September 28, 2021

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Mortgage News

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

Cash buyers called for 847 existing home sales in Tri-Cities in the second quarter. It was an increase over the first quarter, bringing the total payout to 1,570 by mid-year, so Home Sales Report from ATTOM Data Solution. Overall, pure cash sales continued to make up just over a third of all sales of existing properties.

The Johnson City metropolitan area had 350 cash sales. It was the second lowest share of cash sales among metropolitan areas and the only one where market share decreased from the previous quarter. The Johnson City metropolitan area includes the counties of Carter, Washington, and Unicoi.

Kingsport-Bristol had 497 cash sales. Its market share corresponded to that of the metropolitan areas. Likewise the performance of the previous quarter. The Kingsport-Bristol metropolitan area includes Hawkins and Sullivan counties in NE Tenn. and Counties of Scott and Washington in SW Va.

All metropolitan areas in the region except Knoxville and Johnson City were at or slightly higher than the US market share of 34%. The market share of the metropolitan region Q2 and the change compared to the previous quarter were:

Asheville – 34.6% plus 16%

Chattanooga – 34.6% plus 27%

Johnson City – 31.5%, down 4%

Kingsport-Bristol – 34.9, up 16%

Knoxville – 33.1%, up 14%

Nationwide, cash sales were at their highest level since the first quarter of 2015. In the second quarter they rose by 31.7% compared to the first quarter.

Cash sales in the Greater Johnson City area have been declining since the third quarter of last year. Kingsport-Bristol’s market performance in the second quarter was a rebound from a decline in the first quarter and part of an overall trend increase since the second quarter of last year.

ATTOM defines a cash-only purchase as a sale with no loan recorded at the time of sale.

Investors and newcomers to the area tend to be the largest group of pure cash buyers right now. This worries some market experts because they see it depleting the inventory of homes that younger working-class and middle-class households might otherwise buy.

Local data shows that some cash sales are being used for flips and put back on the market in the affordable price range. Others go to the rental markets, which make up just over a third of the Tricity’s housing stock.

FHA sales decline

In the second quarter, there were 79 FHA sales in the Johnson City area and 114 in the Kingsport-Bristol area.

Here is the region’s FHA market performance by market share in the second quarter compared to the second quarter of last year and the revenue number in the second quarter.

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.

Conventions sales have increased during the current market as many sellers are turning away from FHA loans. Sellers want to sell their houses as easily and cost-effectively as possible. Some see FHA loans less affordable than conventional loans because of FHA requirements.

FHA appraisals differ from convention loans in that, in addition to a valuation, they also require an appraisal of the property. The main focus during an FHA assessment is on health and safety as well as the value. The house must meet the HUD requirements. If not, the sale will be held until the issues are resolved.

Recently, buyers have switched to conventional loans and foregone some contingencies in order to be more competitive.

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Categories: REAL PROPERTY