October 10, 2016

Homeownership Month arrives with strong local housing market reports


This year's Homeownership Month arrived in Northeast Tennessee riding a wave of positive housing market news.
 Gov. Bill Haslam declared June "Homeownership Month" at the request of the Tennessee Housing Development Agency. Part of THDA's mission is to make homeownership affordable to a wider range of Tennesseans through financing options and the availability of down payment assistance.
This year, Northeast Tennessee and the state have a lot to smile about. 

According to the Tennessee Association of Realtors, sales of single-family homes were 5% better than May last year and the median price increased 5.4%.  That's a statewide snapshot. There are local markets posting stronger reports, and Northeast Tennessee is one of them.

According to the Northeast Tennessee Association of Realtors' Trend Report, May home sales were up 27.3%. The average sales price was 0.7% percent higher than last year. That's not bad, but year-to-year comparisons don't offer the best trend picture. For that, you have to look at the year-to-date data. So far this year the average price  is 2% better than the first five months of last year. Another driver for softer prices is most of the sales growth has come in the lower tiers of the market while the higher end portion of the market is struggling.

May isn't an outlier to Northeast Tennessee hot sales market reports. It was the 12th straight month sales have been higher than they were before the recession. And so far this year all but one monthly year-over-year comparison has been a double-digit increase. March was the exception with a 7.8% increase.

According to THDA's Homeownership Month media report, construction of new single-family homes in the Volunteer State is rising faster than in the rest of the South and the nation. Statewide, construction was up 17% in the first quarter compared to a year ago, versus 8% growth in the region and 12% nationally.

Unfortunately, Northeast Tennessee lags those reports.  New home construction was 3.9% better than the first quarter of last year. New home permits have been in the 150-160 range during the first quarter of the past four years, and that housing market component is performing at half of its pre-recession capacity.   

There are varied reasons for the softer new home industry. One is population. Death rates in Northeast Tennessee are higher than birth rates, so the only population growth is newcomers to the region. So far that migration has been concentrated in the Washington and Unicoi counties of the Johnson City metro area.
Even with softer local new home construction, it's a powerful part of the economy. "Every time you see a home under construction, that's an investment being made in the local community. Dollars and jobs are being brought to town," said Ralph M. Perrey, executive director of THDA. "Residential construction is both a gauge of economic growth and one of its most important drivers."
Another positive for the housing economy is foreclosure rates are at their lowest level since the year 2000. The percentage of mortgages past due in Tennessee and here in Northeast Tennessee are also at pre-recession levels. 
"Homeownership has traditionally been one of the best tools to build up a family's wealth and financial security," said Perrey. "Plus, research has shown that homeowners are more involved in their communities, they put down deeper roots, and their children do better in school."
You've probably read and listened to news reports that said home ownership is declining. The most current reports show it 63.5% of occupied households. That's down 5.5% from its peak. But when you look at the local numbers you get some context that's missing in many news reports. It's the context that says homeownership in our area is higher than that national average.

The most current Census data show homeownership in the Johnson City metro area is 68.3%.  It was 71.2% the year before the Great Recession. 

Kingsport-Bristol's homeownership rate is currently 73.6%, down from 74.4% before the recession.

June is officially Homeownership Month, but economic and cultural data clearly show it's critical to the well-being of communities every month.

Marsha Stowell is the 2016 president of the Northeast Tennessee Association of Realtors. The real estate education and trade group is the voice for real estate in the Tri-Cities and has over 1,050 local Realtor® members and almost 60 affiliates