Sellers hold the advantage over buyers in Northeast Tennessee and Southwest Virginia’s real estate market, meaning the number of people looking to buy houses exceeds the number of houses available for sale.
The result: An increase in home sales and a slight increase in the average list prices of houses on the market.
Recent first-time homebuyers, John and Laura Greene of Bristol, Tennessee, experienced the seller’s market firsthand. The Greenes, both 47 years old, spent five to seven months looking for a house before they closed on one in May.
John Greene said he and his wife, who had only rented previously, were guided by their real estate agent, but they still had to contend with everyone else in the market for a house.
“Around here all these houses sold pretty quickly,” John Greene said.
Aaron Taylor, president of the Northeast Tennessee Association of Realtors, said he expects the total number of single-family homes sold in Sullivan County to be around 1,900 for 2018, the highest number of sales in well over 10 years.
Sales of single-family homes are up in all Northeast Tennessee and Southwest Virginia counties over 2017. For the most part, the same holds true for home values.
Bristol, Tennessee, Bristol, Virginia, and Kingsport, Tennessee, are all at 10-year highs as far as home-listing prices. However, regional home prices are still lower than the national median price of $267,200, according to the National Association of Realtors.
Average home prices can vary from location to location. In Washington County, Virginia, the average year-to-date home price is $183,556 whereas the average year-to-date home price in Sullivan County, Tennessee, is $171,529.
Taylor said in some cases, it’s less expensive to own a home than to rent. The lower cost of living has much to do with the fact the region’s median household income is lower than national median household income of $57,617 as of 2016, according to the U.S. Census Bureau.
Median household income in Washington County, Virginia, is $43,835, the median household income of Bristol, Virginia, is $35,801 and the median household income of Bristol, Tennessee, is $38,985. In Sullivan County, the median household income is $40,983.
The glut of potential buyers is also a product of the economy, according to Tim Sproles, a real estate agent with Highlands Realty Inc.
“When the economy is good, people start looking for an upgrade,” Sproles said.
Sproles said available housing in Southwest Virginia and Northeast Tennessee has attracted an array of buyers. Some of his clients are first-time homebuyers, and some move to Southwest Virginia and Northeast Tennessee because of jobs. Others are wealthy, older New Englanders who sell their homes and move to the region for quality of life but at a lower cost of living.
The current seller’s market in Northeast Tennessee and Southwest Virginia is another way the region contrasts with many other parts of the country, where the seller’s market is slowing. A study, sponsored by housing marketplace website Zillow, found home value growth slowing in the majority of the nation’s 35 largest metros and that the majority of the U.S. will be a buyer’s market by 2020.
A buyer’s market is one where the inventory of homes exceeds the demand, and thus values decrease, putting home buyers in the driver’s seat.
Taylor said the Mountain Empire region generally lags behind national trends. He does not expect this seller’s market to start slowing down until spring.
Home sellers are still in control of the local market, and a lack of mass home construction in subdivisions is helping to keep the inventory low.
Taylor said it is difficult for developers to find the right locations for subdivisions, because planning not only involves finding and acquiring properties that are suitable for new housing but also requires figuring out the logistics of providing utilities.
Because of tariffs on construction materials — such as lumber and steel — and increased prices of land, home builders find it more economical to build larger homes in the $250,000 to $350,000 range.
In many parts of the region, construction of single-family homes, duplexes and other residences is occurring, but on a smaller scale with individual homes being built rather than large subdivisions. In Bristol, Tennessee, for example, 22 new single-family homes or duplexes are under construction. Karl Cooler, codes administrator for Bristol, Tennessee, said between 37 and 48 new single-family homes were built each year for the last several years.
Fewer homes are being built in Bristol, Virginia. Since 2013, roughly four to 10 homes have been constructed per year.
Subdivisions are in the works. Developer Aaron Lilly is building 30 smart homes with solar power in Bristol, Virginia, the first of which are set to close in December.
Lilly said the homes combine smart technology, advanced climate control and built-in solar panels. However, innovation comes with a cost, and the homes range from around $270,000 to $299,000.
Lilly said he plans another development nearby on 70 acres that could include possibly 400 to 500 residences.
In Bristol, Tennessee, the planning commission is set to make a decision in December on whether to approve a subdivision for Manchester Group Inc. near Old Jonesboro Road that would divide 13.7 acres into 45 lots.
Renovating and flipping
Rather than build new homes, some in Northeast Tennessee and Southwest Virginia are renovating and updating existing properties.
New Again Houses, based out of Bristol, Tennessee, is a company that does home rehabilitation on a large scale. The company buys homes, renovates them and then sells them. The company has seen success since it was founded about a decade ago.
Sam Ferguson, vice president of New Again Houses, said the company flipped seven homes in 2011. Now it renovates roughly four a month, and he doesn’t expect demand for what they do to go anywhere soon.
“People are willing to pay more for a remodeled home than one that hasn’t been remodeled,” Ferguson said.
Often remodeling and fixing up an existing home can cost less than completely constructing a new one. Ferguson said on average New Again Houses spends $40,000 on construction expenditures. He said the values of the homes they work on ranges from $50,000 to $300,000.
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