October 10, 2016

Most local homeowners pay smaller share of income on housing than renters


One big advantage the Tri-Cities housing market has is affordability.

 Sales are on a hot streak and prices are increasing, but not so much that it has dramatically reduced affordability. When you crunch the numbers, a buyer earning the median local family income has ample buying power to purchase a median-priced home. That’s a staple for the cost of living here.

One affordability concern that’s getting increasing attention focuses on areas where home prices have increased much faster than wages. It has put renewed attention on the realities of homeownership vs. renting using the share of total income homeowners and renters are paying for housing as a benchmark. Thirty percent is the number that gets the most attention. Households that pay that, or more, are called cost burdened.  Although that’s not the conventional way to measure housing affordability, it’s a good opportunity to look at the local market from that perspective to see how we stack up.

According to the latest census data here’s how the major city housing markets in Northeast Tennessee look when you compare the share of total income spend on housing by renters and homeowners. The census uses five income ranges to measure the share of household income claimed by rent and mortgages as a share of gross income.  Instead of using all five ranges, we’ll look at only the data that represents the largest share of owners and renters.

Bristol, TN.

Rents – 41.7 percent pay 35 percent or more.

Mortgages – 47.4 percent pay less than 20 percent.

Bristol, VA.

Rents – 47 percent pay 35 percent or more.

Mortgages – 43 percent pay less than 20 percent.


Rents – 35 percent pay 35 percent or more.

Mortgages – 47.1 percent pay less than 20 percent.


Rents – 29 percent pay 35 percent or more.

Mortgages – 46.2 percent pay less than 20 percent.

Johnson City

Rents – 52.7 percent pay 35 percent or more.

Mortgages 47.4 percent pay less than 20 percent.


Rents – 47 percent pay 35 percent or more.

Mortgages – 47.7 percent pay less than 20 percent.

The study that prompted the current media attention about housing affordability and the cost burdens on household incomes was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation. The Harvard State of Housing annual reports also shines the spotlight on this element of the housing market each year. Harvard is currently gearing up for their 2016 report that is scheduled for release next month.

If you step back at look at the share of income that goes to housing in the seven-county Tri-Cities region, 38 percent of the homeowners are spending 20 percent or less of the gross income on housing while 43 percent of renters are paying 35 percent or more. The economics are clearly on the side of homeownership while a large share of renters are firmly in the cost burdened category.

This is coming at a time when the number of rentals is seeing expansion in the Kingsport and Bristol regions some of it accelerated by tax incentives from city and county governments. The current trend in apartment expansion began several years in the Johnson City market and was driven by an upgrading trend in student housing. It saw an increase in the number of high end apartments and high occupancy rates caught the attention of investors and local government officials.

Kingsport came on board to boost the overall housing options in their effort to attract and retain new residents.

Whether you look at the numbers on a city or regional level, the bottom line is the same. Although home prices have increased during the recovery from the Great Recession they have not taken a big bite out of local housing affordability. Our housing market is one where families earning the median income can afford to buy a median price home without becoming “housing cost burdened.” At the same time, the share of renters who are housing cost burdened is increasing. That’s a valid concern for housing affordability advocates.

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 1,000 local Realtor® members and almost 60 affiliates