Cash sales account for a third of local home sales; Sharp decline for FHA sales

 

Cash buyers claimed 847 Tri-Cities existing home sales during the second quarter. It was an increase from Q1 and upped the mid-year all-cash total to 1,570, according to ATTOM Data Solution’s Home Sales Report. Overall, all-cash sales continued to account for a little better than a third of all existing home sales.

The thee-county Johnson City metro area had 350 cash sales. It was the second-lowest cash sales share among area metro areas and the only one where the market share declined from the previous quarter. The Johnson City metro area includes Carter, Washington and Unicoi counties.

Kingsport-Bristol had 497 cash sales. Its market share was consistent with the area metro areas. So was its performance from the previous quarter. The Kingsport-Bristol metro area includes Hawkins and Sullivan counties in NE Tenn. and Scott and Washington counties in SW Va.

All the area metro areas except Knoxville and Johnson City were at or a little higher than the U.S. 34% market share. The area metro area  Q2 market share and change from the previous quarter was:

Asheville – 34.6% up 16%

Chattanooga – 34.6% up 27%

Johnson City – 31.5%, down 4%

Kingsport-Bristol – 34.9, up 16%

Knoxville – 33.1%, up 14%

Nationwide, cash sales were at the highest level since the first quarter of 2015. During the second quarter, they were up 31.7% from the first quarter.

Cash sales have been trending lower in the Johnson City metro area since the third quarter of last year. Kingsport-Bristol’s Q2 market performance was a recovery from a Q1 decline and part of an overall trend increase since the second quarter last year.

ATTOM defines an all-cash purchase as a sale where no loan is recorded at the time of sale.

Investors and newcomers to the region are typically the current largest group of all-cash buyers. That worries some market experts because they see it depleting the inventory of houses that might otherwise be bought by younger working and middle-class households.

Locally data show some all-cash sales are used for flips and put back on the market in the affordable price range. Others go into the rental markets, which account for a little more than a third of the Tri-Cities housing stock.

FHA Sales Decline

There were 79 FHA sales in the Johnson City metro area during Q2 and 114 in the Kingsport-Bristol Metro area.

Here’s the region’s FHA market performance ranked by Q2 market share compared to Q2 last year and the Q2 sales count.

Asheville – 2.5%, down 50%, 57.

Chattanooga – 8.7%, down 32%, 309

Johnson City – 6.6%, no change, 79

Kingsport-Bristol – 6.7%, down 34%, 114

Knoxville – 8%, down 33%, 345.

Convention sales have increased during the current market since many sellers are turning away from FHA loans. Sellers want to sell their homes with as little complication and cost to them as possible. Some see FHA loans less favorably than convention loans because of the FHA requirements.

FHA appraisals differ from convention loans because they require an assessment of the property in addition to a value determination. The primary focus during an FHA appraisal is health and safety in addition to value.  The home must meet HUD requirements. If it doesn’t, the sale is held until the issues are corrected.

Recently buyers have moved to conventional loans and waived some contingencies to be more competitive.

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