TRI-CITIES, Tenn. – Existing home sales are slowly gaining in the struggle to reach balance and sustainability. The TCI Group’s Appalachian Highlands long-range housing tracker improved for the second 12-month period with July’s flat sales. They’re at a pre-pandemic level, but the lack of inventory and the continued surge in rentals is making any “new normal” difficult to define.
The sales increase and inventory crunch also dialed back the toeholds some markets had on four months inventory – the first step to balanced market conditions.
Commercial Realtors are closely watching to identify demographic and consumer shifts that will have bearing on what businesses and investors do in the coming months.
While apartment construction has cooled the surge in build-to-rent townhome communities continues gaining market share. One indicator of that trend is the rent for two-bedroom apartments in July v. July last year. Across the region they averaged $1,200 to $1,400 a month. The increase was 14% in Kingsport, 9% in Johnson City, 92% in Bristol TN, 13% in Greeneville and 18% in Elizabethton. The rent increases lag home prices, but the trend shift from ownership to rental continues increasing.
According to the National Association of Realtors (NAR) multi-family demand in the Johnson City metro area has been stronger than it is nationwide, so prices rose faster. The current vacancy rate is 5.9%. The ideal rate is 8%.
Demand in the Kingsport-Bristol metro area is weaker than it is nationwide, but despite weaker conditions rents have risen faster than they did nationwide. The current vacancy rate is 5.5%.
The Tri-Cities Apartment Association listed a 3.7% vacancy rate in its most recent count. That’s up from 3% earlier this year.
So far this year 42 multi-family transactions have closed in the Tri-Cities region. This time last year there were 46.
The Johnson City multi-family cap rate is 5.9%, down from 6.1% last year. In the Kingsport-Bristol metro area it’s 6%, down from 6.4% last year, according to NAR.
During the 12 months ending in mid-July the Johnson City area continued its housing market dominance with a 41% share of existing home sales. It also had 53% of the 57 $1 million plus sales during the 12-month period.
The Greeneville market continues to have the best over-all inventory availability in the region.
Categories: REAL ESTATE