TRI-CITIES, Tenn. – One area of the housing market that doesn’t get a lot of public attention is its role in the economy. Local governments generate significant tax revenue from real estate transactions, property taxes, and various fees associated with property ownership. This revenue is crucial for funding public services and infrastructure projects.
According to the Research Department at the National Association of Realtors® (NAR) every home sold in our area has a total economic impact of $114,100. Last year’s sale of 7,679 existing homes has a total local impact of $87.6 million. Here’s how that impact per sales percolated through local economies.
- 28% was income generated for the real estate industries.
- 4.6% was expenditures related to home purchases.
- 15.6% was the multiplier of housing related expenditures.
- 51.8% was the stimulus for new home construction.
It’s easy to see how much of a player real estate is in the local economy, but last year wasn’t all good news. The total sales volume for sales of homes from the local Multiple Listing Service was $2.2 billion. It’s a big number, but about $200 million of what it was in 2021.
Realty Transaction Taxes were also down. Here’s what they looked like in the region’s two biggest county markets.
- Sullivan Co. – $2,018,060 last year, down from $3,636,299 in the 2021 peak year.
- Washington Co. – $1,942,636, down from $3,598,124 in 2021.
The transaction tax is the onetime tax collected any time a residential or commercial property is bought or sold. The state Department of Revenue controls the tax rate, which is $0.37 per every $100 indebtedness of the sale.
Locals have their fingers crossed for an upturn in the local housing market this year to boost what is forecast to be a weaker year for the overall economy.