By DON FENLEY
KINGSPORT-BRISTOL, Tenn. – The pandemic home sale profit party isn’t over for Kingsport-Bristol home sellers yet. But the music is slowing down.
ATTOM Data Solutions’ third-quarter Home Sales Report found profit margins on a single-family home and condo sales across the U.S. decreased to 54.6% as prices declined for the first time in almost three years.
But that’s not what the local market looked like.
Since Kingsport-Bristol metro area prices have not declined, the third-quarter profit margin was 62%, up 2% from the previous quarter and 2.9% better than last year. Price rate growth for the metro area has been weakest in its major city. But that has been bolstered by stronger price growth in its smaller submarket. The Johnson City metro area wasn’t included in the analysis because its sales data was below the benchmark.
So, where’s the slowdown?
It’s in the average dollar gain – not the total dollar amount. During the third quarter, the total dollar gain was $75,750, up 5.2% from the second quarter and up 16.5% for last year. It’s the best dollar gain home sellers have seen. But it lags the pandemic growth rate trend. Since the second quarter of 2020, when the housing market powered its way out of the pandemic, sellers saw average dollar gains of 10.2% per quarter. The year-over-year average gain rate was 29.9%.
Bottom line. As strong as the current local dollar gains were, the quarter-over-quarter growth rate was half of the average for the past 10 quarters. The current year-over-year rate was 13.4% off the pace for the same period.
For those whose eyes glaze over when the percent symbol becomes part of the story, look at it this way.
Since the second quarter of 2020, the average quarterly dollar gain has been $4,265. The current average is $3,750, better than the previous quarter.
The average year-over-year third-quarter gain was $10,750. The average during the post-pandemic price spike is $12,980.
Here’s the U.S. big picture: “Rapidly rising mortgage rates have not only resulted in fewer home sales but have begun to impact home prices as well,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “With rates the highest they’ve been in over 20 years, homebuyers face serious affordability challenges, with monthly payments in some markets up 50% year-over-year. It’s very likely that home prices will continue to weaken in many markets in the coming months.”
While the local and U.S. numbers differ, the trends are clearly on the same track. However, the local market picture is not skewed by the ebb and flow of housing in the major metro markets. The big question is how sticky the local median and sales sweet spot runup be as the market slowly stabilizes.
The current local median sales price for the Tri-Cities region is $230,000, according to the Northeast Tennessee Association of Realtors (NETAR). That’s $30,000 higher than where it used to be. The existing home sales sweet spot is between $250,000 and $399,999. The sweet spot’s top range is also in the target price for many of the new homes being planned or under construction.
Categories: REAL ESTATE