Tri-Cities home construction pace still on upswing

JOHNSON CITY, Tenn. (WJHL) — New home construction permits in three of the region’s busiest areas are outpacing 2023 numbers through the first third of the year, while average values are down slightly after steep increases from 2022 to 2023.

News Channel 11’s analysis of data from Kingsport, Johnson City and the unincorporated areas of Washington County shows a 20% increase in total permits, with 242 pulled through April 30. The figure was 201 through the same period of 2023.

Washington County’s on a record home construction pace this year – 130 single-family permits through April. Mayor Joe Grandy said it’s a cycle that’s been in place for a few years.

“Right now, there’s still a very heavy demand for housing in this market, so as long as that’s the case, the builders will keep building and we’ll move along at this pace for a while,” Grandy told News Channel 11.

A lot of houses means a lot of inspections – putting pressure on the county building official Scott Chapman and his one inspector, David Martin.

Chapman is a former builder himself and says things are unlike he’s ever seen. Washington County averaged 112 single-family permits a year from 2018 through 2020. From 2021 through 2023, that average was 309 – and they’re on track for more this year, which has Grandy looking at adding a second building inspector in the budget year that begins July 1.

In 2020, Martin completed 2,765 inspections of various elements like plumbing, electrical and the overall home. By 2023, that total had risen to 3,873, and he’s on track to complete more than 4,800 this year.

“Our biggest issue and concern right now is being able to service the builder with an inspection and not be scheduled out as far as we are,” Chapman said.

“We try to accommodate as much as we can (to avoid slowing builders down),” he added.

Chapman said he sees firsthand the influx of buyers from other parts of the country who are attracted by the region’s combination of natural beauty, ease of transportation, low taxes, and, for them, relatively low home prices.

“I had two from Wyoming last week that’s moving, but we’re seeing the normal, Florida, New York, Connecticut, Michigan, Texas,” he said. “We have been on a roller coaster the last couple of years with the volume that we’re taking care of.”

Cost trajectory may be flattening

Numbers aren’t the only thing that’s been up. Across the three localities, average permit values rose an eye-popping 23% last year from 2022 – up from $278,312 to $342,590. But so far this year, that figure is down a bit to $338,690.

The flattening in prices should come as a welcome relief to buyers in the first-time homebuyer and so-called “workforce housing” markets.

Kingsport City Manager Chris McCartt told News Channel 11 that the city has worked within its potential to both increase the number of homes being built and keep prices as affordable as possible. Staff have had internal conversations and then “we’ve asked our developers, those that are external to the process, what do we need to do better to help you all build more in Kingsport?”

The answer has been more technology to make information flow back and forth quickly, as well as adjusting subdivision regulations where possible.

“Any time we as a city can go in and make adjustments to essentially lower the development costs, the goal then is that that would be passed on to the buyer,” McCartt said. “I think some of that is what we’re seeing.”

The city is trying to incentivize developers in a way that creates a wide range of price points for buyers, he said. Making adjustments to lot sizes and looking at options to allow greater density on a piece of property is one of several avenues Kingsport has used.

Kingsport sees big drop, Johnson City big increase in permits

After two years of very high construction totals, Kingsport has seen its building pace slacken, at least through the early spring. The Model City recorded 45 new single-family permits through April 30 of this year, compared to 90 in the same period last year.

The average permit value in Kingsport, meanwhile, rose slightly, from $322,408 to $329,762. Kingsport saw the sharpest permit value increase of the three areas in 2023, with that average rising 36% from the full-year 2022 average of $248,179.

Johnson City saw the sharpest rise in construction, registering a total of 67 permits compared to just 24 for the same period in 2023. The city’s total for the year in 2023 was 196 as building picked up significantly in the summer and fall.

The average Johnson City permit value so far this year is $313,495, which is 8% lower than the full-year 2023 value of $338,131. Johnson City’s 2022 to 2023 average permit value increase was 17%.

Washington County on record building pace

Washington County, excluding the incorporated areas of Jonesborough and Johnson City, continues to see a robust home construction market that features the highest average permit value among the three areas.

Through April, the county’s 130 new home permits (excluding manufactured homes) was up 49% from the 87 a year earlier. The average value was $354,765, which is nearly equal to the average of $357,601 for the same period in 2023. For all of 2023, that average was $366,465, which was 20% higher than 2022’s average.

Excluding manufactured homes, Washington County saw a total of 319 permits in all of 2022 and 330 in all of 2023, leaving the county on a pace to exceed those totals this year.

Grandy said he’s seen local wage levels rise in the past five years, but he still expects outside buyers to keep competing with locals looking to buy their first homes for a while.

“The demand’s still high, the supply’s still low,” he said. “It’s going to take a while to equalize. We have an attractive area. Whatever’s created the change … there are people that are moving to Tennessee in record numbers and they’re moving to this part of the state. Numbers we haven’t seen in the past.”

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