Hawkins County emerging as growth bright spot

The volume of good economic news coming out of Hawkins County is almost enough to make elected officials and the chamber of commerce giddy. After a decade of stagnation, a revival of industrial growth – some public, some off the public radar – is underway. Hawkins has also joined Washington County as one of the few counties in Northeast Tennessee with population growth.  And, another piece of the growth formula – new home construction – is in place setting the stage for more growth to come.

Patterson-Petzoldt Build Fund LLC is reviving the Surgoinsville Allenwood development idled by the Great Recession. The developer has acquired 20 lots from the Appalachian Credit Union, and Patterson Homes plans to build new homes targeted to buyers looking to spend $200,000. The original development had 34 lots. Some of the lots were sold, but only four homes were built.

Marketing for Allenwood is being managed by Amy Patterson, Broker/Owner at Conservus Real Estate. We currently have three homes under construction – one pre-sale and two spec, Patterson said. The homes will range from 1,500 to 1,800 sq. ft. One is a one-level ranch, another is a ranch with a bonus room, and there’s two-story home. The wooded lots are one-to-three acres. The 20 lots have been resized into 16 larger lots, and while the price target is $200,000 or below upgrades are available, she added.

Travis Patterson said reception to the development has been good. “The first home in the planned development was sold before site preparation as finished.” We talking to three-to-four people a week about new homes, he added.  Not all of those are for the Surgoinsville development since Patterson also builds at Old Island and Chase Meadows in Kingsport.

“A lot of what we’re seeing is pent-up demand for new homes.”  New home construction is taking over since existing home sales have extinguished much of the supply of properties that were attractive to flippers, he said. “It seems to me that during the recession the focus from many buyers and owners was to fix up their homes rather than buying a new home.” But that trend has about run its course. Now, property values are rising again. According to the Northeast Tennessee Association of Realtors Trends Report, the average sales price of a single-family home in Hawkins is 20% higher than it was during the first nine months of 2016.

Patterson recently told a group of Chamber of Commerce members that at the beginning of the year he was saying he would be happy with 12 builds in 2017. “So far we have 23. I’ve never seen new construction demand as high as it is now,” Patterson said. The biggest problem we have is finding crews to keep construction even with the demand. He added that builders were also closely watching material costs. Hurricanes, trade disputes with Canada and ongoing NAFTA discussion are beginning to show in up building material costs increases.

The state Data Center’s projections show Hawkins’ population increasing at 0.5% for a couple of years. It’s not exactly a population explosion, but when compared to what’s happening in other area counties it’s noteworthy. The core issue is all of Northeast Tennessee’s counties have a death rate that’s higher than the birth rate, so migration is the only form of population increase. And that migration is not evenly distributed.  This dynamic is intensified by the region’s rapidly aging population. Currently, 15 Tri-Cities residents a week are turning 65. That continues for the rest of the decade and has a significant impact on the type and cost of new home demand.

As small as it may seem modest population growth combined with job gains at Phipps Bend and new home development targeted in the price range most in demand among consumers has set the stage for Hawkins to step up as a growth leader in the Tri-Cities region in an era when some of the region continues to struggle with population losses and stagnant growth. Just this year Phipps Bend had two industrial expansions that will create 100 new jobs. Allenwood is located about five minutes from Phipps Bend.

For more information contact Amy Patterson or Patterson Homes

Tri-Cities new home market is finally taking off

After seven years of declining new home activity and another four years of slow growth, the market is taking off.

Tri-Cities area builders saw the first stirrings of the surge early this year, but the crunch showed up in the third quarter. That’s when the Johnson City Area Homebuilders Association’s showcase of homes kept bumping into a problem. Many of the homes entered were sold before the event launched. It’s a nice problem to have – especially for a housing market sector where recovery came slow – very slow. And no, it’s not back to pre-recession levels. That’s something some builders don’t see happening in the foreseeable future.

Currently, most builders say business is brisk across the region. Some Washington County builders say they’re selling new homes faster than they can get them built. And while the demand is concentrated in northern Washington County it’s not limited to the Gray area.

Travis Patterson of Patterson Homes and Eric Kistner, principal broker at Bridge Pointe Real Estate and Auction and president of the Northeast Tennessee Association of Realtors, see a similar demand crush in Sullivan and Hawkins counties.

Patterson’s market focus is on Sullivan and Hawkins counties. He recently launched a project just outside Surgoinsville. It involves assuming the undeveloped part of a project that began in 2008 but sidelined by the recession. He plans to build 14 spec homes on wooded lots. The homes will be offered in the $200,000 or under price range. “The first sales came before we got the site preparation on the first four-home phase was finished,” he said.

Patterson also builds at Old Island and Chase Meadows. He said many of the customers he’s seeing are Baby Boomers getting ready for retirement. They’re looking in the $270,000 to $300,000 price range, and those homes are selling almost as fast as we can build them.

Kistner said developers have done a good job getting out in front of the demand. “They have a renewed confidence in the market.”

Kistner main focus is the Edinburgh Community. It continues as a Sullivan County hot spot. “We’re constantly seeing more and more Eastman people,” he added. Eastman employees relocating to the area has always been a target market for Edinburgh.

Kistner added his firm is also in the planning stage for a development in Johnson City. We’re still working on a target market, he said.

Michael Garland, president of the Johnson City Area Homebuilders Association (JCAHBA) and Garland Farm Estates, says the market is strong, and the numbers speak for themselves. “Washington County is dominating the new home market.”

The local recovery from the recession has been slow and steady and unless there’s a significant upset in the economy should continue, he says. That recovery has him looking at another step at Garland Farms.  “I feel the market is at a place where I can take a look at it. I’m cautiously optimistic.” When asked about that undefined next phase and what buyers a looking for Garland said he’s considering something like higher-end patio homes.

Tim Hicks, Hicks Construction, and a former JCHBA president says on a scale of 1-to-10 the market is probably an eight right now. “It’s really good,” Hicks said he found the stories about the area not having enough new home inventory six to a year ago really hard to believe. “But the last 30 days has made me a believer.”

Matt Lorencen, part of the Gouge/Lorencen Team at ReMax Checkmate, handles much of the Orth Homes inventory.  He called the market “pretty strong” and added that Orth builds 65 to 70 homes a year – everything from condos to homes in the $200,000-to-$400,000 price range. “Just before the showcase of new homes he said Orth has an inventory of two homes. “We’ve been selling them when they’re still in the sheet rock stage.”

Kelly Wolf, Wolf Development, said his business is as good as he’s seen since the recession hit. “Honestly, we pinching ourselves about just how good it is and how great it feels to not have the proverbial anvil of a non-performing economy hanging over our head.”

His example of how things are going?

Twenty-four of the lots in his new 50-lot Douglas Chapel Estates have already sold.




Social Security COLA increase will boost Tri-Cities economy by $3.6 million a month, but it’s nothing for elders to cheer about

The Tri-Cities economy will get a $3.3 million a month bump when local residents get their first Social Security checks that include the 2018 cost-of-living adjustment (COAL).

The 2% increase is the first substantial increase in years and means the typical check will be about $25 a month higher.

According to the most current Census data, almost half of the households (43.1%) in the seven-county Tri-Cities region receive at least one Social Security check.

According to a Social Security Administration, count by zips codes serviced by the local Security office, close to one-in-three local residents receive Social Security. And that number is increasing as the local population ages.

Here’s another way to look at it. If all the area’s Social Security recipients lived in one city, it would have a larger population than Johnson City, Kingsport, and Bristol, TN combined.

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. That’s before next year’s 2% increase.

But before anyone starts cheering wait for the Part B shoe to drop.

Current Medicare and Social Security recipients who have been protected by the hold harmless clause and had their Part B (outpatient services) premiums from skyrocketing increases might see an increase in their Part B premium commensurate to the COAL increase.  And even if Part B costs stay the same, many might see premiums rise by about 2%. There’s no word on when that decision will be released.

Even with the 2018 COAL, the fact remains that medical care, housing costs, rental inflation continue to outpace Social Security’s COS most of the time. During past 35 years, medical care inflation has been greater than Social Security’s COLA 33 times.

That simply means retirees are not getting benefits increases that truly keep up with inflation so they have been and continue to get cuts in their benefits.


A Tri-Cities’ ticking population time bomb

Data: 2016 American Community Survey, National Association of Counties. Tennessee State Data Center.

Remember the adage that a rising economy raises all boats. Today’s economy is showing that’s not always the case. While there’s ample evidence the Tri-Cities economy is seeing gains, demographics show the population picture is soft – very soft in some areas. In fact, some counties are losing population and the end result of a declining population is a softer economy.

The most current Census data illustrates the situation.

The number of deaths in each of the region’s counties outnumbers the number of births. That means attracting new residents is the only vehicle for population growth. And – as the chart illustrates – growth is not evenly distributed.

So far, it has been good news for Washington County and not-so-good news for the other counties. It’s also why you’re seeing some local governments – like Kingsport – in a flurry to attract new residents.

In a couple of months reports on city-level demographics will afford the opportunity for a drill down on the numbers.

Population is a big deal because in a consumer-driven economy a declining population means fewer people have to spend more to sustain the status quo of sales tax collections – a prime revenue stream of local schools and government.

And a declining population – combined with the rapid aging of the Baby Boomers – means fewer people are in the labor force. There’s good and bad with that. The good is it tends to prod employers to increase wages – an important gain in an area with chronic underemployment and wage stagnation. On the downside, it means businesses won’t have an adequate labor force to keep up with the business cycle opportunities. A great example is what new home builders are now facing. They’re having a problem keeping up with demand and a labor shortage is a big driver of that situation.


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