The number of equity-rich homeowners in the Northeast Tennessee is shrinking while the number of owners who are seriously underwater properties is increasing.
In both cases the changes are nominal. It’s not enough to set off alarms, but it does require applying some context to the situation rather than just pulling comparison data point.
In a market like ours that has seen record sales for almost a year you’d expect to see some owners tap their equity to trade up or maybe scale down for retirement. Either way, would effect the equity rich share.
Equity rich is defined by RealtyTrac’s studies as a property that has a 50% or better loan to value ratio.
The national share of those properties during Q2 was 22.1%, up from 19.6% last year
All seven of the Northeast Tennessee counties in the most recent analysis had a higher share than the U.S. share. Here’s how the locals stack up with their Q2 share last year.
Sullivan Co. 31% down from 33%.
Johnson Co. 30%, unchanged.
Hawkins Co. 26%, up from 25%.
Carter Co., 25%, down from 26%.
Greene Co. 25%, down from 26%.
Washington Co. 23%, up from 22%
Unicoi Co. 24%, down from 26%.
There’s another point to keep in mind when using equity rich shares to measure the local market. Only 52.4% of the homes in Johnson City metro area and 49.6% in the Kingsport-Bristol metro area have mortgages.
A half year of record sales with a conservative year-to-date average sales price increases that range from 1.5% on the low end in Sullivan Co. to a high of 3.5% in Greene Co. also has to be figured into the equity status ebb and flow. It lifted some of those seriously under water to a marginally underwater position. More about that later. The only county with a year-to-date average price decline is Hawkins, down 3.3%.
Owners of properties that are seriously underwater get a lot more attention than those who are equity rich. Seriously underwater is defined as a property with a loan-to-value ratio of 125% or more.
Nationwide the share of homes with seriously underwater mortgages is 11.9%, down from 13.3% last year. Half of local counties now have a higher share than the rest of the nation.
Here’s how the local markets looked in Q2 compared to the same period last year.
Greene Co. 15%, up from 14%.
Johnson Co. 14%, unchanged.
Carter Co. 12%, up from 11%.
Unicoi Co. 10%, up from 9%.
Washington Co. 9%, down from 10%.
Sullivan Co. 7%, unchanged.
RealtyTrac’s data partner, ATTOM, matched the home equity data against property and ownership characteristic data – including occupancy status, market value, property tax rate, ownership description and congressional district – to provide a profile of who, what, when, where and why for seriously underwater properties.
Here’s what that profiling looks like:
Property value: 34.4% of properties with an estimated market value up to $100,000 are seriously underwater compared to just 4.9% of properties with an estimated market value above $750,000.
Loan vintage: 26.4% of properties with a loan originated between 2004 and 2008 are seriously underwater compared to 8.3% with a loan originated since 2009.
Occupancy status: 21.8% of non-owner occupied properties are seriously underwater compared to 9.1% of occupied properties.
Ownership type: 43.5% of properties owned by a Company/Corporation/Incorporated owner are seriously underwater compared to 10.1% of properties owned by a husband and wife.
Property tax rate: 21.4% of properties with an effective property tax rate above 2% of market value are seriously underwater, compared to 11.8% of properties with an effective property tax rate below 1%.
Political party: 13.1% of properties located in a congressional district with a Democrat representative are seriously underwater compared to 10.8% seriously underwater in a congressional district with a Republican representative.