Town and Country Blog

Reality Check

It’s Cheaper to Buy than Rent, and There’s Help for Buyers
Posted: September 30, 2016 by Town and Country Realty

Most people totally agree with Millennials who think buying a first home is scary. But the best way to come to terms with that is to stop looking in the rear view mirror and reliving the bruising years of the Great Recession and a snail’s pace recovery. That was then and now is now. Knowing what’s happening with the local economy can soothe some of yesteryear’s fears and put you in the right frame of mind to face the future.


Remember that bad news will always get more attention than good news. While a layoff  gets a prime spot on TV and a big front-page headline, the bigger picture about job and employment gains get far less – if any – regular attention. The reality is in October there were 3,200 more nonfarm jobs in the Tri-Cities than there were during October of last year. Wages are also improving. More jobs, better wages and lower gas prices mean retail sales are increasing.  Although the numbers are not in yet, in all likelihood, home sales will move past the 12-month total from last year in November.


That’s a reality check from reliable sources that contradicts a story making the rounds that the local economy is slowing down. With that reality in hand focus on a few other speed bump on the road to home buying.


In a perfect world every buyer would  have a 20 percent down payment.  Twenty percent is a best-case lending industry benchmark.  Some lenders would also like to see the 30-year mortgage go away, but we don’t’ live in a perfect world.  Locally the average down payment is in the range of 10 to 15 percent, and most mortgages are written for 360 months.


Some potential buyers are sitting on the fence because they think buying a home costs too much.  Granted, you can find examples of homes with seven-figure price tags in the Tri-Cities. It’s also true that prices start in the $225,000 up range in many of the new home developments.  But it’s also true that that’s not the norm. In October $165,750 was the median price of a previously owned, single-family home in Johnson City.  In Kingsport it was $140,000, and it ranged lower in all local major city markets except Erwin where it was $145,000.  In fact, 63 percent of the Tri-Cities homes on the market this month are in the $200,000 and below price range.


There are many programs to help buyers and they’re not all for first-time buyers. According to the group at Down Payment Resource, 73 percent of the homeownership programs have no first-time buyer requirement.


Programs are available in urban and rural settings. And you might be surprised that you don’t have to get very far from the city limits to be considered rural. This is the reason potential buyers need to shop homeownership programs to find one that fits their needs. Resources include Realtors, local agencies like Easter Eight Community Development and the Tennessee Housing Development Agency. The U.S. Department of Housing and Urban Development, the U.S. Department of Agriculture and Veterans Administration can also be added to the list. Down Payment Resource recently pointed out in an article that there are more than 2,400 programs available across the country and 85 percent have funds available for homebuyers. “It’s important for new buyers to seek homeownership education. It’s often a requirement for down payment programs and it gives buyers confidence with the home buying process, financing options, including down payment programs, and budgeting.”


According to the most recent Census data almost half (49.5 percent) of renters in Tri-Cities are paying 35 percent or more of their income on housing. Compare that to the largest share of homeowners with a mortgage.  In the four-county Kingsport-Bristol Metropolitan Statistical Area (MSA) comprising Sullivan, Hawkins, Scott and Washington Co. VA. 47.1 percent were paying 20 percent or less of their income on housing.  For the three county Johnson City MSA (Washington, Carter and Unicoi counties) the number was 46 percent paying 20 percent or less. It doesn’t take an advanced degree in economics to see the advantage of buying a home instead of renting in the Tri-Cities.

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