Tri-Cities all-cash home sales have slowed, but still command a dominant place in a market where home prices and rents are increasing faster than wages and housing is becoming less affordable.
The latest figures in Attom Data Solution’s Q3 Home Sales Report find U.S. all-cash sales of single-family and condominiums dropped to a 12-year low of 24.3%. Locally, they were off the 2018 annual pace but still account for a little more than one-in-three sales in the seven-county Tri-Cities region.
The Tri-Cites region comprises two Metropolitan Statistical Areas (MSA). The Kingsport-Bristol MSA includes Hawkins and Sullivan counties in NE Tenn. and Scott and Washington counties in SW Va. The Johnson City MSA included Carter, Unicoi, and Washington counties in NE Tenn. About 20 years ago the region was split from one MSA into two.
Among 53 major metropolitan areas with a population of at least 1 million, those with the highest share of all-cash sales were Miami, FL (37.7%); Birmingham, AL (36%) Phoenix, AZ (35.1%); Tampa-St Petersburg, FL 34.9%) and Jacksonville, FL (33.4%). The Tri-Cities’ population is a little more than a half-million, and all-cash sales accounted for 36.7% in the three-county Johnson City MSA and 33.6% in Kingsport-Bristol.
There were 786 all-cash single-family and condominium sales during Q3 this year, down from 899 last year. On the metro level, 370 of those sales were in the Johnson City MSA, down from 470 last year, and 416 were in Kingsport-Bristol down from 429 last year. Attom’s report listed no institutional investor Q3 sales. Last year there 104 in the seven-county Tri-Cities region – 83 in the Johnson City MSA and 21 in Kingsport-Bristol.
Many – if not most – all-cash sales are by investors. That part of the local housing market has been strong since the Great Recession dramatically increased the number of foreclosures and heavy discounts for buyers. Some investors focused on the flipping market. The flipping market has softened this year, but locals still have a higher average return on investment than the national average. Most of the flip sales have been in the $200,000 and under market which accounts for nearly 70% of all local home sales. Individuals and mom-and-pop investors have been active and boosting their rental property inventory.
There was also some institutional investor activity as last year, but rapid price increases in the local resale market have made it less attractive to that group. Institutional investor purchases are defined as residential property sales to non-lending entities that purchased at least 10 properties in a calendar year. Attom’s benchmark for institutional sales to be included in the report is 50.
Attom’s most recent vacant property report shows that the number of Sullivan and Washington county investor-owned single-family and townhome properties has declined for the past three years while the vacancy rate has increased.
Rents – like home prices – have outpaced wage increases. That dynamic pushed the share of affordable homes in Sullivan and Washington counties to 30% of total listings in October. That means that the average wage earned didn’t have the buying power to purchase a median-priced home in either county. At the same time, local renters typically spend more their income on housing than homeowners.
On the rental side of housing out-of-state investors who own many of the larger apartment complexes – especially in Sullivan County – have pushed to increase profits. Earlier some Kingsport renters saw an increase of $100 a month or more. At the same time, move-in and rent incentives were cut back. There are signs the incentives are returning as owners push to increase their occupancy rates.
The most recent Census shows 26% of the occupied housing in Kingsport-Bristol is rentals. In the Johnson City MSA, the rental share is 35.2%.
Categories: REAL ESTATE