Real estate is at the core of the region’s economic recovery
Almost everywhere you look, there’s evidence of a Northeast Tennessee economic revival. Employers are hiring. Restaurant parking lots are crowded. Sales tax collections are up. And the local real estate industry is a core element of the surge.
There’s an axiom that says housing leads the economy out of rough patches. There is a reason for that. Real estate is at the very fabric of the local business structure. Not only is it a significant employer, but it is also either directly or indirectly related to a multitude of other businesses and their success.
When most people think about real estate, they envision a buyer or seller and a REALTOR®, but many others are involved in every real estate transaction. A partial list includes mortgage originators and lenders, appraisers, home inspectors, realty law firms, and the support staff behind each of those businesses. Each transaction is also part of the revenue stream for appliance and furniture sales, movers, advertising and media networks, hotels and motels, restaurants, service stations, and the list goes on and on. Each existing home sales is also a driver for the pro and do-it-yourself home remodeling and upgrade industry, its employees, and the suppliers, contractors, and subcontractors it takes to build or renovate a home.
The real estate recovery process began in earnest in 2016. Since it is the tip of the spear, its activity was the most visible. It has not let up since 2016, and the rest of the economy is coming online. Look at where we were at the end of the first quarter. During the first three months of this year, residential resales alone pumped $567.8 million into the local economy. That is the tip of the iceberg when you step back and take in the bigger picture.
According to an analysis of the economic impact of real estate, those existing home sales resulted in another $135 million in spending related to each home purchase, the multiplier effect of housing-related expenditures, and new home construction. A prime example is the local home improvement businesses. Nationally the home improvement industry saw a $5 billion increase last year. Locals shared in that. The materials increase in the do-it-yourself and pro renovation and remodeling industry is one factor that continues to dramatically increased demand for lumber.
An economist for the National Home Builders Association (NHBA) studied the impact of home sales on local businesses and the economy. It dovetails with the national and state analysis done by the National Association of REALTORS® (NAR) Research Department. Here’s just one example. A buyer of an existing single-family detached home tends to spend over $4,000 more than a similar non-moving homeowner.
Existing home sales also induce additional new home production. Typically, one new home is built for every eight existing home sales. During just the first three months of this year, resales incentivized construction for 300 new homes.
Northeast Tennessee real estate is more than selling and buying property when you look at the big picture. And the big picture is looking better and better every month.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee – Southwest Virginia region representing over 1,400 members and 100 affiliates involved in all residential and commercial real estate industries. Regional market analytics are available on the NETAR website.