By DON FENLEY

The Tri-Cities region has done well in the townhome build-to-rent surge. A recent example was cited in a post from the TCI Group’s Affiliate Broker Ryan Ketron.

He reported that D.R. Horton has sold its two build-to-rent properties at Gardner Village, Gray, and The Villas at North Park, Kingsport. The Villas went for $18,250,000 while Gardner was a $16,850,000 deal to NJ based Onyx Partners.

Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of Realtors (NAR) recently wrote that build-for-rent is one solution to the housing shortage. Locally, the market needs several thousand homes to stem its shortage. Nationwide, the estimate is a need for 2 million.

“Built-for-rent is the concept of new single-family home construction for the intent of renting. While there has been growth in new home sales and construction activity, multifamily home construction has also grown in recent years. However, an apartment may not have enough square footage for some renters. With this concept, a yard for a pet, space for a home office, and room for a new baby becomes more accessible. Renting a single-family home in a new housing community may also come with amenities not seen in the typical apartment, such as walking paths, pickleball courts, or even shared gardens.

“So, will the market for this type of construction continue to increase? Perhaps if home buying continues to be out of reach for young adults. They will need a bigger space if they have growing families or even just a yard for a dog to play in. Built-for-rent may be their solution—even if temporary—as they save for their down payment for their first home,” she wrote in a NAR economist blog.

The Tri-Cities region has and continues seeing its share of increased rentals and multi-family activity.

ATTOM, a leading curator of land, property, and real estate data, recently reported that the sales of single-family investment properties here increased 16% from last year. And as of the end of April 47 multi-family building permits were pulled in the region’s two metro areas. That doesn’t include a 72-unit Greeneville development that has just been announced or the completion of The completion of The Henry, a 32-unit boutique loft apartment community in downtown Johnson City.

As of the end of April, the Johnson City metro has seen the most multi-family permits – 28. Of those, 12 were for developments of five or more units. The Kingsport-Bristol metro market saw 19 permits, and 15 of them were for 5-unit-or-more developments.

If investor plans are finalized, there will be more apartment big Kingsport construction. It would make Kingsport’s Allandale area one of the highest density regions of the city, if not the region. One proposed deal has seen a land purchase, the other has an approved site plan. Combined with existing properties, and the North Park build-to-rent. it would mean six major complexes within that area. That’s a double-edge sword – a potential traffic nightmare, but a boon opportunity for two aged shopping centers and West Stone Drive.

While the regional housing preference remains with single-family ownership, the rental market has and continues to increase in performance and consumer preference.

There are better than 14,000 apartment units, duplexes etc. in the region. The number of single-family rentals is 66,111, according to ATTOM; however, that’s just in the 40 Tri-Cities zip codes that met the benchmark for the most recent analysis.

As Lautz points out in her blog, this is a helping with the housing inventory shortage. But rents, which continue increasing faster than inflation and most local wages, are one of the top contributors to the inflation pressures many local are feeling.

Categories: REAL ESTATE