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As others have noted, the increase in prices over the past 2-3 years is largely due to the influx of people moving into the area. My experience is that there is actually more younger couples than most would imagine, but still majority retirees. A few points:
1) Even with the increased population, the infrastructure and traffic patterns are seemingly holding up well.
2) The current market is not nearly as hot as it was a year ago, when you literally could not find a house in some price ranges.
3) I don't think the average price in the JC area will substantially decrease any time soon, but I do see it as a bubble.
4) The average home price is masking a major long-term problem. The problem is that the current housing market is basically out of reach for the average local resident or young couple. Those people are basically on the sidelines renting right now and I am afraid that many of them are also moving out of the area to find better wages and lower cost of living.
I agree that we aren't really competing directly with larger metro areas such as Charlotte, Tampa, etc. My feeling is that most of those who live here and move here find this area to be much preferable to those types of cities. The important caveat to this is wages. Going back to my point above, if the housing prices are going to stay at elevated levels, the wages simply must increase at an appropriate pace as well. Otherwise, we lose our future as they move elsewhere
Agree that JC home prices won't decrease any time soon even though they are overvalued by about 30% based in their historical levels. The decline in sales has many moving parts and while the move-up and luxury markets have and continue improving workforce and affordable opportunities have declined.
One prime reason is the economy is not creating high-quality jobs and the average private sector wage is among the lowest in the state. Since wages have not kept up with the pandemic induced markets of 2020, 2021 and 2022 the working classes are indeed on the sidelines. That won't change until prices decline or wages increase.
One consideration is while so much focus in put on prices, much of the migration we're receiving is based on lifestyles and prices in the $300,000 to $375,000 price range is affordable to them.
We already have a population problem. We export the best and brightest of our young college and trade graduates for better wages and more opportunity. Plus we have a higher death rate than the birth rate. While Johnson City is among the leading area attracting new residents, there are indicators that some of influx is beginning to wane to pre-pandemic levels so that growth source could soften.
I don't think prices are at an elevated level and will continue on a slight improvement this year. Since JC and the region have traditionally had cheap housing the pandemic changes very well have moved prices to a new sustainable level. 2024 will be a rebuilding year if inventory comes up. However, close to 14,000 local area homes have mortgage rates in the 3% range and that locks in current owners unwilling to give that up.
There so much talk and reports of a surge of new homes but building permits - an indicator of future building - are running behind last year's levels. New home construction is still operating at only about 55% of the 2006 peak.
I disagree that the average house price will be on a downward trend anytime soon. The area is on the long-term radar of people retiring who want to live in a moderately conservative, leave-me-alone region. Your competitive markets aren't Charlotte or Tampa or Houston... JC relocators are trying to avoid those markets. Also, Tennessee is now well-known due to Nashville, and the lack of an income tax is a strong component of relocation demand, even if a significant portion of your base is retirees. And those relocators and retirees are still coming from California, New York, Colorado, Texas, Wahsington and Florida, bringing with them significant equity to buy down their mortgages at high rates or just simply pay cash for a house.
And as the poster said above, Johnson City is by far the nicest city in NETN. Future supply will continue to be restrained by structurally high interest rates (aka development finance costs) vs. pricing expectations, costs of materials and labor, and even land supply within a 20/30-minute car drive to JCMC/ETSU or the JC Mall.
When supply is constrained and demand is consistent or increasing, I can't see housing or land prices decreasing. If places like Johnson City lose significant value on their housing stock, we have major issues across the entire nation. The only headwind I can really identify is for relocations, with difficulty selling their home in another market with high rates. But (IMHO) that points to a softer market for metros with high housing costs, not really for the suburban and rural housing markets like JC.
The "retirees moving here from out of area" makes sense at first, but it doesn't seem to be showing up like folks might expect in population data.,at least not yet.
This info is from last year, but clearly, the amount of newcomers isn't some huge percentage gain.
IMO, the Tri-Cities isn't really getting any benefit from Nashville - if anything, the state government hardly seems to support anything north or east of the Smokies tourist areas. Yes, the state is making some "best of" lists, but that is largely due to the low taxes.
Yes, you will have some conservatives moving to this area from out of the area, but the flip side of that is going to be local liberals and moderates going to areas friendlier to them. That hardly ever gets discussed, but I know a good amount of people who have done exactly that. There's going to be a push-pull effect of people moving for political reasons until the political environment across the country is less polarized.
Quote:
Originally Posted by jchometeam
As others have noted, the increase in prices over the past 2-3 years is largely due to the influx of people moving into the area. My experience is that there is actually more younger couples than most would imagine, but still majority retirees. A few points:
1) Even with the increased population, the infrastructure and traffic patterns are seemingly holding up well.
2) The current market is not nearly as hot as it was a year ago, when you literally could not find a house in some price ranges.
3) I don't think the average price in the JC area will substantially decrease any time soon, but I do see it as a bubble.
4) The average home price is masking a major long-term problem. The problem is that the current housing market is basically out of reach for the average local resident or young couple. Those people are basically on the sidelines renting right now and I am afraid that many of them are also moving out of the area to find better wages and lower cost of living.
I agree that we aren't really competing directly with larger metro areas such as Charlotte, Tampa, etc. My feeling is that most of those who live here and move here find this area to be much preferable to those types of cities. The important caveat to this is wages. Going back to my point above, if the housing prices are going to stay at elevated levels, the wages simply must increase at an appropriate pace as well. Otherwise, we lose our future as they move elsewhere
I am usually in Johnson City at least once a week. Traffic is notably heavier than it was pre-pandemic, often at odd times of the day. I drove by ETSU to go to Publix a couple weeks ago a little after noon on a Monday. It was basically bumper to bumper traffic the whole way. It's summer - traffic around the university should be reduced, but it felt like a major city. It's striking to me considering I worked in Johnson City in 2018/2019.
Wages are becoming a major problem. I left Ballad in January. I was a top grade level individual contributor in my department, so there was nowhere for me to move up to professionally without going into management. I left for a local government in western NC, and I took a pay cut and effectively a demotion in the move. After a nice COLA, I'm almost back to where I was at Ballad at a lower job grade. With the government, I could get promoted top level individual contributor, and make 20%+ more than top level at Ballad.
We hired a guy in 2021 who was an IT analyst at level 1. He was promoted to a level 2 analyst in 2022, and made about 10% less than I did at the same job grade back in 2016. Wages haven't budged at all. I know Ballad has lost many senior level individual contributors throughout the organization because of low pay and bad working conditions.
At the same job level, for very similar jobs in IT, government wages in NC state and local government are far above Ballad, most of the banks, local governments, etc., pretty much everyone but direct-hire Eastman position. Of course, onsite corporate positions somewhere like Charlotte or Raleigh will pay much, much better.
I worked for Eastman's help desk answering phones in 2013. Pay was $12.80/hr. I just checked the website - pay is $13/hr. now.
I agree that the area really isn't competing with Charlotte and Raleigh, but people have to earn a living. That's getting increasingly difficult to do around here with the area's depressed wages. Low real estate prices used to help justify that, but that's no longer the case when Johnson City is expensive as many urban areas that pay much better. I'll be surprised if there isn't a continued exodus of area younger people.
Last edited by Serious Conversation; 07-28-2023 at 06:59 AM..
Agree that JC home prices won't decrease any time soon even though they are overvalued by about 30% based in their historical levels. The decline in sales has many moving parts and while the move-up and luxury markets have and continue improving workforce and affordable opportunities have declined.
One prime reason is the economy is not creating high-quality jobs and the average private sector wage is among the lowest in the state. Since wages have not kept up with the pandemic induced markets of 2020, 2021 and 2022 the working classes are indeed on the sidelines. That won't change until prices decline or wages increase.
One consideration is while so much focus in put on prices, much of the migration we're receiving is based on lifestyles and prices in the $300,000 to $375,000 price range is affordable to them.
We already have a population problem. We export the best and brightest of our young college and trade graduates for better wages and more opportunity. Plus we have a higher death rate than the birth rate. While Johnson City is among the leading area attracting new residents, there are indicators that some of influx is beginning to wane to pre-pandemic levels so that growth source could soften.
I don't think prices are at an elevated level and will continue on a slight improvement this year. Since JC and the region have traditionally had cheap housing the pandemic changes very well have moved prices to a new sustainable level. 2024 will be a rebuilding year if inventory comes up. However, close to 14,000 local area homes have mortgage rates in the 3% range and that locks in current owners unwilling to give that up.
There so much talk and reports of a surge of new homes but building permits - an indicator of future building - are running behind last year's levels. New home construction is still operating at only about 55% of the 2006 peak.
When I first moved outside the area about a decade ago to wealthier areas of Iowa and Indiana, one of the first things that struck me was how those areas had much newer, and overall nicer, housing, than this area. To some extent, and especially in Johnson City, that has changed over the last several years, but the quality of housing stock around here compared to somewhere like Charlotte, Greenville, and other markets that have really grown is lacking.
If you are coming here from a more expensive area, that $375,000 home is relatively cheap, but that certainly doesn't buy what it once did, and that's an expensive home by locals' wage standards.
People talk about the wage gains over the last few years, but a lot of that has gone to people at the bottom, and most of those don't make enough to buy a home anyway. The people at the top have always been fine. The middle 50%-60% or so are the ones who have felt the squeeze.
In my personal case, I have no real financial/employment ties to the area at this point. My income is earned from a government in another state, and the delta between the prices in Johnson City and Asheville certainly isn't what it was. The "lock in" effect on mortgages is real - my mortgage is under $700. I couldn't live anywhere else any cheaper.
I'll be out of here as soon as rates go back to lower levels or prices come down some. This is probably the least affordable housing market for normal buyers in probably twenty years.
The local market is least affordable in the affordable and work-force housing portion of the market. The move-up and luxury markets are still doing OK and posting positive growth. Zillow just published a bullish outlook that projected price increases of 5.7% in the Johnson City metro, 5.6% in the Kingsport-Bristol metro, 5.3% in Morristown and 3.8% in Knoxville. https://fortune.com/2023/07/28/housi...orecasts-2024/
Others think prices haven't bottomed out yet. In fact, prices haven't declined in the Tri-Cities. That have increased. The mid-year median was up almost 11% from last year, according to NETAR. I agree that the working-class wages have taken the biggest hit in both the housing market and the economy. Our local class division is getting wider and there's not a lot of evident ways the increase that other than employers raising wages. The old models of industrial recruitment haven't really worked for over a decade but we're still pouring thousands upon thousands on these failed efforts.
Housing is a symptom of the economy. This still has a serious underemployment problem. Of course, that has been good for local businesses, but you can't really grow an economy with cheap labor forever.
As far as home prices are concerned, I'd be surprised if they didn't do a little better than the Zillow forecast.
I bought a townhouse in Bristol back in 2019 for about $100k. Comps in my complex that have sold recently are up to $160k-$180k. It's absolutely mind-boggling to me. If you got a $100k loan in 2019 at 4.5%, that's about a $500/month payment - very affordable. That same property today, at $170k and a 7.25% interest rate, is about $1,150/month. These rates are essentially dead money.
Back in 2019, I was looking at some townhomes in Gray in the same price range. When those come up, they're pushing $200k. For Gray! All Gray has is convenience to both Johnson City and Kingsport - there's not much directly there. I believe median selling price in Piney Flats and Gray is now right around $500k. Neither area is anything special. I don't understand this at all.
Keep in mind that Johnson City is the only "nice city" in the region. Bristol is making strides, but is still quite small, and farther away from anything else of consequence. Kingsport has been trending downward for years. Johnson City has probably appreciated more than the surrounding areas, and I don't think it will decline as bad. Even far-flung regions in southwest VA have had unreasonable appreciation.
I agree these prices aren't sustainable, given the lack of wages and growth outside of Johnson City. I'm sure some of this is out of area/retiree money, but this isn't Florida or somewhere that is really booming. Population growth has been about the same rate as it was pre-pandemic.
Yeah, that's what I'm hearing too, from family members.
My sister purchased a roughly 10 year old, 4 bed, 2 1/2 bath house with garage and basement in Blountville, last summer (2022), for $350k. Pretty nice house for that price.
She had it appraised again this past May and it's already appreciated roughly $75k!!
My mom lives in Kingsport on an acre lot, in the city limits, and has an older (1940s) 3 bedroom, 2 bath ranch, with a basement and garage. They purchased it in 2002 for roughly $119k--and thought that was "expensive" back then.
She's had it recently estimated by her neighbor--who is a realtor--that she could sell it for $300-325k - maybe more.
Kingsport housing prices are out of control. I remember just a few years back, as recently as 2017-2018, you would consistently see small, in-town older houses (2 or 3 bedrooms, 1 bath or so) in the range of roughly $35,000 - $100,000.
I just did a realtor.com search for the city of Kingsport, and just 1 house came up less than $100,000: a small ok looking old home for $79,000 in Lynn Garden.
These home prices in the Tri-Cities region do not favor folks making less than roughly $75k/annually. How can folks purchase homes here? Unbelievable.
I agree with the comments made by many of you about the sustainability of what is happening with the Tri Cities real estate market. The real estate market nation wide is very inflated right now no matter where you are located. Something is going to happen as some sort of correction, it just has to. What that correction is or how far it goes is anyones guess.
The contributing factors I see playing into that are mortgage rates, and the job market. If anyone listened to Jerome Powell's speech in June of this year when the Fed took a rate adjustment pause, he specifically mentioned the real estate market as something the would be affected in the future. Many people in the real estate profession (including Zillow as referenced above) believe the real estate market will continue its climb from here or even accelerate "as soon as the Fed lowers rates". The Fed has been crystal clear on this, they are NOT going to lower rates, or pivot from raising them any time soon. If my two cents matter, I don't see interest rates being lowered at all until unemployment reaches or goes over 6%.
Next up is the job market. As many people in this thread have mentioned, the local job market in the Tri Cities area just does not support the run up of the real estate market. At least some portion of the transplants moving there are remote workers with well paying jobs that can and have afforded to pay the inflated for the area prices. Remote work is going to be taking a hit in the future as documented in various new articles. One recent example is Farmer's Insurance. About a year and a half ago the then CEO declared all employee's will be working remote indefinitely. Many employee's then moved or had already moved away from their work locations to either different metro's or more rural areas after selling their homes for inflated prices. They now have a new CEO that is requiring all workers to be at an office work location 3 days a week before the end of the year. There are many stories of people selling homes at a loss, and having to finance their new homes at a higher interest rate while moving closer to the office they are returning to. I have read estimates that up to 1 million people could be called back from remote work by the end of the first half of 2024. What impact will this have on the Tri Cities area?
My interest in the area is rural portions of Carter, Unicoi, and Greene Counties. I have watched the market explode, level off, and now settle. What is the future of this market? I have no clue, but what I see is many homes and land tracts with either price reductions, or not selling at all and being removed from listing. Two land parcels I looked at during my last trip to the area (rural Erwin, and Southern Greene County in October 2022) both had price reductions of 30K-50K after I returned from my trip. Neither parcel ever sold, and both were removed from MLS listing.
I have seen rural, vacant land tracts in the areas I mentioned list for under 10K an acre, and as much as 28K an acre. Some have sold, some have not. The days of people just throwing up numbers and selling real estate seem to be behind us. Again there are many stories of people that have purchased real estate nation wide in the last two years that now regret it. In my area of Illinois there are people that bought homes last year and are already upside down on value by 100K. Again, it's not just Tri Cities. I have looked in areas of Monroe, Polk, and Morgan Counties, and everything is double to triple what is was in 2017-2018. My parents live in Michigan, and a brick ranch home sold last year for 550K near them which was unheard of. The new owner knocked it down and is now building a 7 figure home.
As I mentioned, the future is anyones guess. However, if you pay attention to what is currently happening (school loan payments restarting, uptick in home foreclosures, auto loan defaults, credit card debt reaching new all time highs, bank failures) the broader economy is changing. What has happened is just not sustainable as mentioned before, and everything shot up so high so fast that there is plenty of room for it to come down. I myself am stacking cash as fast as I can, and getting into a position where I can jump when the time comes.
Yeah, that's what I'm hearing too, from family members.
My sister purchased a roughly 10 year old, 4 bed, 2 1/2 bath house with garage and basement in Blountville, last summer (2022), for $350k. Pretty nice house for that price.
She had it appraised again this past May and it's already appreciated roughly $75k!!
My mom lives in Kingsport on an acre lot, in the city limits, and has an older (1940s) 3 bedroom, 2 bath ranch, with a basement and garage. They purchased it in 2002 for roughly $119k--and thought that was "expensive" back then.
She's had it recently estimated by her neighbor--who is a realtor--that she could sell it for $300-325k - maybe more.
Kingsport housing prices are out of control. I remember just a few years back, as recently as 2017-2018, you would consistently see small, in-town older houses (2 or 3 bedrooms, 1 bath or so) in the range of roughly $35,000 - $100,000.
I just did a realtor.com search for the city of Kingsport, and just 1 house came up less than $100,000: a small ok looking old home for $79,000 in Lynn Garden.
These home prices in the Tri-Cities region do not favor folks making less than roughly $75k/annually. How can folks purchase homes here? Unbelievable.
I can kind of understand Johnson City prices. It's had the most business growth over the last few decades. It's where all the "nicer" dining, retail, nightlife, etc., is in the area. Generally, if if the area is getting something new, it goes to Johnson City first, if it spreads to other cities at all. It's the hub of any ethnic dining in the area. It has the university, VA, and Ballad corporate jobs. It's the only city in the area that approximates a middle to upper middle class suburban in most cities.
If you're coming from a suburban area around a good-sized city, what does Kingsport have to offer? What justifies that appreciation? I've been to many cities that size all over Midwest, Southeast, and New England, and Kingsport is one of the least impressive of any of them. It's clearly been trending downward for years, yet prices are going through the roof.
My personal opinion is that many of these pandemic-era migrants moving for politics and taxes, especially outside of Johnson City, will likely be moving back to bigger areas once they realize how bad the healthcare is, if their remote jobs vaporize and they're making $.50 on the dollar compared to what they are used to, they starting looking for "X, Y, Z" then have to go to at least Knoxville to find it, etc. That, combined with wages, seems like it would place downward pressure on housing prices in especially Kingsport.
I make over $75k, have a good bit of equity, but a move-up house at current rates feels difficult to achieve for me.
I can kind of understand Johnson City prices. It's had the most business growth over the last few decades. It's where all the "nicer" dining, retail, nightlife, etc., is in the area. Generally, if if the area is getting something new, it goes to Johnson City first, if it spreads to other cities at all. It's the hub of any ethnic dining in the area. It has the university, VA, and Ballad corporate jobs. It's the only city in the area that approximates a middle to upper middle class suburban in most cities.
If you're coming from a suburban area around a good-sized city, what does Kingsport have to offer? What justifies that appreciation? I've been to many cities that size all over Midwest, Southeast, and New England, and Kingsport is one of the least impressive of any of them. It's clearly been trending downward for years, yet prices are going through the roof.
My personal opinion is that many of these pandemic-era migrants moving for politics and taxes, especially outside of Johnson City, will likely be moving back to bigger areas once they realize how bad the healthcare is, if their remote jobs vaporize and they're making $.50 on the dollar compared to what they are used to, they starting looking for "X, Y, Z" then have to go to at least Knoxville to find it, etc. That, combined with wages, seems like it would place downward pressure on housing prices in especially Kingsport.
I make over $75k, have a good bit of equity, but a move-up house at current rates feels difficult to achieve for me.
Yeah, JC should have some appreciation--with the university, and medical school, and influx of shopping amenities and options, and increase in population. It does make sense, that prices would increase some.
Kingsport has that "small town/conservative town" vibe going on. Lots of people are moving there who just want a smaller town with church - going neighbors or those who are conservative. It does strike me as very odd that Kingsport has just absolutely lost so many good restaurants and retail over the past 10-15 years.
Kingsport has moved from the "first tri city" in the 1970s and 1980s, to the last, since the early 2000s.
Bristol TN/VA has passed Kingsport in terms of retail and restaurant amenities. Arguably, Kingsport still has the "better density and building bones" in their downtown, but the options pale in comparision, if up against Bristol or JC.
Kingsport pricing is just out of control, and does not reflect local wages.
Yeah, JC should have some appreciation--with the university, and medical school, and influx of shopping amenities and options, and increase in population. It does make sense, that prices would increase some.
Kingsport has that "small town/conservative town" vibe going on. Lots of people are moving there who just want a smaller town with church - going neighbors or those who are conservative. It does strike me as very odd that Kingsport has just absolutely lost so many good restaurants and retail over the past 10-15 years.
Kingsport has moved from the "first tri city" in the 1970s and 1980s, to the last, since the early 2000s.
Bristol TN/VA has passed Kingsport in terms of retail and restaurant amenities. Arguably, Kingsport still has the "better density and building bones" in their downtown, but the options pale in comparision, if up against Bristol or JC.
Kingsport pricing is just out of control, and does not reflect local wages.
The problem is that Kingsport has nothing to offer.
If you're a conservative suburbanite coming from outside of Chicago, Detroit, Boston, insert big market blue city here, what does Kingsport offer? At ~55,000 residents, it's not a real small town. You're not going to that feeing there.
It's conservative, but feels extremely behind the times (even compared to the rest of this conservative region), in terms of a lack of economic development and attraction of new businesses. Keep in mind that many of the people moving to this area, even if they don't consciously notice it, are used to the Costcos, Whole Foods, and similarly affluent and upscale businesses where they are from.
There isn't any of that in Kingsport. Johnson City can offer that on a small scale, with a real mall, Publix, Earthfare, and some boutique places to fill in some gaps. Keep in mind that Publix is basically everywhere in Florida, and every semi-affluent place from North Carolina on south. It's not really a marker of affluence, but this area has such bad grocery stores that it's basically the gold standard here.
Anyone from any area of consequence will be horrified at IPCH and HVMC. If you're from a decent area, you'd be horrified by the medical care anywhere before you get to Asheville or Knoxville, at least. Crime in Kingsport is terrible. Walking through the HVMC lobby these days looks like the walking dead - tons of strung out addicts, no one appears to work, face and neck tattoos seem to be all over half the patrons.
Bristol is doing better, but it's starting to get a homeless/bum/addict problem as well. Half the issue that KPD, BPD, and SCSO are extremely aggressive, arresting anyone at any time, even if it is false arrest, to keep inmate numbers high to justify the new jail.
I just had a cousin who moved back to Kingsport from East Nashville. His KPT rent is now 80% of what his NVL rent was, but he was fired, so didn't have much of a choice. His salary is about half of what it was in Nashville.
Like you said, wages/housing in Kingsport especially is totally out of whack. Years ago, the low wages were at least somewhat offset by low housing costs. These days, wages remain in the toilet, among the worst in a low wage state, and housing costs are up tremendously. It's not sustainable. I think a lot of these pandemic-era refugees will go back to better places once they realize how bad Kingsport actually is.
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