By DON FENLEY
TRI-CITIES, Tenn. – The TCI Group’s Appalachian Highlands long-range housing tracker moved higher for the first time in three months in August. The tracker monitors existing home sales in monthly 12-month increments.
August’s increase is small. It amounts to nine new sales a month during the annualized period. It puts the market on the same sales footing it was on in May – the month that began the sag in this year’s peak selling season.
Commercial Realtors closely watch residential sector data to identify housing, demographic and consumer shifts that will bear what businesses and investors do in the commercial marketplace.
New home construction is picking up across the Tri-Cities region, but construction is still barely half of its peak performance level. To make a long story short, builders can’t build homes fast enough to keep up with demand and many existing homeowners are locked in by low-rate mortgages that they are unwilling to give up.
That’s giving existing inventory extra emphasis – especially inventory segregated by price range.
The region has been stuck at two months of overall inventory or less for 32 months. What market watchers want to see is a consistent movement to the 4.5 to 6 months of inventory range. They are looking for not only the number of listings, but the absorption rate to see how the specific price ranges are performing. A balanced market has 4.5-to-6 months of inventory. It’s the trademark of a healthy market since it gives buyers and sellers equal footing. So far this year, three price ranges have a consistent movement toward to balanced conditions. They are $400K-$499,999K, $500K – $599,999K and $600K-$699,999.
An inventory shortage, higher prices and mortgage rates have helped move the multifamily demand picture on almost equal footing as the single-family sector.
The most recent National Association of Realtors (NAR) commercial insights on the Johnson City metro area’s multifamily market show the current inventory is 7,237 units up from 6,913 last year.
The vacancy rate is 3.8%. This time last year it was 1.8%.
The effective rent is $964, up from $920 last year.
It also says demand for multifamily space is stronger than it is nationwide, since Johnson City has a faster absorption of multifamily space. As a result, rents rose faster than the national rate and the vacancy rate is lower.
The same report says the effective rent in the Kingsport-Bristol metro area is $1,000, up from $950 last year.
The current inventory is 5,954 units up from 5,867 last year and the vacancy rate has increased to 6.1% from last year’s 2.6% level.
According to NAR’s outlook, the multifamily sector will remain strong compared to other sectors “owing to favorable demographics, a strong job market and low housing affordability due to higher mortgage rates.”
Categories: CORE DATA