Existing home sales continue their slow decline in May. So far this year, they have declined by an average of 0.4% per month even as more new residents continue moving here. That’s a trend calculated on sales for the 12-month period ending each month for the area’s four major residential regions.
Some experts think sales could decline by as much as 10% by year’s end if mortgage rates continue increasing. That’s a given as long as the FED continues increasing interest rates. And there is continued pressure for that to help right the unbalanced and overheated housing market.
Since local home sales were up 11.2% last year, a 10% decline would be a growth rate adjustment but not a significant market change. A pause in the sales rate would boost the region’s anemic inventory. That is beginning to happen, but it’s a painfully slow process. Balanced market conditions are typically marked by five-to-six months of inventory. This month’s inventory chart shows that the region is nowhere near that benchmark.
Market share for the four primary markets for the 12-months ending in mid-May hasn’t changed from previous reports. The Johnson City region continues to dominate market share for home sales in all price ranges except the $100,000 and below class. Kingsport accounts for 41% of all sales in that price range.
And the Twin Cities continues to punch above their weight in the $700,000-to-$800,000 and $900,000 to $1 million price ranges.
New home permits were up almost 9% last year but are still less than half of the annual permits pulled during the region’s 2006 building peak. Currently D.R. Horton accounts for most of this year’s new permits, and the firm anticipates increasing production, according to Barak Saltzman, vice president for city operations.
According to the Market Edge, permits for new high-end homes continued robust gains. There were 176 of those permits pulled last year – up 33.3% from 2020. Washington Co. Tenn. accounted for 64 of those permits, and there were 37 in Sullivan Co. The big increase was in Greene Co. Permits, there jumped from 12 in 2020 to 30 last year. High-end permits are defined as those for homes with 4,000 square feet or more space or $400,000 or more construction costs.
There were also 575 new commercial permits last year, up from 254 the previous year. Most were in Washington Co. Tenn. – 206, up from 90 in 2020. Sullivan Co. permits increased to 169 permits from 76 in 2020. Washington Co. Va. had 93 permits, up from 46, and Greene Co. had 55, up from 26.
Jerry Petzoldt, CEO, owner, and principal broker at the TCI Group attributed the increase in permits – and increases in local commercial real estate (CRE) transactions – to an improving economy and the influx of new residents in the region has experienced. “It’s all about population growth, and both the economy and commercial real estate follow population,” he said.
“Currently, there’s an awful lot of interest in the local market from outside the Tri-Cities. Investors and developers are looking for places where they can invest.” We’ve never had that before, but the steady stream of reports in both regional and national media about the influx of new residents was a game-changer.” High ratings in each of the quarterly Wall Street Journal/Realtor.com Emerging Markets Indexes is just one example. Both local metro areas were rated consistently rated as a good place to invest in housing and a good place to live. “Investors and new residents want to go where the action is, and the spotlight is on us.”