By DON FENLEY
TRI-CITIES, Tenn. – Realtor.com’s current rental affordability report shows many are spending more than a quarter of their monthly budgets (26.4 percent) on rent. That’s what’s happening in the large metro areas. Some conditions are similar in smaller metro areas like the Tri-Cities. Others are much different.
“Rents are significantly higher than previous years and are taking up a substantial portion of incomes, which are growing at a slower pace than inflation,” said Realtor.com Chief Economist Danielle Hale. “Still, there are some bright spots for renters. Based on the general rule of thumb to keep housing costs under 30 percent of your paycheck, renters in the large metro areas were able to follow best practices in August. Plus, rent growth continued to cool. If these trends and typical seasonal cooling persists, renters may be able to keep housing costs to a manageable portion of their budgets in the months ahead.”
There are some signs that local rent spikes are beginning to moderate. And more inventory is coming on the market to provide additional competition in the three-bedroom townhome class. According to Rent.com, The Villas at North Park in Kingsport is putting the first of its three-bedroom units on the market. Rents are in the $1,850 a month range. As the developer works toward build-out, more units will come on the market.
Kiplinger is advising subscribers to expect a slowdown in apartment rents for the rest of the year. The labor market has been strong, but not strong enough for large rent hikes, on average. Rents will grow faster in areas that attract workers and encourage business expansion.
In Kingsport, the median rent for one-bedroom units has dropped to $790 a month, according to Zumper. The older apartment communities dominated by a Texas investors group (ValCap) are still advertising $1,000 a month for one-bedroom units, but less expensive options are starting to crop up for those willing to shop and get on a waiting list. Compared to last year, rents on one-bedroom units are up 30 percent based on the $790 median. The median rent for two-bedroom units this month is $999. That’s a 43% increase from last year. The average rent for three-bedroom units is $1,350, up 28 percent from last year.
The median one-bedroom in Johnson City is $895 a month, up 38 percent from last year. Two-bedroom units have a median rent of $1,092, up 29 percent from last year. The typical rent for a three-bedroom apartment is $1,637 a month, up 38% from last year.
Zumper lists the typical rent for a one-bedroom apartments in Bristol as $899, up 35 percent from last year. The median for a two-bedroom unit is $1,027, up 28 percent from last year. Three-bedroom units have a median price of $1,400, up 38% from last year.
U.S. apartment rents were up 18 percent in 2021 and have continued increasing this year. According to a new analysis from Apartment Lists, prices are rising faster in cities previously deemed “low cost.” That is the situation in the Tri-Cities. New apartment construction and more competition from build-to-rent single-family units and townhomes are also beginning to show up in the local market. Jay Lybik, National Director of Multifamily Analytics, CoStar Group, said in prepared remarks, “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand.” Another report from Yardi Matrix shows the average apartment asking rent recently decreased for the first time in 2022, and that is beginning to show up in the local market.
So far, demand for apartments and rentals has been high. One thing local market watchers are focused on is higher interest rates. They tend to put downward pressure on mobility over time. If that happens, it will take a bite out of the rush of new residents to the area.
Although 25 percent of income on housing is the accepted rule of thumb, 30 percent is the number that puts renters in a stressed housing situation. Applied to the current local household incomes, here’s the 30% affordability target for total cities. The first figure is the monthly target for median household incomes. The second is the median for family households.
- Bristol – $1,052, $1,438
- Elizabethton – $950, $1,142
- Greeneville – $1,026, $1,243
- Johnson City – $1,054, $1,628
- Kingsport – $1,052, $1,467
Categories: REAL ESTATE
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