By Dave Ongie
As Ralph Perrey – Executive Director of the Tennessee Housing Development Authority – assesses the lack of affordable housing in our region and beyond, he is quick to point out that this problem didn’t pop up overnight.
“If you look back at historic trends, the number of houses that were being built each year up until the crash of 2008-09, it’s just cratered and it’s never recovered anywhere near what we need,” Perrey said during a recent visit to the Business Journal. “So we’ve had a decade when we haven’t been building enough housing at any price.”
That lagging supply of housing met a spike in demand during the COVID-19 pandemic. The Wall Street Journal and Realtor.com were among many who alerted the nation to our low cost of living, outdoor recreation opportunities and overall high quality of life.
Buyers from states like California found homes in our region to be a bargain, which put a lot of upward pressure on home prices.
“These are expensive prices for us, but if you come from California, it’s like a 2-for-1 sale,” Perrey said.
The upward spiral in home prices has had far-reaching effects locally. Rick Chantry, President of Northeast Tennessee Association of Realtors (NETAR), recently noted that March’s median home sales price topped out an all-time high, which was nearly double what the median price was back in 2012.
Current homeowners are suddenly living in a world where their homes are worth twice as much as they were a decade ago, but selling would leave them with the prospect of buying another house in a market that is still highly competitive despite signs it may be cooling ever so slightly. When compared to the plight of those looking to become homeowners, however, the dilemma current homeowners find themselves facing pales in comparison.
Perrey has his finger on the pulse of the challenge to find affordable housing. The THDA’s Great Choice Home Loans program is dedicated to helping first-time homebuyers secure 30-year fixed rate loans, and the lack of affordable housing is proving to be a roadblock for many folks looking to purchase their first home.
“A few years ago, if you said what is the average THDA purchase price, it was around $148,000,” Perrey said. “Now, on the statewide basis, it’s about $185,000.”
The median price of homes purchased in Johnson City by existing THDA borrowers is $145,000 compared to $137,000 for THDA borrowers in Kingsport-Bristol. According to NETAR, the average listing price for a home last month was $239,000.
“That’s going to be the biggest challenge for the homebuyers we work with is there’s just not a lot to choose from in your price range, and even if you find something, you’ve got to be able to keep bidding against the other 27 people who want that house,” Perrey said. “That generally works to the disadvantage of the people we’re working with.”
With that being said, Perrey is encouraged by the fact that builders are now beginning to focus on building more affordable housing in our region and across the state. Whether it is multifamily dwellings or single-family homes, several building projects are currently in the pipeline around our region.
“I think more homebuilders are interested in building at entry-level price points, because that’s where the growth is,” Perrey said. “There’s more interest in building in those price points, and people are being a little smarter in their design features that let you cut some costs here and there. I think as we as a society straighten out our supply chain issues, it will offset some of those ridiculous price spikes in construction costs.”