Tri-Cities jobs decline in December; Johnson City MSA jobs down from 2017, Kingsport-Bristol gains

December – preliminary 2018 annual – job report was a mix of good and not-so-good news.

U.S. hiring surged during December, but not in the Tri-Cities. The region’s economy lost 400 nonfarm jobs but finished the year with an average of 1,150 more jobs than 2017. The net annual totals will be available in the January labor market reports.

December’s employment was down by 1,980 people, and the unemployment rate dropped to 3.4%. Unemployment dropped because there were 2,130 fewer people in the labor force. The annual employment monthly average improved by 2064 people while stronger hiring brought an additional 1,315 people into the labor force.

The preliminary, non-adjusted annual total shows the seven-county region was close to the pre-recession recovery level.  It had 417 fewer nonfarm jobs in 2018 than it did in 2008.  A clearer picture will come with next month’s adjustment of the numbers.

Most of the December and preliminary annual report shows an improved Tri-Cities labor market. But there are some soft spots.

Nonfarm job trend

For example. While the three-county Johnson City MSA had the best job growth in December, it ended the year with 67 fewer nonfarm jobs than it had in 2017- a 0.1% job loss.

The four-county Kingsport-Bristol MSA had 1,275 more jobs than it did in 2017 for annual growth of 1%.

There were only four job sectors where both of the region’s MSAs had annual job gains: Manufacturing, Transportation and Utilities, Professional and Business Services and State employees.

Here’s how the 2018 nonfarm job gain/loss look by job sector compared to 2017.

Mining Logging and Construction

Johnson City MSA 2,325, up 117.

Kingsport-Bristol, 7,058, down 358.

Manufacturing

Johnson City MSA 7,675, up 83.

Kingsport-Bristol 20,967, up 292.

Metro nonfarm job trend

Wholesale Trade

Johnson City MSA 2,183, no change

Kingsport-Bristol,  4,300, up 25.

Retail Trade

Johnson City 10,383, down 33.

Kingsport-Bristol 15,733, up 150.

Transportation and Utilities

Johnson City 1,000, up 50.

Kingsport-Bristol 5,117 up 200.

Information

Johnson City 1,292, down 33.

Kingsport-Bristol 1,225, down 67.

Nonfarm v. private sector jobs

Financial Activities

Johnson City 4,333, down 8.

Kingsport-Bristol 3,658, down 8.

Professional and Business Services

Johnson City 8,657, up 192

Kingsport- Bristol 10,225, up 383

Education and Health Services

Johnson City 13,950, down 308.

Kingsport-Bristol 18,608, no change.

Leisure and Hospitality

Johnson City 9,717, up 133

Kingsport-Bristol 12,433, up 433.

Other Services

Johnson City 2,400, down 83.

Kingsport-Bristol 6,092, up 100

Federal employees

Johnson City 2,950, up 42

Kingsport- Bristol 825, down 67.

State employees

Johnson City 5,650, up 83

Kingsport-Bristol 2,550, up 67.

Local government employees

Johnson City 6,583, down 983

Kingsport-Bristol 12,875, up 25.

 

 

Foreclosure red flags signal stress in local booming housing market

While the regional housing market is celebrating its best sales year in a decade there are distress red flags waving. Foreclosure starts increased 19.5% last year in the local NE TN markets. The local SW VA markets saw an 11% increase. The regional scorecard was a 12% increase.

The distress signals are cited in Attom Data Solution’s 2018 Year-End U.S. Foreclosure Market Report. Nationwide new foreclosure filings were down 8% from 2017. It also reports that foreclosure activity dropped to a 13-year low last year. Attom’s year-end report is based on publicly recorded and published foreclosure filing in more than 2,500 counties.

“Plummeting foreclosure completions combined with consistently falling foreclosure timelines in 2018 provide evidence that most of the distress from the last housing crisis has now been cleaned up,” said Todd Teta, chief product officer. “But there was also some evidence of distress gradually returning to the housing market in 2018, with foreclosure starts increasing from the previous year in more than one-third of all state and local housing markets.”

Local foreclosure starts spiked in 2015 then gradually declined until last year. Attom’s report shows 547 new filings in the local 12 markets.

The largest number of new filings come in the biggest county markets, but it’s noteworthy that Sullivan County, which led the region on increasing its market share of single-family resales last year, also saw a 22% increase in new filing. The Washington County Tenn. Market saw a 14% increase in new filings.

The only NE TN market that had fewer new foreclosure starts was Carter where they declined by one new start.

It’s also noteworthy that new filings declined in all the SW Va. Local markets with the exception of Washington County. It had a 34% increase.

Attom’s report says some of the distress was driven by natural disasters, but natural disasters do not explain the increase in such markets as NE TN and the largest SW VA market. So, what’s driving the stress on the housing market?

While the local economy continues to boom not all segments are performing at that rate. The recovery has been very good from some and not-so-good for others.

The region is at full employment but the creation of what’s referred to as “good jobs” is outnumbered by creation of low-pay jobs in the health care and service sectors.

According to the state Department of Labor and Workforce Development and Bureau of Labor Statistics (BLS) list of jobs that are in most demand in our labor market for every $50,000 and above new job the local economy creates four jobs that pay $30,000 or less. The benchmark for a family of three to attain and sustain a moderate lifestyle is almost $60,000.

Another factor is the number of individuals that live from payday-to-payday. They’re surviving, but any disruption in finances puts them is the stressed category.

Attom’s 2018 home equity report is a month out, but the Q3 report shows the number of seriously underwater mortgages has been increasing since Q3 2017. The increase accelerated during Q1 last year.

It’s cheaper to rent than buy in Washington Co.; rents increasing in other counties

Looking for a three-bedroom home in the Tri-Cities. It’s cheaper to buy than rent in Sullivan, Hawkins and Carter counties, but the dynamic has shifted to renting in Washington County. At the same time rents in all the counties except Washington are rising faster than wages, so it’s anyone’s guess on how long the current buy option remains dominate.

Attom Data Solution’s 2019 Rental Affordability Report moved Washington into the renter category even though rents are rising faster than wages in the other counties. The report also said home prices are increasing faster than wages in Carter and Sullivan counties.

The analysis factors the relationship of rents, home prices and wages for the rent/buy option (full methodology is at the bottom of this report). And that creates what looks like some contradictions. For instance, the three-bedroom rent in Washington and Carter counties is $928, but it’s cheaper to buy in Carter because the average cost to buy is less than it is in Washington when you crunch all the numbers.

The average rent in Sullivan and Hawkins is $958. Home prices are increasing faster than wages in Sullivan while wages have the upper hand on increases in Hawkins counties.

Nationwide renting is clearly becoming more the more attractive option in the volatile housing market said Jennifer von Pohlmann, content director for Attom. When you factor in the number of apartments coming online in the Tri-Cities the description of a volatile more competitive housing market takes on a local look.

According to Attom’s analysis, average fair market rents rose faster than average weekly wages in 52% of the 755 counties analyzed while average wages rose faster than rents in 48% of the counties. Home prices were rising faster than wages in 80% of counties while home prices were rising faster than rents in 70% of the markets.

Average wage earners in both Washington and Sullivan counties have the buying power to get a median-priced home, according to Attom’s Home Price Index released late last year. They were among the five of 13 state counties with that affordability status.

The most current Census data shows 30% of the occupied households in Sullivan were rentals while 36% were rentals in Washington County. That is steadily increasing for several reasons. That’s a concern because almost half of the local renters pay between more than the 30% that’s recommended for housing cost.  Some pay more than 50%. One concern is the more people spend on rent the less disposable income they have for other purchases.

As cited by Attom’s report home prices and rents are increasing, and there are more apartments, condo and apartment rentals coming onto the market as investors position themselves to cash in on the rental trends. At the same time, new home construction has slowed and the average price to get into one of them is above the $200,000 range.

Although rents vary widely the Department of Housing and Urban Development’s 2019 fair market rents offer an idea of the changing dynamics. Since the fair market rents are used to determine payment standard amounts for HUD’s housing voucher program, in many instances they are lower than the market rates for an apartment, condo, and single-family rentals.

Here’s how the current fair market rents look in the region two largest counties and the rate increase from last year:

Washington County:

  • 1 bedroom, $534, up 4.25%.
  • 2 bedroom, $689, up 3%.
  • 3 bedroom $863, up 2.4%.
  • 4 bedroom $980, up 0.4%.

Sullivan County:

  • 1 bedroom $529, up 3%.
  • 2 bedroom $700, up 2.3%.
  • 3 bedroom $924, up 2.3%.
  • 4 bedroom $1,015 up 3.4%.

Methodology

For the Rental Affordability Report, Attom looked at 50th percentile average rental data for three-bedroom properties in 2018 from the U.S. Department of Housing and Urban Development, along with Q2 2018 average weekly wage data from the Bureau of Labor Statistics (most recent available) and January-November (YTD) 2018 home price data from ATTOM Data Solutions publicly recorded sales deed data in 755 counties nationwide.

Rental affordability is average fair market rent for a three-bedroom property as a percentage of the average monthly wage (based on average weekly wages). Home buying affordability is the monthly house payment for a median-priced home (based on a 3 percent down payment and including mortgage, property tax, homeowner’s insurance, and private mortgage insurance) as a percentage of the average monthly wage.

 

 

 

 

 

 

Older workers a big part of Tri-Cities workforce and their ranks are growing

More than one-in-three local workers are 55 years old and older.

The next time you shop for groceries, pick up something at Walmart or grab lunch at almost any Tri-Cities fast-food restaurant count the number of workers who are in the 50 years-old. That’s right there’s a lot of them. And their ranks are increasing.

An analysis of Labor Department data by Liscio, a research publication for investors, said Americans 55 and over made up about half of all employment gains in 2018. When you consider that age group makes up about a quarter of last year’s labor force, it’s a signal a big demographic shift is taking place.

The most current Census data on work status shows almost half (41.8%) of the Tri-Cities population in the labor force age range were 55 or older. Of that group, 33.2% worked during 2017 – 61.6% of them full-time, and 38.9% part-time. That means 58,508 workers – a little more than one-in-three of all workers were 55 and older in 2017.

Fast-forward to 2018 and Liscio’s analysis. It said 39.2% of the 55+ population were working, the largest portion since 1961. The Tri-Cities had almost that share a year before the Liscio’s study. And since the local demographic is older look for it to lead some of the future studies on how Baby Boomers are changing the face of retirement, work, and the economy.

Another way to look at it is the Baby Boom generation has dramatically changed everything it touched since their parents brought them home from the hospital and began changing diapers. They may not make up the largest share of the total demographic anymore, but they will continue to shake things up.

Many of the older workers get a part-time job to supplement their Social Security and take some strain off their retirement savings. Others have little or no savings and rely on their jobs for a pay-check-to-pay-check retirement. And talk to anyone in that age group who has looked for a job or many of those who work in worker placement and they’ll tell you age discrimination is very much alive in the Tri-Cities.

Here’s another consideration of where the Tri-Cities stands and where we’re heading consider this: Moody’s rating agency says 13 countries will reach super-aged status in 2020. That simply means one-in-five of the population will be 65 or older.

Next year 22.2% (a little more than one-in-four) Tri-Cities residents will be 65 and older.  We’re well on the road to becoming a super-aged region.

 

 

 

 

 

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