Apartment demand eases, rents still increasing


TRI-CITIES, Tenn. – Waiting lists may on the decline in the Appalachian Highlands apartment market, and some complexes are offering move-in incentives. But demand remains strong, and landlords are still increasing rents while scrambling to maintain occupancy rates and cut costs.

At the end of May, year-over-year rent increases for one-bedroom apartments ranged from lows of 6% for one-bedroom apartments in Johnson City, Bristol TN and Elizabethton to 15% in Greeneville. Two-bedroom year-over-year increased were highest in Bristol TN, up 36%. The three-bedroom annual cost increase was up 76% in Kingsport and 62% in Elizabethton

Here is how the median rents in late May looked, according to Zumper’s research department.


Kingsport – $800, up 14%. Lease renewals at some of the larger complexes are coming in at 7%.

Johnson City – $800, up 6%

Greeneville – $750, up 15%

Bristol TN – $700, up 6%

Elizabethton – $585, up 6%


Bristol, TN – $1,494, up 36%

Johnson City – $1,119, up 15%

Kingsport – $950, up 17%

Greeneville – $850, up 21%

Elizabethton – $635, up 23%


Johnson City – $1,910, up 59%

Kingsport – $1,757, up 76%

Greeneville – $1,700, up 13%

Elizabethton – $1,700, up 62%

Bristol, TN – $1,400, up 27%

Zumper is an apartment listing service and research firm. Its data is based on company listings and is not inclusive of the broader market.

According to the Tri-Cities Apartment Association, the local occupancy rate is 96.33% and the average rent is $1,100. That’s not quite as strong as the occupancy rate for single-family rentals. During the second quarter it was 97.2%. A recent study by the National Association of Realtors (NAR) found the Tri-City’s rental market was the second tightest in East Tennessee. Only Knoxville had higher occupancy rates.

While some developments are being slow walked until investors get a better handle on the local market, others are charging ahead. Of course, plans are just that until building permits are pulled and construction is underway. The luxury apartment communities have excelled in both occupancy and rents and that has whetted investors’ appetite.

Although there is a lot of city hall and chamber of commerce talk about the lack of affordable and workforce housing, many multi-family communities – like the single-family market – have kept rents and prices above the affordable benchmarks.

The affordable housing benchmark is no more than 30% of gross income spent on housing. The latest regional Census count for renters is 7.6% (4,121) spent from 30 to 39% on housing while 20,167 (37.2%) spend over 35%. That count of housing stressed individuals will be updated later this year with more current data that most market watchers think will increase.

Local rents and home prices have increased dramatically during and after the pandemic as economic condition pushed the region’s traditional low-priced home prices to new highs. At the same time, landlords seized the increasing demand opportunity to adjust their rents to market prices.

The annual median sales price on existing home sales increased 61.4% from 2018 to 2022.

Here’s how the median rent increase during May 2018 until last month looked, according to Zumper’s data:


Greeneville – up 59.9%

Elizabethton – up 37.6%

Johnson City – up 29.1%

Kingsport – up 32.7%


Bristol, TN – up 130%

Greeneville – up 59.8%

Kingsport – up 51.3%

Johnson City – up 44.3%

Elizabethton – up 21%


Greeneville – up 113.8%

Bristol TN – up 85.4%

Johnson City – up 74.7%

Kingsport – up 42.8%

Both rents and single-family home prices have increased faster than wages so much of the rental and single-family market has become much less affordable. The most recent Homeownership Affordability Tracker from the Atlanta Federal Reserve Bank rated Greeneville as the only affordable existing home sales market in the region. Still, for those who can arrange financing and can find housing they can afford ownership outweighs renting during this era when much of the public prefers to rent.



Categories: REAL ESTATE

1 reply

  1. This makes sound financial cents to me. As
    interest rates rise and stabilize at higher
    rates that have doubled in the past year, the
    value of income properties softens and decline
    due to reduced cash flow caused by higher debt
    service. If the rental rates have plateaued or
    declined to a weaker level it also reduces cash
    flow. Rental property values are tied directly to
    net cash flows and as cash flow increases and/or
    decreases so does its market value. It does
    appear we may be at the pinnacle of the rapid
    rent and interest rate increases and a perfect
    time to sell but not to buy which weakens
    demand and can also soften rental property
    values in the near and long term. The only
    value influencer remaining is demand for
    tenants to occupy the rentals as vacancies
    reduces net income and likely to occur over
    time unless the population expansion continues,
    but will exhaust at some point if rentals are over

    Rental properties unlike owner occupied houses
    are simply a math problem for rental property
    investors. Selling at this time is no surprise and
    is expected for residential income producing properties.

    Office income properties on the other hand are a
    much bigger concern with high vacancies and work
    from home trends. Office space requires new
    business recruitment and/or expansion to make these
    numbers work and the trend has is not going in the
    right direction for now.

    Industrial properties are the sweet spot with almost no
    inventory, no new building due to 40% increase in cost
    over the past couple years which also increases cost
    to rent by 40% just like apartment rentals. This means
    businesses that occupy new industrial buildings will
    have to pay more and existing industrial rents will
    increase from $4.00 to $5.00 PSF range to $7.00 to
    $8.00 PSF range. This is a heavy rent increase for both
    existing and new business ventures to the region and
    meet with strong resistance from industrial tenants.