High-end homes in the Tri-Cities (Knoxville, Chattanooga: sales, 2013, new home)

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There's an interesting factoid in the current home building report by The Market Edge. Although new home construction lags the other markets in East Tennessee it ranks second for permits for high-end homes. The report defines high-end homes as one with over 4,000 sq. feet or a permit value of more than $400,000. So far this year 15 of those homes have been permitted in the Tri-Cities. Five in Sullivan Co. and five each in Washington counties Va and Tenn. Seven of the high-end homes were permitted in the first quarter. Knoxville leads E. Tenn. in these permits so far this year, followed by the Tri-Cities then Chattanooga. At the same time overall new home construction is up in all the areas except the Tri-Cities.
Tri-Cities ranks 2nd in E. Tenn. high-end new home permits
Living large in Kingsport, over half new homes are bigger than US median

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Knoxville is a much bigger metro, so of course it will post bigger numbers. The number of high end permits is interesting in contrast to the lack of overall permits. I would wager that the high end permits are mostly from retirees or other wealthy individuals from outside the area building a home here - with rare exception, the jobs in this economy don't pay enough to support such an expensive home. The lack of overall permits could be explained away by locals either lacking the resources to commit to a new home or being too hesitant to do so. I think all this report states is that wealthy people from outside the area can build a great home here cheaply, while the natives are either too poor or too uncertain to build homes at a fast rate.

[jchometeam]

There are plenty of very wealthy people from the Tri Cities, who obtain their wealth from jobs in the Tri-Cities. Its not a "rare exception". In the last year, there have been 200 homes over $400,000 sold in the Tri-Cities area. Of course there is a very large gap between the lower end service jobs and the jobs that would allow for a purchase of a $400,000 home, but that does not discount that existence of the very well paying jobs. It is obvious that you have had a very bad experience with this area, and I hate that. I really hope that you have better luck in your next city.

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Originally Posted by Emigrations

Knoxville is a much bigger metro, so of course it will post bigger numbers. The number of high end permits is interesting in contrast to the lack of overall permits. I would wager that the high end permits are mostly from retirees or other wealthy individuals from outside the area building a home here - with rare exception, the jobs in this economy don't pay enough to support such an expensive home. The lack of overall permits could be explained away by locals either lacking the resources to commit to a new home or being too hesitant to do so. I think all this report states is that wealthy people from outside the area can build a great home here cheaply, while the natives are either too poor or too uncertain to build homes at a fast rate.

You're right. Knoxville does have a larger population. Maybe a better way to look at it is % of total. High-end permits accounted for 8% of all permits so far this year in Knoxville. In the Tri-Cities they accounted for 5.6% of all permits. In Chattanooga it was 2%. There's not enough real data to pin down who's building the new high-end homes. I know some are local and some are newcomers. Kingsport is the only city that tracks and releases data about what the in-migration is doing. Their numbers show that most of the new residents prefer to buy existing homes. That makes sense. They can buy an existing home and use the rest from the resale of their other home without paying capital gains. We'll get a better idea about income in a couple of months. That's when the Census Bureau will release new data. I did some calculations last year for a story that compared 2009 v. 2010 household incomes in the Tri-Cities. It showed the number of households with $200,000 or more was up 40.5%. The $150,000, to $200,000 households were down 2.9%. $100,000 to $150,000 up 14.6%. The biggest loss was $60,000 to $75,000. they were down 20.1%. The broader picture was about what it is nationally. Those at the high end of the income sales did better and those in the middle lost ground.