Site preparation for ValCap’s new apartment complex is well underway in west Kingsport. Tentative plans for the muti-story complex include retail space on the ground floor. When completed, there will be three major ValCap apartments at 11W and University Blvd. Texas-based ValCap is the largest apartment complex owner in Sullivan Co. Its growth in the region has been aggressive.

By DON FENLEY

Multi-family housing is lagging the single-family sector in inventory growth, while occupancy and rents continue performing at a robust pace.

Kingsport rents growth led the region in a July, according to a spot check of Zillow’s apartment data. The average 1-bedroom rent was $965, up 29% from last year. Two-bedroom apartments were averaging $1,175, up 11% from last year. Note that Zumper’s data is from landlords who list with the service, not the total local apartment universe.

Here’s how the July apartment rent spot check looked in the other major local cities.

Johnson City

• 1 bedroom $900, up 13%
• 2 bedroom $1,263, up 7%

Bristol, TN

• 1 bedroom $703, up 12%
• 2 bedroom $1,200, up 3%

Greeneville

• 1 bedroom $750, no change
• 2 bedroom $900, up 3%

Elizabethton

• 1 bedroom $575, down 2%
• 2 bedroom $950, up 15%

One of the most asked questions is when will rents come down? There’s a simple answer. When there’s less demand and more inventory. Given the current population and housing market dynamics, it’s going to be a slow process.

Vacancy reports vary and depend on the area covered and benchmarks for analysis.

The most current data from the National Association of Realtors (NAR) says there is 7,582 multi-family units in the three-county Johnson City metro area. That’s a 2% increase from last year. It lists the vacancy rate at 3.2% down from 4.2% last year.

The NAR report for the four-county Kingsport-Bristol metro area lists 5,989 units, up 0.7% from last year. It lists the vacancy rate at 5.7%, down from 6.9% last year.

NAR says multi-family demand for both metro areas is stronger than it is nationwide, which accounts for lower vacancy rates and stronger rent increases. The analysis does not include Greene or Johnson counties.

ATTOM data solution’s current vacancy data for single-family investment properties is 2% for the region’s two metro areas plus Greene and Johnson counties.

This year’s multi-family inventory expansion, as measured by new building permits, is down or even with last year.

In the Johnson City metro area, 8 new permits for 2-unit projects is down by six from last year. Eight permits for 3-to 4-unit projects is up 100% from last year and the 17 permits for projects with five or more units are down from 34 last year.

During the first half of this year Kingsport-Bristol has seen 4 permit pull for 2-unit jobs, up from two last year. There have been 3 permits for 3-to-4 unit jobs, unchanged from last year and 25 permits for projects with 5 or more units, unchanged from last year.

Ownership of the regional rental properties has increased – especially with the sales of townhome developments – but remains mostly local. That does not include ownership of large apartment complexes.

The most recent analysis by ATTOM found 17% of the regional; single-family rentals were owned by out-of-staters. That has increased in the past year with more activity by out-of-state and local investors.

A separate ATTOM analysis found that 54 single-famil;y sales in  the Kingsport-Bristol during Q2 were made by institutional investor investors. Those 54 sales accounted for 5% of the metro area Q2 sales.

Categories: REAL ESTATE