JOHNSON CITY, Tenn. (WJHL) — Millie Pendola wasn’t surprised “at all” when she learned Tuesday that Johnson City’s 37604 zip code ranked seventh nationally in realtor.com’s “America’s Hottest ZIP codes” ranking — even with close to 30,000 competitors.
“I love to tell all my buyers that Tennessee is sort of the trifecta of tax-friendly state, beauty and affordability,” the Century 21 Realtor said at her office in the center of said zip code, which encompasses most parts of Johnson City that are west of Interstate 26.
Pendola left a career as a paralegal to enter real estate two years ago and has seen a tremendously strong market around the Tri-Cities. In fact, zip code 37664 in Kingsport also made the top 50, coming in at 47th.
“We’ve had a lot of relocations from California markets, from Florida markets, from New York markets, Washington D.C. … and they’re more cash-heavy than our local buyers, which is to be expected,” Pendola said, adding that about three-quarters of her business has been people migrating from outside the area.
Indeed, realtor.com listed affordability, at least on a national scale, and relocation as two of the three reasons 37604 was considered a hotspot. The other was opportunities for aspiring millennial homeowners, who own homes at a 56.9% rate in the zip code compared to a national average of 51.3%.
The median price according to realtor.com for the January-June period was $329,000 in 37604. Pendola’s data show a median list price year to date of $268,078. Regardless, it’s well below the national average of $450,000 and that’s bringing people who have sold in other regions into the area with plenty of cash in hand. It’s the third-lowest median listing price among the top 10 hottest zip codes.
Pendola said her clients, all of whom she said are coming here to either take local jobs or work remotely as opposed to being retired, “are impressed with the level of affordability compared to where they’re moving from and I think that’s a huge attraction for our market.
In July the average list price was $420,571 for 57 active listings, according to Pendola’s data, and the median was $300,000.
“That can get you a lot here and a little other places,” she said. “You get more bang for your buck … compared to the San Francisco area, the LA area, New York City area, so there’s a big driver there because they can pay cash.”
What about affordability?
Will Crumley has been building homes around the region, including in 37604, on infill lots that are either empty or have homes in such disrepair they’re torn down and replaced. He said demand in Johnson City is “unprecedented in our lifetime.”
Specifically in the 37604 zip code he said there haven’t been a lot of new neighborhoods or subdivisions developed in recent years, leaving supply limited.
“A lot of these numbers are driven just by demand,” he said. “People that are from here and people that have moved here want the amenities that downtown and living in town provides. I think a lot of the people that are moving here from urban places want the best of what an urban environment can provide. Walkability and restaurants and the like.”
While outsiders may still see the region as affordable, in-migration and cash offers are driving prices up steadily.
The median sale price in 37604 from January-July 2021 was $208,650, meaning half of the homes sold went for less than that amount and half for more. This year, that median is $265,210, up 27% in just a year. The average price is up 18%, from $255,548 to $301,894.
The scarcity of available land, and now even infill lots, has created a market Crumley said he never would have imagined growing up in Johnson City. Wilson Avenue, which parallels West Market Street in the Mountain Home neighborhood, has seen a revitalization in the past couple of years where a generation ago it was the site of extra police patrols due to a major drug trafficking issue.
“We’re getting over $200 a square foot on new houses,” said Crumley, who has built on Wilson. Indeed, records show purchase of a lot at 308 Wilson for $19,000 in October 2021, construction of a 1,008-square-foot house house early this year, and sale of that home for $214,900 in April — $213 a square foot.
Another lot at 419 Wilson was purchased for $21,000 in February of this year, and an 884-square-foot house was then built there. Five months later it sold for $200,000, or $226 a square foot.
Crumley said that’s a boon to established residents there, many of whom are moderate income.
“It can help revitalize older neighborhoods and bring some new life and raise some property values for existing homeowners,” he said.
Crumley has one home in progress on an infill lot on West Chestnut Street and another on Wilson Avenue but said opportunities to buy such lots are becoming scarcer and scarcer.
Scarcer, but not completely unavailable. Tuesday afternoon saw two homes under construction in the 100 block of West Chestnut. One was a tear down that Sandra Walker of Walker Construction and Development was overseeing, the other a vacant lot Crumley was building on, with both homes set for two stories and well over 2,000 square feet.
“They are selling as fast as I can build them,” said Walker, who tries to focus on keeping homes below the $300,000 price point and prefers to remain in the $200,000 range.
“We’ve had a lot of customers, clients, that’s called us wanting us to build for them that have been from Florida, Minnesota, California,” Walker said.
Even as inflation has sent interest rates up, Walker, Crumley and Pendola all agree Johnson City appears to be on a trajectory of high demand and increasing prices that’s likely to last for some time.
“I didn’t think Johnson City would ever become a hub, but yeah, Johnson City has become a hub,” said Walker, who grew up here.
Pendola said she believes Johnson City’s leaders have “done a great job optimizing for growth in the population and their planning and zoning commissions are allowing new residential areas to be created.”
She said she thinks demand is far from being met.
“I think it will continue. Again, the trifecta of beauty, tax leniency and the affordability of our area is very attractive to people. I don’t think that’s going to decrease.”
Those fundamentals are good for Crumley’s business, but the rising prices do leave him concerned about people who are from here and work in important middle-income jobs getting priced out of the market.
Through the first seven months of 2021, there were 186 active listings in the $100,000 to $200,000 range. This year, there have been just 111, a decrease of 40%. The total in the $200,000 to $300,000 range is nearly unchanged, with 108 last year and 117 this year. In the $300,000 and up range, though, there have been 154 listings this year compared to 95 last year.
“A city can’t grow at least in my opinion on the most expensive housing alone,” Crumley said. “Real growth comes from growth across socioeconomic boundaries and people need those houses to move up into, they need those first houses to buy.”