Unlike 68% of counties studied local housing still affordable

Housing affordability improved in Sullivan County during the first quarter of this year and slipped in Washington County. The local counties were among the 142 counties in Attom Data Solution’s Q1 Home Affordability Index (HAI) where median prices affordability improved. That wasn’t the case in 68% of the 446 counties studies in the report.

Both Sullivan and Washington had a Q1 HAI that shows housing is now more affordable than either county’s historic index average. Sullivan County slipped below that benchmark in Q4 – the only quarter where the index showed less affordable conditions in 2017.

Attom determines affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes, and insurance — on a median-priced home, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics. The full methodology is at the bottom of this report.

During Q1 Sullivan County’s index was 102. It was 105 for Washington County. An index below 100 housing was less affordable than the county’s historic average. Sullivan County has its best index last year during Q1 when it was 107. Washington County’s best index last year was 121 in Q1. Both counties had their most affordable index in Q1 2013 when Sullivan rated a 137 and Washington had a 133.

According to the report, the year-over-year median price for a home in Washington County was $139,900, up 18%, and $109,000 in Sullivan, up 8%.

The annual income needs to buy a median-priced home after a 3% down payment and a 28% front-end debt to income ratio was $37,050 in Washington County and $28,600 in Sullivan County.

Annualized wage growth was 2% in Washington County, and 1% in Sullivan County and home prices are appreciating faster than annualized wages in both counties.

What the percentage of annualized wages need to buy was 25.8% in Washington County and 17.4% in Sullivan.

Nationwide Attom’s report found that Q1 median home prices were not affordable for average wage earners in 304 of the 446 counties studied in the report. Sullivan and Washington’s counties were the only Tri-Cities counties in the report. Knox was the only other Northeast Tennessee county in the report. It had a Q1 HAI of 112, and the median sales price was $155,000. The annual income needed to buy that median-priced home was $41,871. And like Sullivan and Washington counties, home prices in Knox is increasing faster than wages.

“Coastal markets are the epicenter of the U.S. home affordability crisis, but affordability aftershocks are now being felt further inland as housing refugees migrate from the high-cost coastal markets to lower-priced markets in the middle of the country where good jobs are available,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “That, in turn, is pushing home prices above historically normal affordability limits in those middle-America markets.”

Attom’s index analyzes median home prices derived from publicly recorded sales deed data collected by Attom Data Solutions and average wage data from the  U.S. Bureau of Labor Statistics in 446 U.S. counties. The affordability index is based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage and a 3% down payment, including property taxes, home insurance, and mortgage insurance. Average 30-year fixed interest rates from the Freddie Mac Primary Mortgage Market Survey were used to calculate the monthly house payments. Only counties with sufficient home price and wage data quarterly back to Q1 2005 were used in the analysis.

 

The report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes, and insurance — on a median-priced home with, assuming a 3%t down payment and a 28% maximum “front-end” debt-to-income ratio.

For instance, the nationwide median home price of $229,500 in the first quarter of 2018 would require an annual gross income of $57,009 for a buyer putting 3% down and not exceeding the recommended “front-end” debt-to-income ratio of 28% — meaning the buyer would not be spending more than 28% of his or her income on the house payment, including mortgage, property taxes, and insurance. That required income is higher than the $54,847 annual income earned by an average wage earner based on the most recent average weekly wage data available from the Bureau of Labor Statistics, making a median-priced home nationwide not affordable for an average wage earner.

 

 

 

February sees spike in notice of trustee sales

Lenders eased up on repossessions in February but there was a spike in new notices of trustee sales.

There were 41 new notice of trustee sales in the local NE Tennessee counties. That’s almost double the 23 in January. Sullivan County accounted for most of the new filings as it did in January, according to Attom Data Solutions.

Lenders repossessed 31 properties in February, down from 51 in January. Most of those were in Sullivan County.

So far this year there have been 82 properties repossessed and in REO status. Notice of trustee sales (NTS) totals 64.

Here’s a capsule view of foreclosure activity so far this year.

County NTS REO Total
Carter 9 4 13
Greene 3 12 15
Hawkins 6 6 12
Johnson 2 3 5
Sullivan 27 32 59
Unicoi 1 4 5
Washington 16 21 37

 

Sullivan, Washington Co. single-family rents up; increasing faster than wages

Rents were on the rise in Sullivan County in Attom Data Solutions’ Q1 Single-Family Rental Market Report but flat in Washington County. Rents are rising faster than wages in both counties while home prices are increasing faster than rents. And although the average annual gross rental yield was down in both counties, it was higher than the 8.9% national average.

Attom’s report puts the current potential gross rental returns at 10.9% in Sullivan County – down from 11% – and 7.7% in Washington County – down from 9%. The national potential was down 0.3%.

The average rent on a three-bedroom home in Sullivan is $914 a month, up from $887 while it was $905 in Washington County, up from $902.

The report also put the vacancy rate on investment properties at 3.5% in Sullivan County and 3.1% in Washington County.

The number of single-family and condo investment property investors up 23% in the Johnson City Metropolitan Statistical Area (MSA) and up 18% in Kingsport-Bristol MSA while the number of investment properties is up 24% in Johnson City MSA and up 20% in Kingsport-Bristol.

The report analyzed single-family rental returns in 449 U.S. counties each with a population of at least 100,000 and sufficient rental and home price data. Rental data was from the U.S. Department of Housing and Urban Development, and home price data was from publicly recorded sales deed data collected and licensed by ATTOM Data Solutions.

“Despite declining returns in many areas, the single-family rental market continues to grow thanks to more activity by smaller and middle-tier investors,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “The biggest increase in market share over the past year has come among investors owning six to 10 single family rentals, followed by those owning between 11 and 100 rentals. These smaller to mid-tier investors are benefitting from newfound efficiencies in acquisition, financing and property management that allow them to buy outside their backyard in areas with higher potential returns, and to leverage their money to buy more properties.”

Investors on the local and national level have continued putting their money into cash flowing assets such as rental properties as a hedge against a stock market that is beginning to show signs of weakness. The single and multi-family markets are still strong, but the single-family market is not seeing as much competition and supply-demand turmoil as the multi-family market. There are reports that the investor group that owns most of the large complexes in Kingsport is looking to sell those properties. That dovetails with other changes in ownership that have increased the pressure for higher apartment rents at many of the established complexes.

For its report, Attom looked at all U.S. counties with a population of 100,000 or more and with sufficient home price and rental rate data. Rental returns were calculated using annual gross rental yields:  the 2016 50th percentile rent estimates for three-bedroom homes in each county from the U.S. Department of Housing and Urban Development (HUD), annualized, and divided by the median sales price of residential properties in each county.

ATTOM Data Solutions also incorporated weekly wage data from the Bureau of Labor Statistics and demographic data from the U.S. Census into the report.

 

 

 

 

 

 

 

Knoxville, Morriston MSAs see most of NE Tenn. 2017 growth

Northeast Tennessee’s 2017 population increased by almost 12,000 people according to the Census Bureau’s 2017 estimated population report.

The lion’s share of that growth was in the Knoxville Metropolitan Statistical Area (MSA) which also saw the region’s only natural population growth – there were more births than deaths. The rest of the region’s growth was from migration.

Here’s how last year’s growth looks broken down by the metro area.

Knoxville – 77.5%.

Morristown – 10.1%

Kingsport-Bristol – 6.4%

Johnson City – 6%

Drilling down to the report’s cumulative components of change shows negative natural population growth in all by the Knoxville MSA. Here are the report’s estimates for births and deaths in the four metro areas:

Knoxville – 9,482 births, 9142 deaths.

Kingsport-Bristol – 2,888 births, 3,756 deaths.

Johnson City – 1,987 births, 2,313 deaths.

Morristown – 1,260 births, 1,361 deaths.

The combined international and domestic migration data show most of the region’s growth in the two western MSA. Totals for 2017 were:

Knoxville – 8,885

Kingsport-Bristol – 1,642

Morristown – 1,310

The seven-county Tri-Cities Consolidated Statistical Area (CSA) saw an estimated population growth of 1,476 people last year.

There were 4,875 births, 6,069 deaths and a total migration of 2,683 new residents.

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