Where are the single-family rentals? Why are landlords selling?
GRAY, Tenn. – During a time when demand for single-family rentals has outstripped supply, it seems counterintuitive that owners would dump their rentals. But according to courthouse records, that’s what’s happening.
Although some think single-family rentals are dominated by out-of-state investors, data show that most are locals. In fact, many of the landlords are traditional mom-and-pop operations locals have used to capitalize on tax breaks, embrace the wealth generation properties of real estate and to add an extra revenue stream to the family budget. But there are individuals with multiple properties who are keeping rentals as investments.
So why have landlords dumped almost 26,000 single-family homes and townhomes since the pandemic?
The simple answer is 2020, 2021 and 2022 were the strongest seller market years the region has seen in decades. Some owners looked at the market, the cost and headaches of being a landlord and decided it was a good time to get out to cash out.
The whys and how’s of real estate investing are not what most local residents and real estate professionals want to know about. They’re top concern is where are the rentals and what’s available. It’s a dynamic universe where rentals come off and go on the market every day. But here’s a capsule look at where most rentals were located at the end of the second quarter.
Bristol – 9,246
Johnson City – 7,683
Kingsport – 6,665
Greeneville – 5,967
Abingdon – 4,470
The region’s overall vacancy rate is 2.6%. That’s 1% lower than the regional apartment vacancy rate.
Zip codes with the largest number of vacancies were:
37620 – Bristol – 190
37660 – Kingsport – 185
37745 – Greeneville – 161
24201 – Bristol – 138
24210 – Abingdon – 129
37601 – Johnson City – 100
The zip code with the highest vacancy rate was:
37665 – 11.16% with 75 vacancies.
Fifteen of the 42 zip codes in the Q2 ATTOM analysis had no vacancies. Included in the zips with no vacancies and more than 1,000 rentals were 37615 in Johnson City, 24211 in Abingdon, 24251 in Gate City, 37641 in Chuckey.
Eleven zip codes had vacancy rates of less than 1%.
While the NE TN SW VA single-family rental market still strongly favors landlords, there are some signs demand is beginning to wane. It hasn’t show up in occupancy – like it has in the apartment community when landlords are beginning to offer incentives – but some of the recent build-to-rent developments have not performed to expectations.
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