Wow! That’s the first impression when you look at what the Tri-Cities area housing market did in 2019. Here are just a few of the milestones.
- It saw the best annual single-family resale price appreciation since 2008.
- It was the ninth straight year resales have increased.
- Single-family resales moved past the 7,000 a year mark for the first time.
- It was the fourth straight year total volume for residential resales exceeded $1 billion.
If you get deeper into the weeds, other benchmarks were raised, but you get the point. From a sales and price perspective, 2019 was a very good year for the housing economy in the 11-county region monitored by the Northeast Tennessee Association of REALTORS® (NETAR).
And when the final numbers for commercial real estate and new home sales come in, it will again establish that the housing industry is one of the leading contributors to the local economy. The sales volume for the existing, commercial, and new home sales in 2018 was $1.8 billion. It should be at or a little better than $2 billion for 2019.
All of the good news about 2019 begs the question: can the local record-setting market pace be sustained for a sixth straight year in 2020?
There are pluses and minuses on that yet-to-be filled-in ledger.
On the demand side, the largest cohort of the Millennial generation will turn 30 this year and enter their prime home-buying years. Some are already homeowners, but many are not. The headwinds for those potential first-time buyers face are availability and affordability.
Five straight years of robust existing home sales have exhausted any surplus inventory. Balanced market conditions used to be a six months supply of homes on the market, but that is only a fond memory. Currently, inventory is below the four-month level for homes in the $200,000 and below price range and at four months of supply in the $200,000 to $399,999 price range. The only market that had the traditional six-months of inventory for balanced market conditions at the end of the year was the Bristol area, and it was only in the $400,000 to $599,999 price range.
Oh, I forgot to mention that even the sale of the region’s most expensive home increased in 2019. The sales of those in the price range of $800,000 and up almost doubled from the previous year. In December, there were 43 area homes with a list price of $1 million or higher on the market.
Fortunately, new home construction is on the upswing. It is concentrated in but not limited to the Washington County, TN area. At the same time, the area home-flipping industry continues to account for one of every ten home sales. That is especially helpful because over half of those flip sales are in the $200,000 and below price range.
Some of the pluses going into 2020 include record-low mortgage rates, which are expected to remain in place for the rest of the year and help with affordability. New federal financing rules are making condominium and townhome purchases more attractive to first-time buyers. More importantly, the region’s economy continues adding new jobs. At the same time, we continue seeing a steady flow of new residents – many of them retirees or early retirees – from other areas.
Most of the local fundamentals for continue growth – even if it’s slower growth – are in place another solid new year for the local housing market.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,300 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics are available on the NETAR website at https://netar.us/voice-real-estate-northeast-tennessee.