GRAY, Tenn. (WJHL) – The Northeast Tennessee Association of Realtors (NETAR) made a dour prediction on Monday, saying that the price of housing is soaring beyond the reach of local workers.
“One of the biggest threats to the Tri-Cities housing market is not higher mortgage rates or inflation,” NETAR officials wrote in their Oct. 17 press release. “It’s affordability.”
Citing housing as a driving factor in the region’s recovery through the Great Recession and COVID-19 pandemic, NETAR writers said the reality of home ownership has changed.
“Back in 2006, the Washington Co. median home price was $125,699,” the release said. “Half of the buyers were paying more, half were paying less. The typical mortgage payment was $540, and the average worker pocketed $38,870 a year. Buyers were spending a little over 16% of their income on housing.”
Statistics from Sullivan County – the largest housing market in the region – were similar. The average household was spending around 11% of its income on housing, NETAR said.
In 2021, the housing market reported by NETAR paints a much darker picture.
“By the end of 2021, the typical Washington Co. mortgage payment had increased by 129.6% to $1,240,” NETAR wrote. “At the same time, wages increased 27%.”
That gap in pay means fewer and fewer workers can actually afford to live in the community they call their home. In fact, NETAR stripped part of the region of one of its major selling points for relocation: affordability.
“The bottom line is the typical buyer was spending 30.1% of their income on housing,” the release said. “Washington Co. no longer enjoys the status of being an affordable housing market.”
Sullivan County saw an even larger jump, with typical mortgages landing at $1,035 per month in 2021. Wages in the county only increased 25.6% in response, according to the release. Mortgages made up a smaller percentage of county residents’ income, however.
The exact circumstances that led to skyrocketing prices are complicated, the release said, but NETAR listed several causes.
“Back in 2016, the region was barely attracting enough new residents to maintain the population status quo,” the release said. “New residents are necessary because the Tri-Cities has a rapidly aging population, and the death rate is higher than the birth rate. There’s also an out-migration of young people.”
When COVID-19 devastated the global economy, NETAR said they saw waves of migration from urban centers as costs of living rose.
“People began looking for places to escape the major metros and high-tax areas,” the release said. “They wanted a better quality of life and more affordable housing. The Tri-Cities had it in spades. The rest is history.”
“As newcomers added to the organic pent-up housing demand, excess housing inventory was snapped up.”
Now, NETAR said they’re worried local workers will never get to buy into the community they help keep afloat.
“Simply put, the lower and middle rungs of the region’s dominant service economy are being priced out of the housing market,” the release said. “The short-term implications for the economy and housing market are not good. The long-term implications are even grimmer.”