April 17, 2021

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While 2020 was a banner year for local builders, new home demand is still strong | Local News

Despite a record wet spring and a pandemic, 2020 was the best year for new Tri-Cities house permits since 2008. And much of that new house flood carries over to this year.

All but two counties covered by The Market Edge saw an increase in the number of permits issued over the past year.

In addition, none of these districts should be viewed in negative territory as a declining new home market.

Carter County came across a 2019 permit total that was the best in over a decade, and Scott County only had two permits out of its 2019 total.

This is what the overall regional approvals and profit or loss look like year-over-year:

Carter – 84, down 20%

Greene – 186, up 28.3%

Hawkins – 17, up 6.3%

Sullivan – 320, up 15.9%

Washington, Tenn. – 446, plus 5.4%

Scott – 12, minus 14.3%

Washington, Virginia – 106, up 66.6%

Tri-Cities Region – 1,171, up 12.3%

Demand soared that in the last two quarters some builders began to shy away from customs houses because certain houses were selling faster than they could build them. Some have also started to qualify customers for the optimization of individual inquiries.

It is also noteworthy that some local governments have renewed interest in housing market issues due to the role housing construction plays in attracting new residents and in economic development. The real estate industry has been a top economic player for several years and accounts for around 15% of the local economy.


The year-over-year growth rate for high-end permits outpaced the rest of the market last year.

The Market Edge defines high-end permits as 4,000 or more square feet or construction costs of $ 400,000 or more. Last year there were 132 of these permits in the seven-county region.

Washington County, Tennessee, was the top performing high-end market. However, Washington County, Virginia has the highest year-over-year growth rate.

New permits for high-end homes in 2020 compared to 2019 are:

Carter – 8-5

Greene – 12-14

Hawkins – 0-0

Sullivan – 34-33

Washington, Tenn. – 57-38

Scott – 0-0

Washington, Va. – 21-7

Tri-Cities – 132-97


The builders had to contend with strong headwinds in the first few months of 2021. The labor shortage worsened and the sky seemed the only limit to the cost of materials – especially for sawn timber. Lumber prices have increased 188% since last spring, adding $ 24,000 to the cost of the average new home.

Even so, according to Marvin Egan of Egan Construction, the local market is still hot.

According to census reports, the growth rate for new homes in 2021 was 8%. Ali Wolf, chief economist at Zonda and Meyers Research, recently said the growth rate was close to 35% due to new orders.

Wolf said her company’s survey of builders in March found most prices had risen, and many began slowing or capping new orders to ensure they weren’t running out of inventory too quickly.

Egan said the same dynamic is playing out in the local market. This also applies to Washington, DC, to intervene in the material cost situation. Some of the increases in the cost of wood can be attributed to tariffs, but experts say the U.S. logging industry underestimated the impact of the pandemic and has been slow to ramp up to meet demand.

As builders struggle with the availability and cost of materials, they also fear that higher production could exceed the availability of land. The cost of free space continues to rise.

Sales of locally vacant land increased 48% over the past year.

Chuck Fowke, chairman of the National Association of Home Builders, also threatens rising affordability issues this year, particularly rising building materials costs, including lumber. Builders also cite rising regulatory and valuation problems due to increased material costs.

Still, home builders are getting better and better at offering homes at affordable prices. In January, 38% of new homes sold for less than $ 300,000, compared with 35% in December, according to Holden Lewis, home and mortgage expert at NerdWallet.

On site, a recent update to market data updated by Builder Magazine found that 280 new home closings were in the $ 151,000-280,000 price range. That’s just over 28% of local new home closings in the past year.

According to the Department of Housing and Urban Development, rising costs and interest rate hikes combined with headwinds have affected new home sales and construction is slowing. But despite these struggles, local demand remains strong, and while the market may not be as hot as it was in the last half of 2020, it is still hot, according to Egan. The question that many local builders struggle with is how long it will take.

Don Fenley is a semi-retired journalist. Check out his blog Core Data at donfenley.com.