The slow train to more inventory
Location, location, location is still dominant in real estate jargon. But inventory, inventory, inventory is right up there with it.
Tri-Cities home sales declined for the first time in a decade in 2022, while prices were resilient, and 2023 conditions are supposed to be much of the same. If the “much of the same” is the first half of last year, things look pretty good. The last half of the year picture is a little frothier.
As measured by the time a property sits on the market and pending sales, consumer demand is ebbing lower. But it’s a short-term situation.
Even though the time on market is increasing, it’s still less than it was this time last year. And although pending sales on existing homes dropped to a 5-year low in December, they’re in line with the pre-pandemic trend minus the inventory factor.
The region had 1.8 months of inventory at the end of December. It improved every month last year. But the improvement was anemic. It lags the pre-pandemic growth rate, which is the benchmark for a return to normal market conditions.
The bottom line is inventory is a primary player holding back sales and keeping upward pressure on prices. Some balance the conversation with the number of new homes, townhomes, and apartments that government officials report being “in the pipeline.”
Here’s what the Johnson City and Kingsport pipelines looked like in 2022, as measured by building permits.
Kingsport issued 310 single-family permits and 91 for townhomes.
Johnson City issued 181 single-family permits and 48 for townhomes.
Welcomed additions for sure, but not quite the inventory boost that will move the existing two largest housing market’s inventory closer to balanced conditions. Of course, there is new home activity occurring outside of Kingsport and Johnson City. Those numbers should be available in a week or so.
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 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us