Some locals looking to buy a home – just not at today’s prices – have amassed their reserves and are waiting for the current local property market to collapse.
It could be a long wait.
Currently, the pandemic is likely to keep demand for residential property strong.
There is no doubt that local supply and demand dynamics are out of balance. And it could happen that part of the current market is overpriced. However, there is little evidence that a housing bubble or major crash that will flood the market with foreclosures is in sight.
What is more likely is a correction that will slow growth rates but still give homeowners a good appreciation of their equity. This equity is a cushion for owners, including those who have not paid a mortgage in a year.
Yes, the foreclosure rate will increase after the state forbearance program ends.
There is also the possibility that some of the area’s single family homes may hit the market.
Both would relieve the serious shortage of inventory in the region somewhat. How much relief remains to be seen.
New foreclosure activity in the area was higher in February, but not by much. According to ATTOM Data Solutions, there were 17 new registrations – six more than in January. Last year around this time it was 57.
Here is the current number of 98 foreclosures in the seven counties of Northeast Tennessee and two counties of Southwest Virginia:
Washington, Tenn .: 18
Washington, Va .: 8
Foreclosure activity is at an all-time low due to the federal government’s moratorium and the CARES leniency program. “These government measures and the efforts of lenders and mortgage service providers have helped millions of homeowners avoid foreclosure during the year-long global pandemic and recession that resulted in the loss of 22 million jobs,” said Rick Sharga, executive vice president of RealtyTrac. an ATTOM Data Solutions company
A number of local indulgences were not available for this report.
Foreclosure and late payment
CoreLogic’s most recent crime and foreclosure reports show that the Kingsport-Bristol statistical metropolitan area (MSA) had a foreclosure rate of 0.2%, compared to 0.3% the previous year.
The rate of felons was 3.5% compared to 1.3% in the previous year.
The counties Hawkins and Sullivan in northeast Tennessee and Scott and Washington in southwest Virginia make up the MSA.
The Johnson City MSA foreclosure rate was also 0.2%, down from 0.3% the previous year. The rate of felons was 3% compared to 1.3% in the previous year.
Carter, Washington, and Unicoi counties make up the Johnson City MSA.
ATTOM’s Q4 Underwater Report lists 9,161 serious underwater mortgages. To make this list, the property’s mortgage must be at least 25% above its estimated value.
The 2020 total was 268 lower than the fourth quarter of 2019.
WHEN IT’S TIME TO PAY
Some homeowners who have used the indulgence program are likely to lose their homes when it comes time to pay. Those who have already negotiated a repayment schedule can extend the term of their mortgage. Others will refinance, short sell, or go to foreclosure. So far, however, there are no projections.
June 30th is the current date for the Sunset of Forbearance.
There is also the option of some sales – or foreclosures – on local rental properties.
A duo of reports from ATTOM signal stress in this sector. The analysis found that half of the single-family homes in Tri-Cities have a higher vacancy rate than the US average. Washington and Sullivan were also the two Tennessee counties where investment property is most at risk as the economic recovery stagnates and adversely affects the housing market.
There are just over 110,000 single-family homes owned by investors in the Tri-Cities region.
That is 42% of the entire housing stock in the region. Most are owned by mom and pop investors who own less than 10 properties. Some are deeply in debt.
Greene County had the highest risk rating in the analysis and Washington County had the lowest risk rating.
Don Fenley is a semi-retired journalist. For more information, see his blog Core Data at www.donfenley.com.