TRI-CITIES, Tenn. – Predictions about real estate are often fruitless. The truth of the matter is all we can do is observe and report. And right now, the Tri-Cities’ long-term domestic real estate sales continue arching downward toward a new balance.
A more stable trend indicator is one advantage of monitoring 12-months of sales ending every month. Across the region, sales were down 2.2% from the 12 months ending in mid-Dec. That’s a decrease of 170 sales during a 12-month period, which is also half of the decline in the previous 12-month reporting period.
The Twin Cities was the market with the softest 12-month decline. Its 1.3% drop is close to half the hit the larger Johnson City (down 2.5%) and Kingsport (down 2.3%) markets took. The Greeneville region was down 2.1%.
Regional sales peaked in Sept. 2021 and have slowly declined ever since. Currently, they are comparable to the late pre-pandemic volume.
Eagle-eye market watchers will focus not only on the 12-month trend but on the price bands trends. That’s both a demographics and a sub-market economic indicator that has added impact on the commercial marketplace. For example, residential growth in the Gray and Piney Flats area creates demand for more suburban types of commercial developments like restaurants, grocers, etc.
Price bands are also important because a starter home or entry-level condo isn’t comparable to a larger home or some of the high-end luxury home sales that have done so well here. If the sales volume is out of proportion, the overall market median price can be skewed. And the Tri-Cities region has seen more higher-end home activity in both the existing and new home sectors.
So far, inventory in the $300,000 and below price bands continues to be very tight. Inventory doesn’t begin approaching the bottom end of balanced conditions until you hit the $500,000 and up bands. The only submarket where there’s a better price mix is Greeneville.
During the past three years, the local median price rocketed from an annual average of $150,000 to $230,000. Some of that 53% increase was a skew from a triple and double-digit growth in the $500,000 and up price bands. This year could settle the question of how much of that was a skew and how much of it was an adjustment of an underpriced market.
The economists at Zillow think the Kingsport-Bristol metro area will see prices decline by 1.3% by next November. The Johnson City metro decline estimate is down 0.6%.
Moody’s analytics are more bullish. Its analysts think Kingsport-Bristol’s home values will decline by 5.5% by the fourth quarter of next year. Their Johnson City outlook is for a 4.4% decline.
The largest of those projected declines would put the median sales price where it would have progressed at the pre-pandemic rate. It would also exert some downward pressure on the current $300,000 – $350,000 sweet spot.
But there are outlooks that say hot regional rural markets like the Tri-Cities will eke out another annual price increase next year. This history of Tri-Cities’ annual home price declines is scant. During the past two decades, there have been three annual price decreases.
Categories: CORE DATA, REAL ESTATE
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