By DON FENLEY
TRI-CITIES, Tenn. – Home builders at a national conference this week had a pessimistic outlook for the new home market. But not local builders. In fact, there’s a night-and-day difference.
Barak Saltzman, D.R. Horton’s city manager for East Tennessee, and the region’s second-largest builder, Terry Orth, say there are challenges, but they predict more stable pricing and sales.
Saltzman said his firm is back to pre-pandemic conditions nationwide, “and we’re seeing the same thing here in NE Tenn. January was our best sales month since June.”
During the International Builders show in Las Vegas, Robert Dietz, chief economist and senior vice president at the National Association of Homebuilders (NAHB), told reporters, “Our thesis is that a recession is underway.” NAHB expects single-family starts will recover a year from now.
Orth expects his firm’s sales to be about the same as last year. He estimates traffic was down by about 20% from the peak, “but it’s still at or a little above pre-pandemic levels.” Orth has about one month of inventory on the ground. The firm’s business is concentrated in six NE Tenn. counties, and he says all counties are performing well.
Orth Homes has stepped up social media advertising on new products, as have other local builders. We have some nice products coming for retirees and those coming from out of town, he said.
That dovetails with the Wall Street Journal and Realtor.com’s latest Emerging Housing Markets Index. For the first time, both Tri-Cities metro areas are ranked in the nation’s top 10. The Johnson City metro area has a 5th place ranking, and Kingsport-Bristol made a big move to the No. 7 spot.
National publicity from the WSJ index and the U-Haul relocation index are among the primary drivers of the move to the Tri-Cities marketing. The Tri-Cities has not managed to organize or launch a regional relocation marketing campaign and relies on state and local efforts to attract new residents. In-migration is critical to sustaining the slow regional year-over-year growth it has experienced. The region has to attract about 34 new residents a day to balance its annual out-migration and high death rate.
Saltzman said, “I’m very bullish when I can be, and I’m excited about what we’re doing in East Tennessee.” He said the firm cut back to balance strong expenses, but we’re past that now. “We are launching some strong incentives.”
D.R. Horton also has about a month’s inventory on the ground and four to five months’ worth of specs in the works. He said improving conditions are permitting the firm to get the price point of some of the new products to the $250,000 range. “We’re trying to figure out how to get more affordable.”
Saltzman said D.R. Horton has its strongest local land position since he’s been in Tennessee.
His goal is to have half of the market in Sullivan and Washington counties and 70% of the regional market. So far, new home permits pulled by D.R. Horton are headed that way.
According to the Census Bureau, 1,564 single-family building permits were pulled last year. Kingsport-Bristol edged out the Johnson City metro area with 793 new permits to 771. The regional total was up by 66 permits from the previous year.
Here are the January new single-family permit totals for the region’s two major cities:
Johnson City – 3
Kingsport – 18. All but one from Holston Habitat for Humanity was by D.R. Horton.
Categories: REAL ESTATE