Washington Co. continues Tri-Cities new home construction dominance

So far this year, Tri-Cities new home construction is slogging along at about the same pace as last year and the year before. That’s not especially good news for a region where a tight housing market has the potential to become a housing shortage – especially in the $200,000 and below price ranges.

However, the region’s slow growth looks pretty strong when compared to other neighboring regions monitored by The Market Edge’s Residential Building Permit Trend Report.

The Tri-Cities year-to-date permit pulls are 21% better than they were during the first half of 2016 compared to 18% in the Knoxville region and 4% in Chattanooga. Local permit activity also outperformed the Asheville region (up 13%) and was only slightly behind the 28% increase in Boone, N.C.

Washington Co. TN continued its dominance in new home construction with 119 new permits in Q2 – 201 during the first half of the year.

Sullivan County had 64 new permits in Q2 and 129 since the first of the year.

Those two counties have a 65.6% share of all the new home construction in the seven-county region.

Compared to the first half of last year permit activity in both picked up since the first half of last year. But the increase is only by 78 new permits.

The region has seen a total of 267 new residential permits this year compared to 268 during the first half of last year.

Here the running total for 2017 by county compared to last year:

Carter – 56, up 14.

Greene – 52, down one.

Hawkins – 14 – up four.

Sullivan – 129, up 12.

Washington Co. TN – 210, up 63.

Scott Co. VA – 17, up two.

Washington Co. VA – 39 – down three.

Washington Co. TN also continued its dominance in the number of high-end residential permits.

The Market Edge defines a high-end permit as one with a construction value of $400,000 or more on a unit over 4,000 sq. ft.

So far 20 of those permits have been pulled in Washington Co. TN followed by 17 in Washington Co. VA.

Sullivan Co. had recorded nine high-end permits this year. Greene and Carter counties have seen four each.

Tri-Cities jobs, employment growth continues in July

Tri-Cities employers continued adding nonfarm jobs at an average rate of 200 a month in July. At the same time employment was 1.7% higher than July last year and the unemployment rate was unchanged from June’s 4.6%.

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From a trends perspective, July was the third straight month job creations increased and the fourth straight month for employment gains. The long-term trend shows a slowing of net jobs gains as the job creation growth rate softens.

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The type of jobs being created is another matter. While there is growth of higher-paying quality jobs, the trend toward part-time or contract work with weaker pay and little or no benefits remains popular with employers to reduce or hold down labor cost. Contracting and subcontracting some types of jobs targeted by local education efforts to balance the region’s underemployment issues has also muted projected results. Another factor is the region’s rapidly aging population and labor force participation rate.

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Private sector wages followed the job and employment patterns. It was another month of strong improvement in the three-county Johnson City Metropolitan Statistical Area (MSA) while wage averages in the four-county Kingsport-Bristol MSA declined from last year’s averages for the seventh straight month. If there were a silver lining for Kingsport-Bristol private sector workers, it’s the rate of decline has been slowly improving since April.

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The average weekly private sector wage for Kingsport-Bristol workers in July was $639, down from $652 last year. Johnson City MSA workers saw their weekly wage increase to $676 from $618 last year. Adjusted for inflation from the July pre-recession benchmark, Kingsport-Bristol workers have $20 a week less buying power while Johnson City MSA workers had $24 a week less buying power. During the recovery from the recession and labor market re-set Johnson City workers saw the longest and biggest erosion of wages.

There are several factors to consider when looking at private sector wages – especially in the Kingsport-Bristol region. As workers age-out of the labor force, you would expect to see a decrease in pay since most replacements would not move into those position at the same pay levels. While this dynamic affects the labor market regional wide, Kingsport-Bristol is especially susceptible to feel the effect due to the number of retirements at the larger employers like Eastman.

The Tri-Cities remains at the bottom of Tennessee metro areas for private sector wages. The total pay numbers are boosted by the number of government sector workers.

July’s nonfarm jobs total was the best it has been since the recession but is still 500 short of that pre-recession benchmark. July is typically the bottom of the seasonal jobs ebb and flow, and the region should see numbers pickup next month if the labor market follows the typical pattern.

On the metro level, the job creation tends – as monitored by the year-over-year change in the three-month moving average – in the Johnson City MSA continues to outperform the Kingsport-Bristol MSA.

Both employment and the labor force are also showing improvement on the year-over-year comparisons. The region’s labor force is up by 1,215 people, and employment is up 3,561. But like the jobs total both lag their pre-recession benchmarks. The labor force is down 21,836 people, and employment is down 1,368 from what they were before the recession.

Most of the jobs growth in the Johnson City MSA is coming in trade, transportation, and utilities; financial activities, professional and business services, leisure and hospitality and government.

Year-over-year job growth in Kingsport-Bristol has been strongest is a trade, transportation and utilities, financial activities, professional and business services, leisure and hospitality and government.

Both MSAs continue feeling an erosion of manufacturing and construction jobs compared to this time last year.

Here’s how the July unemployment rates looked compared to June’s rate in the local counties and the over-25,000 population cities.

Bristol – 4.7%, down 0.1%.

Johnson City – 4.4%, down 0.1%.

Kingsport – 4.6%, no change.

Carter Co. – 4.9%, no change.

Greene Co. – 4.9%, up 0.1%.

Hawkins Co. – 4.7%, no change.

Johnson Co. – 4.1%, up 0.1%.

Sullivan Co. – 4.6%, no change.

Unicoi Co. – 5.9%, no change.

Washington Co. 4.4%, no change.

Data sources – July Bureau of Labor Statistics payroll, employment preliminary and not seasonally adjusted data, BLS private sector wage monthly report, Census Bureau County Business Patterns, Census Bureau Selected Economic Characteristics.

 

Tri-Cities homeowners – investors – rock the equity rich list

There are more than 3,000 Tri-Cities area homeowners – that includes investors –  feeling richer than they did this time last year.

Their economic lot in life is rosier because at the end of Q2 they moved into equity rich status. That means they have a mortgage to loan value on their homes of 50% or less. The total number of locals who are equity rich is 28,855 compared to 25,187 last year.

According to Attom Data Solutions Q2 Home Equity & Underwater Report, the national ranks of equity rich owners grew o.3% from Q2 last year. That put 24.6% of all mortgaged properties in the equity rich class. That’s an impressive number, but it’s a piker when you look at how local homeowners and investors fared.

All 10 of the local counties monitored by the report had a larger year-over-year increase than the national average and only three have a share of equity rich properties less than the national 24.6% share.

While one-in-four homeowners nationwide have an equity rich mortgage status one-in-three homeowners in two local counties can say the same thing.

“An increasing number of U.S. homeowners are amassing impressive stockpiles of home equity wealth, enjoying the benefits of rapidly rising home prices while staying conservative when it comes to cashing out on their equity—homeowners are staying in their homes nearly twice as long before selling as they were prior to the Great Recession, and the volume of home equity lines of credit are running about one-third of the level they were at during the last housing boom,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “However, this home equity wealth is unevenly distributed across different geographies, value ranges, occupancy statuses and lengths of ownership, with a disproportionately high equity rich share among high-end properties, investor-owned properties, and properties owned for more than 20 years.”

The report doesn’t drill the local data down to the length of ownership, the number of high-end or investor owned properties, but it’s a pretty safe to say those conditions are factors in the local equity rich makeup.

But the equity share does say something about the nature of the local housing market. Look at it this way. Close to half of all of the owner-occupied homes in our area are mortgage free. The actual share varies from county to county, but the number is higher than the national averages.

So, if almost half of the homes have no mortgage and the share with equity rich mortgages is almost 30%, you’re looking at a lot of housing market wealth.

And, the local equity-rich shares are not something that has happened over night. They haven’t changed all that much in five years. But remember the share is a fluid number. Some owners cash in on their equity to trade up to a bigger home or to slim down for retirement. Others tap it for a major remodel, or to help finance a child’s college education.

For a long time, Sullivan County dominated the top of the equity rich properties. But Johnson County took over that spot this year.

Here’s how the share of equity rich properties looked compared to Q2 last year and the gain:

Carter – 26.7%, up 2%.

Greene – 28.6%, up 3.5%.

Hawkins – 27.6%, up 2.1%

Johnson – 24.5%, up 4.9%

Sullivan – 33.7%, up 3%.

Unicoi – 27.2%, 2.8%.

Washington, TN – 23.6%, up 1%.

Bristol, VA – 20.3%, up 3.1%.

Washington, VA – 19.9%,

U.S. – 24.6%, up 0.3%, up 0.9%.

Some of the characteristics of the 14 million equity rich U.S. properties at the end of Q2 were:

– 44% had and estimated market value of over $750,000 compared to 29.6% of properties valued between $300,000 and $750,000; 21% of properties valued between $100,000 and $300,000.

– 45.7% of the equity rich properties were owned more than 20 years while only 10% were owned less than a year.

– 27.1% of non-owner occupied (investment) properties with a mortgage were equity rich compared to 23.8% of the owner-occupied properties.

The ATTOM Data Solutions U.S. Home Equity & Underwater report is a count of residential properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV calculation is derived from a combination of record-level open loan data and record-level estimated property value data.

 

How many Tri-Cities residents live where they work and how many commute to their job (revised version)

EDITOR’S NOTE – This is a revised version of the original story to include an update and correction on some of the inflow/outflow numbers.

The median commute time in the Tri-Cities is just under 30 minutes. But that’s only the Census Bureau’s numbers crunch and doesn’t account for the wreck that has a lane closed on the interstate or looky-loos backing up 11W for two miles as they pass a fender bender.

There’s a lot of commuters on the roads in and around the Tri-Cities during the daily drive-time. It’s more than a strain on a transportation infrastructure that is behind demand in many ways. It’s a strain on city services and a big loss in a jurisdiction’s sales tax collections.

Former Kingsport Mayor Dennis Philips used to grouse about 30,000 or so workers who commuted to Kingsport every day. He wasn’t the only voice of complaint, but he was often the loudest. He also didn’t hesitate to hint that what Kingsport needed was a commuter tax.

But if you look at the Census Bureau’s Business Dynamics tool Kingsport is not at the top of the commuter destination list. Johnson City sees the largest inflow of commuters, 33,878 according to Census calculations.

But if you look at the share of workers who live outside a local city Elizabethton tops the list. The number of commuters may be paltry compared to Kingsport and Jonson City, but they account for 85.5% of the jobs.

Local commute patterns have many benefits and ramifications for local cities but first things first. Here are the Census numbers on the number of workers commuting to their primary job.

Johnson City – 33,878

Kingsport – 30,132

Bristol TN – 11,273

Bristol VA – 9,234

Elizabethton – 7,093

Erwin – 2,921

It’s easy to understand why city officials would love it if people lived where they worked. It would be a big shot in the arm in local sales tax collections. That’s a big deal because of Tennessee’s reliance on sales tax collections to fund local services. It’s part of the bottom line that affects the number of police officers, firemen, etc. and how much the folks at City Hall get paid.

And since the local natural population rate is negative – that simply means our death rate is higher than our birth rate – where people decided to live is a big factor in attracting new residents – also known as the only way local population numbers increase.

According to UNC Wilmington, each newcomer who settles in a city or town generates $25,000 a year consuming services and creating demand for jobs in medical, pharmacy, finance, insurance, real estate, food, retail, etc. According to the St. Louis Federal Reserve, consumer spending accounts for the largest portion of the U.S. economy. So, cities must ensure there is growth in the consumer base, which will in turn help to maintain a healthy local economy.

Here’s what the Census Bureau has to say about the number of people who live and work in the same place.

Kingsport – 9,153

Johnson City 10,154

Bristol TN – 3,124

Bristol VA – 1,931

Elizabethton – 1,203

Erwin – 591

The final number in the equation is how many workers from each of those localities commute to another place to work.

Johnson City – 13,135

Kingsport – 11,434

Bristol TN – 7,220

Bristol VA – 4,584

Elizabethton – 4,095

Erwin – 1,565

As vexing as this is for local officials they are pikers when it comes to cities that are hammered by commuter patterns. Governing magazine has several stories about commuter patterns and the growing interest in commuter fees.  Links at included at the bottom of the article.

One of those articles dug out the nonresident’s percent of the workforce for cities with 50,000 or more population. The share starts in Southfield, Mich. At 91.3%. You have to scroll down 48 cities before you find shares that match what Kingsport and Johnson City are seeing.

Since Tennessee’s Legislature has put the lid on growth by annexation cities are looking at all kinds of ways to come up with more money to pay for city needs – and wants.

Don’t be surprised if the daily commute is in the crosshairs in the not-too-distant future. No pun on road rage intended.

Is it Time to Put a New Commuter Tax in Drive?

Cities Considering Taxing Commuters to Drive Up Revenue

Data for this report is from the Census Burau’s  Longitudinal Employer-Household Dynamics inflow/outflow analysis. The most current data is from 2014.

 

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