Sullivan Co. leads Tri-Cities Q2 cash home sales with 67.3% share

Cash is still king in the Tri-Cities housing market. They were down in four NE Tenn. counties when compared to last year, but every county in the region had a higher Q2 all-cash share than the 28.9% posted for the nation in Attom Data Solutions current Home Sales Report.

The highest local share of cash sales was Sullivan followed by Greene and Carter counties.

When the spotlight is turned on institutional investors the only locals making bigger bets that institutional investors nationwide were in Greene, Hawkins and Sullivan counties. But just because local institutional investor sales were off in Q2 doesn’t mean individual investors were not snapping up homes for rentals or betting on flips. Many flippers have posted solid returns on investment since the local inventory tightened up.

Local all-cash sales have consistently been higher than the national average for a couple of years, and Census data show the region has a 5.7% rental vacancy rate while 29.7% of all properties in the seven-county region are rentals. And, the housing trend is seeing a rental preference upturn by elders, Millennials and those re-locating to the region.

Attom identifies investors as an entity buying at least 10 properties in a calendar year.

Here’s a breakdown of the percentage of cash sales compared to Q2 last year.

Carter – 48%, down from 48.2%

Greene – 50.3%, up from 44.5%

Hawkins – 38.4%, down from 43.3%.

Johnson – 39.5%, down from 55%.

Sullivan – 67.3%, up from 35.2%.

Washington TN – 33%, down from 31.9%.

Bristol VA – 42.5%, up from 38.9%

Washington VA – 36.1%, up from 26.8%

U.S. – 28.9%, up from 27.3%.

Here’s how the institutional investor purchases looked as a share of total sales compared to Q2 last year.

Carter – 0.6%, down from 2.5%.

Greene – 2.7%, down from 3.7%.

Hawkins – 2.2% down from 3.4%.

Johnson – 0%, no change from last year.

Sullivan – 4.3%, up from 2.1%.

Unicoi – 1.8%, up from 0%.

Washington TN – 1.8%, up from 1.6%.

Bristol VA – 1.4%, up from 0%.

Washington VA – 0%, no change from last year.

U.S. – 2.1%, down from 2.6%.

A likely reason institutional investors have backed off locally is supply and demand finally kicked in and average sales prices began increasing this year. Although local sales have been closing at a record pace for a year and a half the average price increase remained stubbornly low until this year.

According to the Northeast Tennessee Association of Realtors’ mid-year Trends Report the six-month average sales price up 5.1% higher than it was during the first six months of last year. It was also the best six-month average in nine years.

Local sellers saw an average gain of $8,102 during the first half of this year. It was the best dollar gain since the first six months of 2012.

Social Security is a big economic deal in the Tri-Cities – really big

News that Social Security recipients would get a 2.2% cost of living increase didn’t get much public attention in mid-July when the story broke. Maybe it’s because the extra $3.4 million a month won’t show up in the Tri-Cities until the first of next year. Or it could be that demographics just doesn’t register with some folks.

Social Security is a big economic fact of life here – really big. According to reports covering zip codes serviced by the local Social Security offices close to one-in-three area residents get a check every month and the number will increase as the local population continues aging.

Here’s another way to look at it.

If the area’s Social Security recipients had a city all to themselves it would have a population larger than Bristol TN, Kingsport and Johnson City combined.

Here’s the most current number – 155,345 people.

Need another number to get a fix on just how big an economic impact Social Security has on the Tri-Cities economy?

Current Social Security reports for our region show the monthly checks total $113.6 million.

That will go up next year when the cost of living increase is added, but we’ll have to wait on Social Security reports to get a total because new recipients are coming online every day and others die.

Residents can sign up early for a reduced check from the retirement account when they’re 62, wait until they’re eligible for full-retirement and opt to hold out the biggest benefit when they’re 70. And then there’s the group getting SSI and the children receiving survivor benefits.

The current average aging pace is 20 local residents turn 65 every day. That will go on for a while because there are about 116,000 Baby Boomers in the Tri-Cities and it will be another 20 years before the youngest of them turn 70.

The median Social Security income, that’s the point where half of the checks are larger, and half are smaller, is $18,023 per household. Contrast that to the mean retirement income of $20,493.

That median Social Security number is a little fuzzy because the actual individual number varies widely with personal circumstances. The current retirement average is $1,367. But the monthly maximum this year is $2,687 a month. Past earnings and when a person signs up are the determining factors. As more Boomers retire who had earnings in the $50,000 to $80,000 ranges during their peak earning years begin filing the average will increase.

According to the Social Security Administrator’s report, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds will be depleted in the next 17 years without some reforms that have recommended for decades. Alone, the Disability Insurance Trust Fund will be insolvent by 2028 if Congress does nothing – which it historically has chosen to do. All of the lines up with when most of the Tri-Cities’ Baby Boomers will have reached their prime eligibility years.

The Committee for a Responsible Federal Budget suggests policymakers phase in gradual changes that would allow for more time to plan but also promote long-term economic growth.

“The Social Security Trustees continue to underscore the need to address Social Security’s financing shortfall soon,” the committee recently said. “Failure to act would result in all beneficiaries receiving a 23% across-the-board benefit cut when the combined trust fund exhausts in just 17 years, (that just shy of the time frame when the youngest Tri-Cities Baby Boomers will reach 70) when today’s 50-year-olds reach the normal retirement age. The SSDI program faces an even more immediate deadline and will deplete its trust fund in 2028.”

“Policymakers can still address Social Security’s financial problem without making drastic tax or benefit changes, but the window for responsible action is closing,” the committee added. “If policymakers are willing to act soon, they can create a plan that strengthens the program’s finances while phasing in changes gradually to give workers time to plan, improving retirement security for vulnerable beneficiaries and promoting long-term economic growth.”

Social Security paid $911 billion in benefits in 2016. Nationwide, it’s the primary source of income for nine out of every 10 individuals 65 and older, according to Social Security reports.

Kingsport-Bristol retail sales collections bounce back after two month slump

Kingsport-Bristol retail sales tax collections bounced back from two months of negative performance for a solid 2.7% year-over-year gain in May. At the same time, Johnson City Metropolitan Statistical Area (MSA) collections cooled with a 0.6% decline.

CLICKING ON CHART RENDERS LARGER FILE

Kingsport-Bristol’s May over April performance was also the best in the state, up 9.1%.

All of the Northeast Tennessee MSA enjoyed better performance than last year except the three-county Johnson City MSA.

May was a continuation of mixed Tri-Cities economic signals.

Johnson City MSA continues to see stronger job and private sector wage gains than the four-county Kingsport-MSA while the Kingsport-Bristol housing market is showing stronger sales and average price gains than Johnson City. There is antidotal indications Kingsport-Bristol’s housing growth is benefiting from Johnson City metro area residents looking for more affordable housing and Coalfield residents relocating for better employment opportunities.

According to May’s seasonally adjusted retail sales tax collections report from Middle Tennessee State University’s Jones College of Business, collections statewide was 6.4% higher than May last year.

Here’s how the year-over-year performance tracks for Northeast Tennessee Markets:

  • Johnson City, down -0.6%.
  • Kingsport-Bristol, up 2.7%.
  • Knoxville, up 3.8%.
  • Morristown, up 2.5%.

The month-over-month performance was:

  • Johnson City, up 0.9%.
  • Kingsport-Bristol, up 9.1%.
  • Knoxville, up 3.1%.
  • Morristown, down 1%.

Tri-Cities collections were up 0.3% from May last year but are still underperforming the stable trend pattern that began July last year and continued through February before falling off the cliff.

May’s collections also returned the share of collection to a more normal pattern. Johnson City claimed a 48.2% share of the total.

Nationwide, shoppers boosted retailers by 1.2% following a disappointed April.

The Commerce Department’s retail sales report showed auto sales up were 2.7% – the biggest gain since November. Clothing stores, department stores, health and beauty shops, sporting goods and grocery stores all increased in May while furniture and building supplies declined.

Consumers play a significant role in the vigor of the economic recovery because their spending accounts for roughly two-thirds of all economic activity. Retail sales also account for 40% of consumer spending.

 

Tri-Cities residents older, working longer – population growth slow

The latest Census data shows Northeast Tennessee residents are older, working longer, living longer – but not always in good health. And demographically we’re where the rest of the nation will be in five or six years.

There are bright spots in last month’s population estimate for Tri-Cities Region. But those pinpoints of growth are barely enough to make for losses elsewhere. The three-county Johnson City Metropolitan Statistical Area (MSA) has a current growth rate of 0.5% while the four-county Kingsport-Bristol MSA’s rate is negative. The seven-county Consolidated Statistical Area (CSA) saw a net growth of 870 residents. Still things in NE Tenn.  are better than they are in SW Virginia, which has taken the biggest hit.

Washington, Hawkins, Carter, Sullivan, and Greene saw population growth according to the latest data. But some of that growth is so weak it doesn’t balance losses elsewhere. For example, the region’s largest county – Sullivan – saw an increase of six residents from the previous year.

Johnson and Unicoi counties lost population as did every county in the SW Va. portion of the Tri-Cities region.  The Coalfields is expected to lose 8% of its population by 2020, according to the University of Virginia’s Weldon Cooper Center for Public Service analysis.

The Baby Boom generation is largely responsible for this graying population trend, according to Peter Brosella, a demographer in the Census Bureau’s Population Division. “Baby Boomers began turning 65 in 2011 and will continue to do so for many years to come,” he added. In SW Va. cheap natural gas choking the demand for coal has amplified the population decline.

Some back of the envelope calculations show that between 2016 and 2020 about 16 area residents will celebrate their 65th birthday every day. At the same time, another 15 will step across the 70 years-old threshold each day.

Carter County now holds the distinction of having the youngest median age in the region – 42.6 years.

Unicoi County is the senior at 46.6 years.

The median age in most areas of the nation increased in the latest estimate. On the state level, Maine is the oldest at 44.6 years while Utah is the youngest at 33.9 years. The nation’s median age has increased almost three years from 35 in 2000 to almost 38.

Here are some of the things that go with this trend:

Older adults are working longer, and the Census Bureau expects this to increase. In 2015 there were 95,825 workers 65 and older in the Tri-Cities labor force. At the same time, close to half of the working age population is not in the labor force.

Obesity is a major health issue. About 40% of the older population national wide is obese. The local population share is higher.

More seniors are divorced, and about 1-in-4 nationwide live alone.

The aging of the Baby Boomers could fuel a 75% increase in older adults requiring nursing home care. It also means Social Security and Medicaid expenditures will increase from a combined 8% of GDP in 2014 to 12% by 2050. In 2015 almost half of all the households in the seven-county Tri-Cities region received Social Security.

Here’s a capsule version of the latest county population estimate compared to 2015.

Carter Co.  – 56,502, up 72.

Greene Co. –  68,615, up 54.

Hawkins Co. – 56,563, up 120.

Johnson Co. – 17,754, down 67.

Sullivan Co. – 156,667, up 6.

Unicoi Co. – 17,719, down 101.

Washington Co. TN – 127,440, up 1,083.

Lee Co. – 24,179, down 533.

Scott Co. – 21,930, down 230.

Washington Co. VA – 54,214, down 80.

Wise Co. – 39,228, down 426.

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