By DON FENLEY

TRI-CITIES, NE Tenn.-SW Va. – The regional existing single-family housing market is flattening out, according to November’s TCI Group’s Appalachian Highland Home Sales Tracker. It and commercial real estate activity look to be in a staging mode for better things in 2024.

The housing tacker’s closed sales for the 12 months ending in mid-November was down 0.8% from the previous period. Although the trend is declining, the rate of decline is slowing and the sales volume is leveling amd mirroring October and November 2019.

Inventory continues to improve in the $300K through the $599K price ranges, and although the $1 million plus market has slowed from last year’s is having a very good last half of this year’s performance.

The region has a toehold on the bottom rung of balanced market conditions in three of the current best price ranges by sales volume. Greeneville and Kingsport continue to have better balanced market conditions in more price ranges than the Bristol and Johnson City ranges. Balanced market conditions is typically viewed at 4 to 6 month inventory.

COMMERCIAL BEST PERFORMER

Multifamily and single-family rental continue to be the best performers – by volume – in the commercial real estate sector.

Several investor groups are involved in or past the due diligence stages for major complexes. But as of the end of the second quarter, there was no new multifamily construction in either the Johnson City or Kingsport-Bristol metro areas.

So far this year the Northeast Tennessee Association of Realtors (NETAR) reports 91 multi-family sales, down from 120 during the first 10 months of last year. Most of those are the duplex, quadplex and smaller apartment properties.

There have been 8 sales of the larger apartment complexes as of the end of the second quarter in the Johnson City metro area and 10 in the Kingsport-Bristol metro area.

So far this year single-family rentals are outperforming apartment due to lack of apartment supply. And the build-rent component continues to gain popularity with investors. That’s driven by many homeowners’ unwillingness to put their existing home – many with very low mortgages – on the market. That’s stifling the existing single-family market’s inability to meet demand and propping up prices.

BOTTOM LINE

TCI’s Home Sales Tracker and the robust rental market signal new residents are continuing to move to the area and that there’s pent-up demand in the local population for new household formation. It’s fertile ground for investors because the population metric is and will continue to expand more demand from commercial market sectors.

One of the biggest challenges is showing investors – and some locals – that the regional market is dramatically more vibrant than what’s available in the compartmentalized Metropolitical Statistical Areas and chamber of commerce or city data silos. The reality is the regional market has a current dollar GDP nearing $24 billion a year and comprises about 520,000 people nestled in a region with some of big city amenities and a small city, and rural, qualities of life. That’s why it’s attracting new residents and investors who sense the investment potential but have a hard time getting their minds wrapped around the big picture that doesn’t look or perform like what they’re used to seeing in metro markets.

Categories: ECONOMY