BLOUNTVILLE, Tenn. (WJHL) — The days of the Tri-Cities being a reliable bastion of affordable housing are over — and a group of leaders gathered Thursday want to keep a challenge about housing prices from becoming a crisis.
“The trajectory is, housing has increased in prices rather dramatically — what didn’t keep pace was wages,” Northeast Tennessee Association of Realtors data and marketing consultant Don Fenley told News Channel 11.
Fenley had ducked out of a “Workforce Housing” summit that brought together city community development leaders from Bristol, Johnson City and Kingsport, along with representatives from the non-profit housing, banking, public housing, realty and home development sectors.
They heard more details about what they already know: housing prices in both the rental and purchase markets are taking up an outsized chunk of monthly income for middle-class professionals, and housing inventory those folks can afford is extremely scarce.
“It’s an unintended consequence of a good economy,” Bank of Tennessee’s Stephen Dixon said in opening remarks.
“It’s no secret that we’ve had a lot of people moving to this area and this region because they know it’s a great place to live and to work, to raise a family. But supply and demand, a funny thing happens when you have more demand than supply things go up.”
That’s been good news for existing homeowners, Dixon said, but not for young professionals trying to get their lives off the ground.
“Most every industry is having a shortage of employees,” Dixon said. “You think about your schools and your firemen and policemen and when they’re trying to be hired but they can’t find a place to live, that causes a problem for all of us.”
It’s a problem that dominates the attention of Wayne Lyons, community development coordinator for the City of Johnson City. He said the problem in a metro where the median amount of income spent on housing has risen from below 24% three years ago to almost 35% today is a major concern. Anything above 30% is considered in the unaffordable range, and Kingsport’s metro has risen from 21% to 34% over the same period.
Lyons said it could become a crisis “if we don’t just work on finding something to solve the problem early enough.”
He said non-profit housing groups can only produce so many units a year, and many of the people struggling to find affordable housing make too much money to be eligible for those programs.
“It’s people who work in the healthcare field in offices,” Lyons said. “It’s police officers, firefighters, teachers, managers at different businesses.”
With an interest rate of 6% and a 5% down payment, the buyer of a $325,000 home would pay an estimated $2,131 a month mortgage. For that payment to be less than 30% of income, a family would have to be earning at least $85,500 a year — the equivalent of two full-time $21-an-hour jobs. Washington County’s median family income is $60,188.
“With houses being built right now, you’re looking at 300,000-plus, easy,” Lyons said.
“We can’t force the price of materials to go down, so we want to make sure that we try to encourage our developers and find some other incentives, other ways to try to solve this problem.”
Fenley, who provided attendees with a slew of statistics, doesn’t think the ship will turn around quickly.
The Federal Reserve Bank of Atlanta publishes a Home Ownership Affordability Monitor that covers every metro area and individual county within those areas. Its index takes into account the median home price, current interest rate and derives a total median monthly payment. It then uses median income to determine the share of median income being paid.
The region’s index was between 120 and 140 — 100 and above is considered affordable — from January 2014 through January 2022. But as interest rates rose and people moving in from outside drove up demand and prices, the numbers dipped below 100 and kept falling.
The Johnson City metro was 85.9 in January and Kingsport’s was 89. It’s a problem Asheville, N.C. has dealt with for years and that metro was at 61.4 in January — but it’s new to this region.
“If you look at an individual basis, if you’re the individual and you need the housing and you can’t find it, it’s a crisis already,” Fenley said.
“It’s a tough challenge,” he said. “Affordable housing, workforce housing is becoming more of an issue. It will become even more of an issue the rest of this year, and probably in coming years. I mean, without workforce housing we’re not going to be able to attract the professionals that are not in the upper ranges of the middle class.”
Fenley said the region hasn’t yet developed a sufficient workforce to support what has become a service economy, and wages in the area are part of the affordability problem.
“Right now the two metro areas in the Tri-Cities, excluding bonuses and overtime, have the lowest private-sector wages in the state of Tennessee. That has worked very, very good for making the area business-friendly. It presents a little bit of a challenge when you get into housing.”
Despite the stark challenges, Dixon and Lyons said Thursday’s turnout and intentional focus on the issue gives them some cause for hope.
“I hope this will be a great start of conversations that will allow us to continue to find solutions to a problem that really is affecting all of us,” Dixon said.
“The city is aware of the problem for sure, and it’s something that’s becoming more apparent every day,” Lyons said.
“We need everybody on board to try to work towards this goal, so there’s multiple groups of people overlapping to try to work forward work towards this goal and solve this problem before it becomes a crisis.”