By DON FENLEY
TRI-CITIES, Tenn. – The area’s new home industry is steadily moving toward production levels not seen for almost two decades. According to Census reports, builders had pulled 1,072 new home permits at mid-year. That’s less than half of the industry’s peak output in 2005.
The lion’s share of new permits was pulled by D.R. Horton, the region’s only national builder. Horton’s Vice President of City Operations for East Tennessee recently outlined his company goal for new housing during a Northeast Tennessee Association of Realtors (NETAR) video that can be found at the association’s website by CLICKING HERE.
Census numbers don’t include the Greene Co. area, which is seeing a similar surge. It’s also likely the Census count is short of the actual number of permits issued because not all local code offices promptly report their totals to the Census Bureau.
To some, the surge of permits represents a population increase. To others, it’s a stabilization of an out-of-balance local housing market’s supply and demand dynamic. It’s both and more. It’s also driving some erroneous population growth assumptions and development push-back. So far, local housing demand is driven by new residents and pent-up demand from area Millennials entering their prime home-buying years. Since the region’s out-migration and deaths outnumber births, the only population gain comes from new residents. Regionally, that grain has improved to a year-over-year growth rate of about 0.4% at the most current Census count. So far, the push back is in the social media talking phase and resistance to new developments with a higher density than neighbors want.
The current housing crunch can be traced to the lack of new home construction for over a decade. Typically, every sixth existing home sale trigger production of one new home. That didn’t happen here and across much of the nation.
The new home deficit began building with the local housing recovery from the Great Recession. The inventory imbalance began accelerating in 2018 when existing home sales had absorbed most of the excess inventory and began building momentum. That’s the last year the local market had balanced market conditions marked by five to six months of inventory. Today, inventory has declined to a month or less. The supply-demand imbalance was a primary driver of double-digit home price increases.
Of course, there were other factors – big factors. The pandemic’s effect on the economy, the number of people moving to the Tri-Cities, and supply chain disruptions are some key influencers.
According to the mid-year Census data, 561 new permits were issued in the four-county Kingsport-Bristol Metropolitan Statistical Area (MSA). Of those, 456 were for single units, 24 permits were for building with two-units, 36 were for three and four units, 45 were pulled for five units or more, and four were for developments with five units or more.
A total of 511 new permits were issued in the three-county Johnson City MSA. Of that total, 400 were for one unit, four were for two-unit buildings, 107 were for developments of five or more units, and 12 permits were for developments with five units or more.
Last year’s annual new home permit from The Market Edge listed 1,275 new home permits in the Tri-Cities region. That total includes the two Tri-Cities MSAs plus Greene Co. The total was also the highest since 2008. That’s the year before the Great Recession hit the local housing market. New permits peaked at 2,622 in 2006, according to the Market Edge, which is widely considered as the most accurate source for building permit data.
©2022 donfenley.com All rights reserved.