All-cash, institutional investor home sales down in Q1- Sullivan Co. sees major drop

The number of all-cash and institutional investor home sale were down during the first three months of the year in most Tri-Cities area counties.

Sullivan County had the most dramatic reductions in both categories. That’s likely driven by rental market conditions in a county where a significant number of apartments are coming online this year and where purchases for rentals has been high. Rents are also trending lower across the region as the supply of rental units increase. The balancing factor is although rents are trending lower and the supply is increasing the most current return on investment numbers remain favorable.

ATTOM Data Solution’s Q1 Homes Sales Report shows there were 647 cash sales on single-family and townhomes in the local market, compared to 781 during the first three months of last year. But that drop is nothing compared to Q4 2016 when there were 1,100 cash sales.

The most surprising number came from Sullivan County where cash sales dropped from 390 in Q4 to 16 during the first three months of this year. That aligns with institutional investor sales. They dropped from 16 last year to zero this year. Across the region, institutional investor sales dropped from 50 during Q1 last year to 18 this year. Institutional Investor sales are defined as residential property sales to non-lending entities that purchased at least 10 properties in a calendar year.

Although local cash sales were down, they still account for a significant share of total sales. And the local share in each market is higher than the national share.

Nationwide, all-cash sales represented 30% of all single family and condo sales in Q1, up from 29.1% in the previous quarter but down from 32.1% in Q1 2016. The 30% share in the first quarter was well below the peak of 44.7% in Q1 2011 but was still above the pre-recession average of 20.4% from Q1 2000 to Q3 2007.

Here’s how Q1 all-cash sales and their market share looked in local markets.

Carter Co. – 78 sales, 46.4% share.

Greene Co. – 132 sales, 46% share.

Hawkins Co. – 101 sales, 49% share.

Johnson Co. – 39 sales, 57.4% share.

Sullivan Co. – 16 sales, 47.1% share.

Unicoi Co. – 31 sales, 50.8% share.

Washington Co. – 187 sales, 34.8% share.

Bristol, VA – 19 sales, 31.1% share.

Washington Co. VA – 44 sales, 40.4% share.

There were 18 local sales to institutional investors during Q1, down from 50 Q1 last year. Here’s a capsule look at those sales by market:

Carter Co. three sales, down nine sales.

Greene Co. – one sale down six sales.

Hawkins Co. – five sales, up one sale.

Johnson Co. – two sales, same as last year.

Sullivan Co.- Zero sales, down 16 sales.

Unicoi Co. – zero sales, down from one sale.

Washington Co. – five sales, down from 10 sales.

Bristol VA – one sale up from zero last year.

Washington Co. VA – one sale, same as last year.

The ATTOM Data Solutions U.S. Home Sales Report is based on data derived from recorded sales deeds, foreclosure filings, and loan data. Statistics for previous quarters are revised when each new report is issued as more deed data becomes available.

Tri-Cities sales tax collections have an up month amid gloomy retail trends reports

Tri-Cities and NE Tenn. sales tax collections scored an up month in February despite a flurry of news reports signaling gathering storm clouds.

MTSU’s monthly report on seasonally adjusted collections showed Morristown led the region in year-over-year gains by a full point followed by Kingsport-Bristol.

Here’s how February looked compared to last year followed by the change from January:

  • Morristown MSA, up 7.9%, up 1.1%.
  • Kingsport-Bristol, up 6.9%, no change from Jan.
  • Knoxville, up 6.2%, up 1.9%.
  • Johnson City MSA, up 5.9%, up 0.6%.

So where are the gathering storm clouds?

On the micro level, February’s MSTU collections report came on the heels of an ETSU Q4 report that said the impressive retail growth in Bristol linked to new outlets at the Pinnacle may be over for the present. At the same time, Economist Steb Hipple affirmed that there has been a shift in the retail market share away from Kingsport merchants to Bristol’s new shopping centers.

A drill-down on Hipple’s numbers to illustrate the market share from the region shows the Johnson City metro area dominated the regional market with a 31.3% share. It was also the first time Johnson City’s market share was higher than the areas outside the three metro areas. Those other areas had a 29.4% market share in Q4, down from 36.8% in Q3. Kingsport had a 22.2% share, up from 19.5% and Bristol had the lowest share in the region – despite its impressive year-over-year growth in the metro area.

The gathering storm clouds come from other reports that look at the market from slightly different perspectives and more current data.

Census data show retail sales had their worst two-month stretch in more than two years in February and March. March’s 0.2% decline was driven by lower fuel prices and auto profits and the delayed delivery of tax refunds.

Beyond that, the storm cloud forecast shifts its focus on some trends.

  • Depending on who you listen to retail is going through an apocalypse led by bankruptcies and store closures or a natural evolution of the industry, which also has some apocalyptic characteristics. Currently, a little more than 3,500 stores across the nation are on the threshold of closing in the coming months. The industry, which is the fourth largest jobs sector here in the Tri-Cities, is also beginning to shed jobs as merchants adapt to closures and tighten their belts to compensate for the bit e-commerce is taking. About 60,000 retail jobs have been lost in the last few month alone, according to a recent Money Marketplace broadcast.
  • Retail experts expect more brick-and-mortar stores will call it quits not because of the e-commerce competition but because of the industry’s shifts to compensate from the overbuilding of retail space. That’s a growing concern among some market watchers here in the Tri-Cities where the retail space expansion continues. According to a recent Business Insider story, “the U.S. has the world’s largest ratio of retail space per capita – 23.5 sq. feet per person. Canada ranks second behind the U.S. with 16.4 sq. ft. per person and Australia is third with 11.1 sq. ft. per person.
  • Although the National Retail Federation expects retail sales to increase by 3.7% this year the market share is shifting with e-commerce taking a bigger bite. So, while retailers are hurting because of the buying trend and a problem with many brick-and-mortar outlets consumers are seeing their access and buying power increase.
  • The next trend taking a bite out of retail is the hollowing out of the middle-class caused by the replacement of well-paying jobs with lower-paying jobs during the restructuring from the Great Recession. That’s one driver behind the woes at Macy’s, Sears and J.C. Penney’s . That effect also mirrors the disparity we see in the economy. While the mainstay stores of the middle-class are hurting luxury outlets and the dollar stores are thriving.

 

 

Tri-Cities Q1 new foreclosure activity takes a big tumble from last year

There was a time – and it wasn’t that long ago – when the first words a Realtor would hear from prospective buyers was, “What kind of foreclosures are out there.” Things have changed since then. There are still foreclosures on the market. But the choices and discounts are not nearly what they were a couple years ago.

Attom Data Solutions’ Q1 Foreclosure Market Report shows foreclosure activity nationwide was down 11% from Q1 last year. Here in the NE Tenn. market, the number was bigger.  New foreclosures were down 54.7%. In real numbers, there were 113 fewer REOs and 80 fewer Notices of Trustee Shares. That’s below the pre-recession level on both the local and national levels.

“U.S. foreclosure activity on a quarterly basis first dipped below pre-recession averages in the fourth quarter of last year, and this report shows that trend continuing for the second consecutive quarter,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “The number of local markets dropping below pre-recession levels continues to grow, up from 78 a year ago to 102 in this report.”

What those numbers really show is there’s less economic stress in the market and that the distressed inventory – like the overall inventory – is getting tigher.

Take the first quarter of 2011 as an example. That’s the year the local market average price bottomed. The sales through began in the final months of 2008 and ended in the first month of 2009. During Q1 of 2011 there were 177 closings on foreclosure sales listed on the local Multiple Listing Service (MLS). They accounted for 20.6% of all sales in that quarter.

Fast-forward to this year. There were 161 closing on foreclosure sales that were listed on the local MLS. They accounted for 13% of all sales during the first three months of this year.

Of course, foreclosures sales totals reported by MLS total is not the entire picture. Some distressed sales are at auction. Others are short sales. And some are direct sales by the owners.

The difference is the market share, the discount and the pulse of the market.

The gain from average home sales price at the bottom of the market in 2011 to Q1 this year is a little better than 54%. Most buyers haven’t seen that much gain, but the overall market price has appreciated since those days. But that annual year-over-year appreciation has been in the low single digits.

The short-term average price trend line has been slowly improving since August last year. It took the big jump to 5.5% in March.

Those gains came not because there were fewer distressed sales, but because the was less economic stress and more conventional sales.

Foreclosures will always be part of the market picture. The traditional local foreclosure rate is a little less than 0.5%. It’s a little less than that now. So is the number of homes with mortgages that are delinquent and seriously delinquent.

The big question about the local housing market now is when will the pent-up demand be exhausted and where will the new normal be. That’s the big question because two of the three major components for housing market demand are soft: Population is on a very slow growth track and although new jobs are being created the rate is slowing, and real wage growth is weaker than it is in comparable counties across the nation.

 

 

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Johnson City MSA private sector wage avg. trends higher; Kingsport-Bristol moves lower

Wages for Tri-Cities private sector workers were a mixed bag in February.

The average in the three-county Johnson City Metropolitan Statistical Area (MSA) continued an upward trend while Kingsport-Bristol workers saw slimmer pay checks for the fourth straight month.

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In fact, the Kingsport-Bristol’s average has been in negative year-over-year territory since the first of the year. It’s the first time in 25 months that’s happened. The four-county MSA also claimed the dubious distinction of having the lowest average private sector wage among all Tennessee MSAs in February despite the fact that its largest county – Sullivan – has the highest all sectors average weekly wage in the Tri-Cities.

According to the current Bureau of Labor Statistics wage report, the weekly average for private sector workers in Kingsport-Bristol is $624, down $9 from February last year.

The Johnson City MSA February average was $648, a $53 improvement over February last year.

Wages in the three-county Johnson City MSA have made a strong comeback after four straight annual declines during the soft recovery from the Great Recession. Last year’s annual average was $615 a week – a 4.2% improvement from the 2015 average.

Kingsport-Bristol workers did better during the recovery, until last year. Since January 2016 the Johnson City metro weekly average has outperformed Kingsport-Bristol in all but one month.

A broader view of the of local wage conditions is provided by the county level average weekly wage for all wages.

The most recent report for the Johnson City metro area shows the wage in two of the three counties was higher than February’s private sector average. The highest – $789 – was in Unicoi County. Washington County’s average was $771, and Carter County had an average of $624.

Kingsport-Bristol’s average was pulled down by lower wages in the MSA’s two Virginia Counties – Scott and Washington.

Sullivan County had the highest average for Tri-Cities Counties – $879 a week.

The Hawkins County average was $761.

Washington County VA had a $700 a week average while the Scott County average was $614 a week.

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