Trend tracking is one advantage of looking at the housing market by monthly 12-month increments. That metric began signaling early last fall that existing home sales were plateauing after increasing for 14 months.
The trend hasn’t resulted in significant sales declines or a shift in the four major city market shares. The Johnson City region continues to dominate sales in every price range, with one exception. Kingsport owns market share for sales in the $100,000 and below range.
Since inventory has dropped to rock bottom, most market watchers pay extra attention to where it’s concentrated for the upcoming spring and summer home buying and selling season. Inventory based on price segments is also indexing the city area’s primary growth patterns and some interesting short-term niches.
Almost half of the region’s listings were in the Johnson City region in mid-March. A short-term exception was homes in the $700,000 to $800,000 price range. Greeneville and Kingsport had a larger share of listing in that price range.
Another hot spot is in the Bristol TN-VA region. Almost one in four listings for the region’s homes in the $600,000 to $700,000 range that are on the market are in the Twin Cities. That’s a bright sport for Bristol considering its overall persistent sales trend decline.
Since the market softening began, Greeneville has had the most consistent sales trend performance. Still, the volume has been in single digits since December. The Kingsport region has the second-best trend performance based on sales pattern volatility, but that too began softening in mid-February.
On the more convention year-over-year metric, February home sales were beginning to show the softening trend. At the first of the month, they were down by a little more than 1%. At the mid-month update, that shifted to a 1% gain from the previous year.
Transactions in the local commercial market were also flat in February. But don’t confuse that with a softer market. Unlike residential sales, which are typically price-driven and are currently concluded quickly, commercial deals take longer. They are driven by the business cycle and cash flow. Some local deals that have gone dormant for a year or more are currently reviving.
Both local and out-of-state investors continue to explore the local commercial market. Many are looking at rural metro areas like the Tri-Cities seeking growth opportunities. Although some developments have higher risks the growth potential is greater due to increasing costs in secondary markets like Knoxville or Chattanooga.
Inventors continue to be focused and acting on just about all the local commercial sectors. Multi-family, rental housing and restaurants have been especially strong. And just like the residential sector, the lack of inventory in some sectors continues to be an issue. Industrial – especially warehousing – is especially tight. Most local commercial practitioners say they could be doing more business if industrial inventory was available.
Jerry Petzoldt, TCI Group, did a deep dive on tax records and found that there has been a lack of warehouse additions for a decade. This comes when there’s increased interest and activity in developing and expanding last-mile delivery infrastructure in large and small markets across the nation.
Demand for this type of infrastructure is high while the supply is low. And the lead time to bring new inventory to the market is extremely long. That’s causing warehouse lease rates to escalate and limits the expansion of this part of the modern economy in the Tri-Cities region, Petzoldt said.
Businesses don’t want to spend money on real estate, but they are willing to rent. Currently, the “Tri-Cities has little or no inventory in the pipeline to speak of, or is there any that has been built for over 10 years as documented in our research of public tax appraisal records in the seven-county Tri-Cities region,” Petzoldt said. “What are we waiting for? As the late Charles E. Brooks would always tell his son the late Andy Brooks and myself…”son, you can’t sell out of an empty wagon.”
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