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Study: 26,600 Tri-Cities renters spend over 30 percent of income on housing

Zach Vance • Updated Jul 9, 2017 at 12:20 AM

When a Tri-Cities renter says half their paycheck is spent before it touches their bank account, they’re most likely telling the truth, based a study released last month. 

Approximately 26,600 renters in Johnson City, Kingsport and Bristol were considered “housing stressed,” meaning they spent more than 30 percent of their income on housing in 2015, according to the 2017 Harvard University State of the Nation’s Housing report. 

In Johnson City, the share of cost-burdened renters was 48 percent, accounting for about 12,300 households. The share of cost-burdened households in the Kingsport and Bristol areas spending that much on rent was 42 percent. 

About 21 percent of renters in Kingsport/Bristol and 29 percent of renters in Johnson City are considered severely cost-burdened, meaning they spent more than 50 percent of their income on housing in 2015. 

That same study estimated the median renter income for the Tri-Cities area was between $22,500 and $22,600, while the median monthly cost of rent in the region was about $630 a month. 

Nearby Boone, North Carolina, is ranked 21st in the country with 54 percent of its renters paying 30 percent or more for rent. 

Kingsport resident Kelsey Addington was expecting lower rent prices when she moved to the Tri-Cities, where she now doles out 40 percent of her income for housing. 

“I was shocked to see how high rent was in the Tri-Cities,” Addington said. “I moved from a much bigger loft in Richmond to Kingsport and my rent is almost identical. I look at homes everyday and hope to make a purchase very soon.” 

Kristen Harris, current office manager at Crescent Building Group in Kingsport, is only paying 24 percent of her income toward a mortgage.

“I was surprised when I found out from my Realtor that I could purchase a home. It seemed like a daunting task but the process only took six weeks,” Harris said. 

“It was the best financial decision of my life. The bank had a special loan program for first-time homebuyers, and my monthly housing costs actually went down. I tell all my friends that they will never get ahead financially if they keep giving half their paychecks to their landlord.” 

According to a Federal Reserve survey conducted between 2010 and 2013, a typical homeowner’s net worth is 36 times greater than that of a renter. A renters net worth was estimated to be around $5,400 while a homeowner’s net worth was valued at $194,500. 

Eric Kistner, Northeast Tennessee Association of Realtors president, recently wrote a column about the Harvard study and cited a few reasons why people choose renting over purchasing a home.

“I believe there are more people that could be owning a home today instead of renting, they are just either not informed, haven’t thought about it or don’t realize the positive aspects of what homeownership does for you financially,” Kistner said.

“I think owning a home is the most efficient pathway to wealth creation.” 

Even though the local inventory of available homes has tightened, Kistner said current low mortgage rates and the region’s cheaper-than-average homes make the Tri-Cities an attractive place to own a home. 

“If you are making the median household income and have a good down payment you have the purchasing power to buy a median-priced home with a mortgage payment that's competitive with the median rent,” Kistner wrote in his column.

“It makes sense for people to consider buying a home over renting. After all, a fixed-rate mortgage might last 15 or 30 years; Rent has been rising above inflation for several consecutive years.” 

Kistner said the region currently posts a 70 percent local homeownership rate, which is the number of owner-occupied housing units divided by the total number of occupied housing units.

Kistner expects that figure to grow, according to early indications, once the U.S. Census Bureau releases its updated housing data later this year. 

Nationwide, the Harvard study concluded nearly 21 million renters, or 48 percent of renter households, were classified as cost-burdened in 2015. 

Region Share of Renter Households with Cost Burdens Share of Renter Households with Severe Cost Burdens Median Monthly Rent
Johnson City Metro Area 48.1% 29.4% $635
Kingsport/Bristol Metro Area 42.1% 21.7% $620

*Cost Burdened households pay more than 30 percent of income on housing. Severely burdened households pay more than 50 percent of income on housing. Households with zero ornegative income are assumed to be severely burdened, while renters paying no cash rent are assumed to be unburdened. 

Sources: Harvard Joint Center for Housing Studies, JCHS tabulations of US Census Bureau, 2015 American Community Survey 1-Year Estimates. Metro estimates derived using the Missouri Census Data Center. 

 

 

 

 

 

 

 

 

 

 

Email Zach Vance at [email protected] Follow Zach Vance on Twitter at @ZachVanceJCP. Like him on Facebook at Facebook.com/ZachVanceJCP.

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