Tri-Cities equity rich properties higher than U.S. share; some stress shows up in underwater report

Another sign of the stability and strength of the Tri-Cities housing market can be found in the Q3 Realty-Trac Home Equity and Underwater Report. At the same time the report signals some developing economic stress in the share of seriously underwater properties in several local markets.

The share of Tri-Cities equity rich homes continued to be higher than the national norm in Q3 in all but two markets – Washington Co. Va and Bristol, VA. At the same time the number of properties that are seriously underwater increased in all but three local markets.

The report defines equity rich as a property with a loan to value ratio of 50% or lower, meaning the homeowner had at least 50% equity.

From a trends perspective the share of equity-rich properties continued moving lower from a Q4 2014 peak. Compared with Q3 last year all but two local markets show declines that range from 6.6% in Washington, VA to 1.1% in Hawkins, Washington Co. TN and the Bristol VA markets. The only two markets with a year-to-year increase were Carter and Johnson counties – 0.9% each.

The regional down trend was most pronounced in the Washington Co. VA and Bristol VA markets.  The other markets, with the exception of Unicoi and Johnson counties, are experiencing a slight decline.  Unicoi’s trend line shows the same drop from Q4 as the other markets but Q2 saw an increase followed by a decline that matches the other local markets.

Sullivan Co. retained its position as the market with the highest share of equity rich properties – 32.1%, almost double the national Q3 number. At the same time, Sullivan Co.’s share is down 3.9% from the same period last year.

One explanation for the declined share of equity rich properties is homeowners who have used their equity to purchase another home during this year’s record sales marker, for a major remodel, or upgrade to their homes.

The report’s indicator of economic stress is the share of home that are seriously underwater. That is defined as a loan to value ratio of 125% or above, meaning the homeowner owed at least 25 percent more than the estimated market value of the property

From a trend line perspective all of the Tri-Cities markets showed an increase of this class of properties in Q1 this year. Since that increase the share has plateaued in most markets in the plus/minus 1% range.  The exception is Washington Co. VA where the trend shows a gradual decline after a sharp increase in Q1. At the same time, that market posted the largest year-to-year increase and the region’s highest share of seriously underwater properties in Q3 – 23.8%. The national Q3 share was 12.7%.

Other local markets that had a higher share of seriously underwater properties than the national share was Bristol, VA (15.3%) Johnson Co. (13.6%) and Greene Co. (14.2%).

Detailed data attributes for RealTrac’s report include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary, the company’s proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties. RealtyTrac’s data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers.



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