Homeownership monitor rates Tri-Cities counties unaffordable


TRI-CITIES, TN – The local housing market is in tip-toeing into what’s beginning to look like a softer prime home buying and selling season with a tainted affordability status.

According to the Atlanta Federal Reserve Bank’s Home Ownership Affordability Monitor, all Tri-Cities NE TN counties are housing burdened. That means owners are spending more than the 30% of their income on housing.

The FED’s monitor status doesn’t mean there’s no affordable housing in the region. There is, but availability is as much of a challenge as affordability. What the monitor’s rating means is buyers are spending more on housing than recommended.  That’s something that makes local civic and government leaders cringe because it gets in the way of marketing for new residents and workers to lighten the burden of the local labor shortage.

The FED’s affordability monitor is a tool that assesses overall market conditions used by business and civic leaders and investors to keep tabs on the housing market and economies of counties and regions. The most current analysis is for December’s market conditions.

The Kingsport-Bristol metro area currently has the most affordable affordability rating at 82.3. But the baseline is 100. Anything below that is unaffordable.

The Greeneville metro area is the next most affordable market with a 75.3 rating.

The Johnson City metro area is the least affordable of the local metro areas with a 70.2 rating.

Here’s the most current data from the FED on the monthly metrics used for the affordabity rating. They are the mortgage payment and percentage of income required for homeownership in the region. The mortgage payment includes principal and interest, taxes, insurance, and private mortgage insurance.

Kingsport-Bristol – $1,528, 36.4%.

Greeneville – $1,485, 39.8%.

Johnson City – $1,700, 42.7%

The Atlanta FED’s Homeownership Affordability Monitor baseline is a rating of 100. Anything below that is considered unaffordable.

What’s not included in the index is the 1% to 2% of a home’s purchase price for annual maintenance.

Since the monthly cost is the deciding factor for most buyers, these numbers move the topic of how can I get the cost down to a higher place on buyer’s pyramid of concerns.

The biggest cost reduction is a 20% down payment. That eliminates the private mortgage insurance and lower the current mortgage payment by about 17%. Currently, the typical local down payment is in the 7% to 10% range.

The next largest cost saving is the buyer’s credit score. The higher the score, the better mortgage rate he or she can get. That’s an area where the region and the entire south suffer. It suffers because the south has the lowest average credit scores of all regions in the nation.

One of the primary reasons affordability has suffered in the region is wage increases have not kept pace with home prices.

 ©2023 donfenley.com

Categories: REAL ESTATE

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  1. Tri-Cities housing market stirring out of its doldrums - DON FENLEY @ CORE DATA