impact does not include the 25% of existing sales not listed on the MLS or new home sales.
During the 12 months ending in mid-October in 2015 – that’s when a pretty good market was beginning to heat up – to those during the 12 months ending on Oct. 10 this year existing home sales jumped from an average of 14 a day to 24 a day.
The primary drivers for the shift were basement-level interest rates that gave buyers more buying power and an influx of pandemic refugees moving to the Tri-Cities. Many locals used their extra buying power to upgrade to more expensive homes. And new residents – many had just sold homes in more expensive markets and were -cash-rich – didn’t hesitate to buy homes that locals saw as more expensive.
Looking at home sales by price range as market share of the metro areas’ total sales shows how the housing market affects the region’s growth. The big takeaway is the Johnson City market continues its dominance in all price ranges. But there have been some market share shifts.
Another takeaway is sales in the most affordable homes range have declined by 25% while increasing in the next two price tiers. There were also dramatic gains in the sales of top-tier homes. For example, during the 2015 base year, there were 13 sales in the $800,000 and up range. During the 12-months ending this month, there were 118 sales.
When looking at market share of sales in just a metro area, the biggest gain in the new $200,000 to $399,999 sweet spot came in Greeneville. Sales in that range now account for 39% of all Greeneville sales and an increase of 22% from 2015.
Another standout is the Bristol TN/VA metro area’s sales in the $800,000 and up range. There have been 26 of them in the 12 months ending in mid-month. That puts Bristol in second place for that price range sales. The Johnson City market had 69 sales.
As the local market begins to show signs of cooling off, it begs the question: will sales and prices crater next year. The answer is unless there’s a major economic set back it’s not likely. The market is stabilizing from white-hot to just hot. While the market is expected to begin normalizing, it’s unlikely it will change dramatically. That would happen only if there’s a significant increase in inventory or population gains.
Builders are currently bringing new homes to market as fast as they can. The big headwinds are material costs and a labor shortage. The new home market was at a little more than half of its pre-Great Recession capacity at mid-year.
Another source for an inventory boost is flippers. They account for about 10% of home sales, and many of those sales are in the $200,000 and below affordability range.
There’s an ongoing effort to continue attracting new residents looking for lower taxes and an area that has an accommodating lifestyle and amenities. A challenge to that is the housing inventory. It’s slowly increasing but is now at an all-time low. A second part of the inventory situation is affordability. Home prices have grown faster than local wages for almost two years, and most of the jobs the region’s economy is creating are in the lower wage ranges of the service sector. That has driven interest in townhomes, condos, and mobile homes, which accounted for about a third of all new homes last year.
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