Tri-Cities housing affordability stands up well against price increases By LOUIE LEACH 2014 NETAR President One advantage the Tri-Cities housing market has is affordability. While homeowners, or those who want to buy, in some areas struggle the picture here is more favorable. The annual average sales price of a single-family, previously owned home in 2013 was 5.9 percent higher than it was in 2012. And the 2012 average was 5.9 percent better than the 2011 average. So far this year, the average price is trending slightly below last year. Still, the Tri-Cities has an affordable market where a family earning the average local household income has the purchasing power to buy an average priced home. The affordability concern that’s getting increasing media attention focuses on areas where home price have gone up much faster than wages. That has put renewed attention on how much families are paying for mortgages and on rent. Thirty percent is the number that gets the most attention. Households that pay that much, 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 what renters and homeowners pay. The census uses five income ranges to measure the share of household income claimed by rent and mortgages. Instead of using all five ranges, we’ll look at only the most common number for this comparison. Bristol, TN. Rents – 39.4 percent pay 35 percent or more. Mortgages – 37.7 percent pay less than 20 percent. Bristol, VA. Rents – 36.8 percent pay 35 percent or more. Mortgages – 29.2 percent pay less than 20 percent. Elizabethon Rents – 31.6 percent pay 35 percent or more. Mortgages – 43.7 percent pay less than 20 percent. Erwin Rents – 28.8 percent pay 25 to 30 percent. Mortgages – 41 percent pay less than 20 percent. Greeneville Rents – 36.3 percent pay 35 percent or more. Mortgages – 41.8 percent pay less than 20 percent. Johnson City Rents – 44.1 percent pay 35 percent or more. Mortgages 45.8 percent pay less than 20 percent. Kingsport Rents – 37.8 percent pay 35 percent or more. Mortgages – 47.7 percent pay less than 20 percent. Those are benchmarks for what the largest percentage of people are paying. It doesn’t mean some homeowners have mortgages that account for 35 percent of their income. In fact, that’s the second largest homeowner group in most cities. It also doesn’t mean that many renters are paying less than 35 percent of their income. 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. What’s often over looked in the big-picture media reports is rental costs and home prices have been growing faster than incomes in several pockets of the country - but not everywhere. The Metropolitan Statistical Area ranking and data for the Tri-Cities shows that a little over 24 percent of the households in the four-county region are cost burdened. That means housing is more than 30 percent of monthly income. Kingsport-Bristol is ranked 359 out of 381 MSAs, and the median household housing cost is $570 a month. In the three-county Johnson City MSA 26.7 percent of households are classified cost burdened. Johnson City ranks 327 among the 381 MSAs, and the median household housing cost is $600 a month. Whether you look at the numbers on a city or MSA level the bottom line is the same. Home prices have improved in the past two years when annual averages are compared. And in some cases home prices have increased more than the average household income. But as the city and MSA numbers show, housing affordability here hasn’t take a big hit. This is one case where having our local MSAs ranked at the bottom of the rankings is good news.
Posted on: Sun, 06 Jul 2014 14:06:48 +0000
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