By DON FENLEY

Housing cycles typically have an 18-year life span. Currently, the Tri-Cities region is stuck between the recovery and expansion stage because of the pandemic’s effect on both housing and the economy.

One effect in the local market – and many others – is the least affordable housing conditions in years. For some it’s decades.

Returning the market to more affordable levels would require one of three things, according to an Intercontinental Exchange (CE) study report: Either the 30-year mortgage rate needs to fall by 4.4 percentage points, the median household income needs to rise by 62%, or home prices need to fall by 38%.

Mortgage rates are at a 23-year high and US principal and interest payments have surpassed the $2,500 for the first time since 1975, according to the study. So far, Washington Co. is the only local county close to that level.

The Atlanta Federal Reserve Bank’s also tracks this with its Homeownership Affordability Monitor. Since the region reached the recovery stage of the current housing cycle in 2015 the median cost burden for a median-price home has increased substantially. It’s up 129% in the three county Johnson City metro area and up 105% in the two NE TN counties of the Kingsport-Bristol metro area.

Those who bought since the first of the year are also spending at or over 40% of their gross income on housing. It’s a spending level with more risk and less discretionary income than the recommended level of 30%. It’s also a concern for local civic and government officials since less discretionary income means less sales tax – unless those homeowners and putting it on credit.

Currently, Johnson City metro owners are paying 43.4% of their income for a median-priced home. In the two NE TN counties of the Kingsport-Bristol metro area, they’re paying 39%. Greeneville’s 38% is the most affordable in NE TN.

Here’s a county breakdown from the FED’s Homeownership Affordability Tracker for NE TN. Since Washington and Scott counties and Bristol, VA are in the Richmond FED District, they are not included because it does not have a similar tracking service. The lists are the median mortgage principal, interest, private mortgage insurance and taxes.

• Carter- Monthly costs $1,774. 41.6% of income for housing.
• Greene – Monthly cost $1,605. 30.4% of income for housing.
• Hawkins – Monthly costs $1,728. 36.1% of income for housing.
• Sullivan – Monthly costs $1,712. 39.3% of income for housing.
• Unicoi – Monthly cost $1,574. 35.8% of income for housing.
• Washington – Monthly cost $2,203. 42.8% of income for housing.

Categories: REAL ESTATE