Luxury homes selling fast across region

Photo courtesy Tennessee/Virginia Regional MLS

By A.J. Kaufman, Managing Editor

June is Homeownership Month, which is supposed to raise awareness about the benefits of owning a home and making homeownership more attainable for all Americans.

Yes, much of the Appalachian Highlands region is booming, but realtors have particularly seen more million-dollar home sales in recent years than any time prior.

Through May, according to The Northeast Tennessee Association of REALTORS® (NETAR), sales of 27 homes valued at over $1 million have closed this year in the Tri-Cities region. Thus far in 2024, luxury sales are up about 18% from the previous year.

In April, a $2.1 million Johnson City sale topped the market list of most expensive homes. In May, a 10,400 sq. ft. home on the Virginian Golf Club was the top sale at $1,650,000.

Don Fenley, a veteran market analyst, recently reported that Jonesborough has seen the most million-dollar business in 2024, with six sales. Johnson City has five sales of that magnitude, while Greeneville, Kingsport and Mountain City also report multiple sales of seven figures.

The new home construction side of this market is also progressing. Last year, there were 343 local permits for high-end homes, up 22% from the previous year. Permits for luxury homes in 2023 are up a remarkable 383% from the annual pre-pandemic total of 2019.

More tellingly, the cash market has been surging in 2024, where so far, roughly half of existing home sales in our market have been cash deals. Five of May’s 11 $1 million sales were cash deals.

Nationally, the story is similar with nearly half of all luxury homes bought entirely with cash during the three winter months before March, according to Redfin. That’s the highest share of all-cash luxury home purchases in at least a decade and an increase from its 44% clip a year earlier.

“Generally, it’s because people have so much equity in their current homes that they are putting a lot more money down on their new homes, enabling them to still keep their monthly payment down (comparably), despite the higher sales price and higher interest rates,” Jonathan Washburn, branch manager for Barrett Financial Group — which has offices in Northeast Tennessee — told the Business Journal. “A lot of this is people selling expensive houses in higher cost areas and being able to buy houses fully in lower priced areas. The other part is people downsizing. Both parts are making it harder for middle class people that need a mortgage to compete. If you are competing against a cash buyer for a house, you are almost always going to lose.”

Fenley’s research supports that, too. As he added just a couple weeks ago, “Many (new residents) have more economic resources from sales of previous homes in higher priced markets. But most have made buying more competitive at the top end of the affordable and move-up market price ranges.”

Jeanna LaBossiere has worked for a local brokerage in the residential real estate industry since 2021. In February of this year, she sold a million-dollar-plus home in Jonesborough, which sold less than a decade ago for $585,000 and had minimal improvements.

“Firstly, homes are worth and selling for more than in years past, probably partly due to an influx of out of state buyers,” she explained to the Business Journal, while noting that trends show a 57% increase in property values since the start of the COVID-19 pandemic. “Home prices in our area were just very low before. Now the secret about our beautiful area is out.”

As to why so many recent home sales are cash deals, LaBossiere reminds us that interest rates are still high, and we are in the real estate world’s busy season, “so it is no surprise to me the deals are happening now, as opposed to the end of the third or fourth quarter.”

The bottom line seems to be that while soaring mortgage rates, inflation and a persistent lack of inventory have cooled some of the overall market, the luxury market is surging, with nearly 100 listings for single-family homes over $1 million in our region as of early June. Washington County heads up this list, with Sullivan County following close behind.

As buyers, sellers, builders, renters and landlords keep rolling with the punches this summer, the topsy-turvy residential real estate market in the Appalachian Highlands remains a picture of volatility.

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