By DON FENLEY

TRI-CITIES – One affordable housing and high rent effect that so far has gotten little attention is the bite it’s taking out of the sales tax that drives local economies.

Look at it this way. People spend more money on housing than anything else. If an individual or family spends more than the recommended 30% of their income on housing, they have less disposable income. When people have less disposable income, they’re forced to cut back on spending. Eventually that means governments collect less sales tax revenue. That worrisome for those relying on sales tax as the lifeblood of government funding.

So far, there hasn’t been any public accounting of how much increased housing costs is affecting sales taxes. That may be muted because consumer spending has not declined as much as expected in the face of inflation. Still, state sales tax collections in the Tri-Cities’ two metro areas have declined. The year-over-year high was 15% in Feb. It declined to 0.2% in May. June numbers should be available in a few weeks.

The most current numbers from the Atlanta Federal Reserve Bank’s Homeownership Affordability Monitor Tracker show that current home purchases in only one county in the Tri-Cities region consume less than 30% of the buyer’s income. The exception is Greene Co.

Here’s what buyers are paying in the latest count. The mortgage amount included principal and interest, insurance, taxes, and private mortgage insurance. The percentage is the percentage of the average buyers’ income consumed by housing costs:

JOHNSON CITY METRO

CARTER Co.

• $1,393 – 33.10%.

WASHINGTON Co.

• $1,857 – 36.6%.

UNICOI Co.

• $1,515 – 35%.

The Johnson City metro area’s housing slipped below the affordable range in April 2022. It bottomed out in September 2022 and has been improving since then. The current monthly trend is increasing.

KINGSPORT-BRISTOL TN VA METRO

HAWKINS Co.

• $1,579 – 33.5%.

SULLIVAN Co. –

• $1,546 – 36%.

The SW VA portion of the metro area (Scott and Washington counties) is not included since they are in the area covered by the Richmond Federal Reserve, which does not have a Home Ownership Affordability Monitor.

Kingsport-Bristol lost its affordable housing status in May 2022. It bottomed out in October 2022 and began a slow improvement. The current monthly affordability trend is declining.

GREENEVILLE TN METRO

GREENE Co.

• $1,410 – 25.2%.

The Greeneville metro area has sustained an affordable housing status since 2015.

Census data on how much renters are paying lags current conditions. A Census update that reflects current increases in both rents and the number of renters is due later this year.

The latest count is 44% of the region’s renters are paying over 30% of their income on housing.

A primary driver of the region’s lack of affordable housing is home prices and rents have increased faster than wages in a region that has a chronic underemployment history.

Categories: BLOG, TRENDS