Officials: Mountain Empire in midst of vibrant housing market (Knoxville: sales, real estate)

[kamoshika]

It has taken five years to recover, but local real estate officials say the Mountain Empire is now in the midst of a vibrant housing market.

Home sales in some cities and suburbs surrounding the Tri-Cities in the first five months of this year are already ahead of the entire volume sales mark for 2012, according to data from realty groups in Tennessee and Virginia.

Vacant lots in subdivisions are being snatched up for future homes, existing homes are in short supply and new construction is taking place across the region.
Officials: Mountain Empire in midst of vibrant housing market - TriCities.com: Local News

[MetropolitanTN]

Good news!

[jchometeam]

There is truly a shortage in homes- its been a great market all year.

It will be interesting to see how the interest rate increases will affect things. I personally think that they need to increase some, we can't keep them artificially low forever. Its time to get back to a market based interest rate that is not manipulated by the Fed.

[MetropolitanTN]

The lower rates stimulate sector growth though, right?

[jchometeam]

In the short term. I like thinking about the long term

[Page2]

Headline overstated the article. In June homes sales were below May and June last year for the region. They were also fewer sales than the first six months of last year. Prices are doing better than sales. The market here seem to be settling back to a normal that sees slow price appreciation. The big price gains in June (Bristol) came because their city market was still getting slammed June last year. So far interest rates haven't had much effect since housing affordability here is high. The real problem is only the Johnson City market is building new homes at a rate to accommodate growth. Of course, there's not much natural growth in NE Tennessee. With the exception of Washington County most of it is in-migration. Kingsport has posted growth, but it was done with annexation.

[Page2]

Here’ the half-year housing market in the Tri-Cities major cities compared to the first six months of 2012 ranked by price improvement:

Bristol, VA – Avg. price up 49.5%; sales down 21.9%.

Greeneville – Avg. price up 26.6%; sales up 4.8%.

Bristol, TN – Avg. price up 15.4%; sales down 15.6%.

Elizabethton – Avg. price up 14.8%; sales down 33.3%.

Johnson City – Avg. price up 9.4%; sales up 3.7%.

Kingsport – Avg. price down 3.6%; sales down 5.4%.

Erwin/Unicoi – Avg. price down 8.8%; sales up 11.9%.

The complete story can be found at http://bjournal.com/blog_72213.html A detailed story with charts on sales and prices for the Kingsport market can be found at http://kingsporttoday.net/2013/07/22...patch-in-june/

[jchometeam]

When the sales are down because there is a lack of supply, that is exactly the time for builders to build. The problems that I see is, just based off my experiences, they are building exactly the wrong kind of thing (small lots, restricted neighborhoods, no trees). If a builder were to build a nice house on 5 acres of woods, it would sell in a week.

Ive always thought that the affordability factor around here is a bit overblown. It sure is cheaper than in other large metro regions across the country, but prices are generally higher than in Knoxville for example.

[Page2]

Originally Posted by jchometeam

When the sales are down because there is a lack of supply, that is exactly the time for builders to build. The problems that I see is, just based off my experiences, they are building exactly the wrong kind of thing (small lots, restricted neighborhoods, no trees). If a builder were to build a nice house on 5 acres of woods, it would sell in a week.

Ive always thought that the affordability factor around here is a bit overblown. It sure is cheaper than in other large metro regions across the country, but prices are generally higher than in Knoxville for example.

It is absolutely the time for builders to build. There is ample demand for new homes. But there's a problem. Post-recession lending standards have basically put the lid on local spec homes and the tri-cities is a spec home market. It's picking up due to demand but new home construction is still at about half of what it was before the recession. So far this year most of the new homes being built are larger than the national median sq, footage which has increased since the recession. But many of the homes are being targeted at the pricepoint sweet spot because that's what's sells quickest. Nice homes on 5 acres are pretty much at the high end of the custom home market. But until local banks, which finance almost all new home construction here, begin lending at pre-recession standards we're not likely to see the new home sector return to pre-recession levels. And this is hurting inventory. According to current MLS listing there are more homes on the market than there were this month last year. The core problem is many of those homes are 20 years-old or older and many are overpriced. We're also wrestling with a problem of the local economy. It's taking a downward trend. Employers are shedding jobs. All the cities except Kingsport are lower than pre-recession levels. Ultimately, housing is about jobs and this region is struggling to establish its new post-recession level. June's labor market report is out today and it looks like it's another month of job losses and higher unemployment. The MSA new home construction reports are also out and that sector is slowing down.
I agree that housing affordability is somewhat subjective. it's based on buyers making 20% down payments and getting the best interest rate. 10% is a more common down payment. I think one of the reasons homes here are less expensive is the reflect the cost of living, which is among the lowest in the southeast. The reports of jobs and unemployment in Kingsport, Bristol and Johnson City will be available tommorrow atKingsport Today

[jchometeam]

Just want to point out 1 more thing. So far this year, 29% of our sales have been cash deals. 46% have been conventional loans, which typically require a larger down payments than FHA loans, which only make up 11% of our sales. To me, that points to a pretty strong buyer among those who are purchasing. Of course, philosophical differences exists, with some people wanting loans to be available to more at risk buyers. I wont get into that, but anyone who has paid attention to my posts over the years can probably tell that I would disagree with most other agents on that issue.