There’s no argument that real estate in the Tri-Cities is slogging its way through the first phases of the coronavirus pandemic. Real estate professionals have quickly rewritten the book on how property is shown, how deals are negotiated, and how sales are closed. It has been busier than some thought it would be. Still, we’re going to miss the type spring buying and selling system of the past four years.
With that said, don’t be surprised to see a double-digit year-over-year decline when April’s housing reports come out early next month. The more telling data point with be the four-month year-to-date closings. It may also dip into negative territory since it was only 17 closings (up 1.1%) more than the first three months of 2018.
Let’s put some context to the anticipated sales drop because a double-digit sales decline hasn’t been seen here since the bottom of the Great Recession. And there’s a lot of media chatter about the housing market heading for a crash.
During the second quarter of last year, there were almost 2,000 closings on single-family resales. That’s an average of 667 a month. Closings were the highest since 2008 in all but one month. The all-time local monthly high of 691 closings was in April 2018.
If closings were down by 12% (the number is used as an example, not a prediction), from April last year it would put them on a level that’s a little higher than April of 2015. That’s the year that the local housing market fully recovered from the Great Recession and started setting sales records almost every month.
The Tri-Cities market has seen annual sales increase every year since 2012. Since then increased sales have increased by 62%.
In other words, the local market is going into this volatile rough patch at record levels. No one is saying sales won’t decline. That will create pent up demand that will release when the all-clear is given.
And despite all the doom-and-gloom headlines, there are some green shoots to remember if the headlines look like they’re fulfilling doom-and-gloom predictions.
- Google search history for the term “should I buy a house?” is at its highest rate since 2004. Ali Wolf, chief economist at Meyers Research, says that shows there’s curiosity about home buying and that consumers are interested in knowing whether now a good time may be to buy. “How much house can I afford?” is also at its highest search level in the past year. Both are positive indicators.
- Local Google searches for real estate questions during the past 30 days were at a 49% interest value. According to Google, “values are calculated on a scale of 0 to 100, where 100 is the location with the most popularity as a fraction of total searches in the location. A value of 50 indicates a location which is half a popular.” The top local searches were “homes for sales near me, mobile homes for sale, Zillow, and homes for sale by owner. Like Google’s national search analytics, that’s a positive indicator.
Realtor.com listings analytics also show interest is high. And almost half of the people looking are from outside the local metro areas. At the same time, a large share of listing views come from people living in the Tri-Cities two metro areas.
- A drill-down on the most recent listings views for the Kingsport-Bristol shows 43% coming from other states, 24.9% coming from within Tenn. and 31% from withing the Kingsport-Bristol metro area.
- The highest share of views from within the state was from Johnson City (35.7%), Nashville (27.8%), Knoxville (10.4%), Greeneville (3%), and Chattanooga (2%).
- Top out-of-state views came from Atlanta (5.7%), Washington, Arlington (4.4%) Charlotte (4.1%) and New York (3.9%)
JOHNSON CITY MSA
- Views from other states had a 43% share of listing in the Johnson City metro area, 28.6% came from within Tennessee and 28% from inside the Johnson City metro area.
- The highest share of views from within the state was from Kingsport-Bristol (43.7%) Nashville-Davison (28.3%), Knoxville (10.7%) Greeneville (5.3%) and Chattanooga (5.3%).
- The highest share of listing views from other states was Atlanta (5.9%) Charlotte (4.5%) Asheville (4.2%) Washington-Arlington (4.2%), and New York (3.6%).
Most economists who specialize in the housing market think the market will see a sharp jolt in the second quarter (April, May, and June), followed by sharp gains by the fourth quarter. The conservative outlook has changed from a V-shaped recovery that one that looks more like a Niki logo. Meyers’ forecast is for a steep drop, followed by a 16-20 month recovery “in fits and starts.”
That’s the same basic outlook Dr. Bill Fox, head of the Boyd Center for Economic and Business Research at UT, discussed during a Zoom briefing last week.
The silver lining to the cloud over the local mark is Attom Data Solution’s analysis of 483 counties ranked the Sullivan and Washington County markets among those that will be least vulnerable to the economic fallout from the pandemic. That doesn’t give the local markets a pass on the fallout – only a ranking that they will be less vulnerable than most other markets.
How less vulnerable is only a matter of speculation. Still, the core local fundamentals are resilient. And there are ample positive indicators that are part of the chaos.
The Northeast Tennessee Association of Realtors (NETAR) Trends Report for April and the first four months of this year will be available shortly after the 10th of May.
Categories: REAL ESTATE