By DON FENLEY
TRI-CITIES, Tenn – Anecdotes about cash-flush, out-of-town buyers snapping up local homes are so common some think they are the norm and one of the reasons local home prices have increased so much.
Data does not back that up. That’s not to say the anecdotes are wrong. They are ample examples of them happening. But the plural of anecdote is not data.
During March local cash sales followed a pattern that we’ve seen for a couple of years. They accounted for about one-in-three existing home sales. But a drill-down on where those cash sales went in NETAR’s primary counties (Carter, Greene, Hawkins, Johnson, Sullivan, Unicoi and Washington TN) tells an untold story.
According to NETAR’s data, 68% of all cash sales last month were for properties sold for $100,000 or less. Similar results were noted from drill downs on primary counties during previous months.
Properties priced in the $200K to $300K accounted for the second largest share of cash sales – 19%.
Sales in the $400K to $500K accounted for 7% of last month’s cash sales and sales in the $300K to $400K have the smallest share of total sales – 6%.
Historically cash deals in the region’s two metro areas ranged from 39.9% in 2011 to 37.5% in 2022. Those numbers are from an analysis of courthouse records for all sales. The share for NETAR’s prime area is lower because it includes only sales of properties listed on the local Multiple Listing Service.
So, who the heck is buying all those properties on the lower end of the local price bands?
Unfortunately, the data doesn’t tell us that. One group heavily invested in those price ranges are investors, flippers and buyers who go a step beyond buying a hard-core do-it-yourself fixer upper.
Flip sales typically account for about one-in-10 local single-family existing home sales. According to courthouse data, about half of them are sold for less than $200,000. It’s a welcome boost to the affordable and workforce housing inventory. At the same time, some of them are a headache for local building inspectors and buyers and homeowners who don’t do some extra due diligence.
Local building officials say the volume of shoddy work, or work that won’t pass inspection, has increased dramatically. They advise checking whether there was a permit for the work. They also suggest checking out the person who did the work and hiring a home inspector to perform the first level oversight.
Most local existing home sales are for properties that are more than 10 years old – some much older. There was shoddy construction during the era those homes were built. They are also examples of older homes with good bones that are high-end flips. But there are also an increasing number of what professionals call “putting lipstick on a pig.”
Categories: REAL ESTATE
Don, Your powers of analysis are exceptional and your wit makes your posts a true joy.