Region’s Home Sales Lag For Second Straight Year

By David McGee
Staff Writer / Bristol Herald Courier
Published: August 5, 2008

Tri-Cities-area home sales currently lag 16-20 percent behind last year’s pace, marking a second straight down year.

Homes, condominiums and townhouses also remain on the market for longer periods and are fetching less money when they finally sell, according to information compiled by TCI Group, a Tri-Cities-based real estate brokerage firm.

In the first six months of 2008, about 2,000 homes changed hands across the greater Tri-Cities area and Greeneville, Tenn. About 5,000 area homes sold during all of 2007 – a 7 percent decline from 2006, when 5,400 homes sold.

In Tennessee’s Sullivan and Washington counties, home sales were off 16.5 percent from last year, according to the Northeast Tennessee Association of Realtors.

Between Jan. 1 and July 25, a total of 1,545 homes in those two counties sold for an average price of $167,800. During the same period in 2007, 1,851 homes changed hands with an average selling price of $169,483.

“Compared to other areas of the country, our market is still strong,” said Ivan Tilley, an agent of Johnson City-based Blue Ridge Properties and president of the Northeast Tennessee association. “We did not see a great jump in prices like so many others did, so we’re not seeing great declines in prices.”

Nationally, home prices fell 15.8 percent in May in 20 major U.S. cities, according to Standard & Poor’s/Case-Shiller index. The national index hasn’t recorded a home price increase since July 2006.

Nine major U.S. cities, including Los Angeles, Miami, San Francisco and Washington, D.C., posted record declines in home prices during May.

The 16.5 percent decline in Sullivan and Washington, Tenn., home sales is the worst in Tilley’s dozen years working in the market, but he said local average price drops are significantly lower than the larger cities.

Tilley said a “strong” local economy should make this area’s downturn short-lived, but any turnaround likely won’t happen until next spring.

“A lot of sellers have reduced the listing price of their homes – and are about as low as they can go. But a lot of buyers are still looking at the national media reports and sitting on the fence waiting to see if they could get a bargain,” he said.

Tri-Cities housing sales have steadily grown 4 percent to 5 percent each year during the past decade until the end of 2006, Tilley said.

“The housing market is really slow,” said Johnny Daniels, owner of Premier 1 Realty in Bristol, Va. “It fell through the floor in September and October of last year.”

Daniels, whose agency operates independently of national realty companies, said his sales have been off between 30 and 50 percent since last fall.

Daniels said his firm typically handles a large number of foreclosed properties from as far away as Wise County, Va.

Part of the home sales problem, he said, is potential buyers are expecting bargain-priced deals that sellers aren’t inclined to make.

Sales also have been affected by a slowing influx of people moving here from other areas, Daniels said.

“We work with people from Florida and New Jersey and New York,” he said. “There are a lot of homes on the market there. Their homes aren’t selling, so they’re not able to move here.”

Pat Callebs, owner of Callebs Realty in Bristol, Va., said other factors include local lenders who have tightened their practices and consumers having more “jitters.”

Bobby Icenhour, Sullivan County’s property assessor, said the number of home sales is “way down. In 2007, we [Sullivan County] were down 25 percent in sales from the year before. That’s not any better this year.”

Home sales held steady across Southwest Virginia during the first half of 2008, according to a recent report by the Virginia Association of Realtors.

Home sales increased 2 percent during the first three months of this year, but declined 2 percent between April and June.

A total of 517 homes changed owners so far this year, compared to 520 during the same period of 2007.

Sales of existing homes, townhomes and condominiums across the U.S. fell 2.6 percent in June compared to May, leaving sales 15.5 percent below June 2007, according to the national association.

In the South, existing home sales fell 3.1 percent from May to June and are 18.1 percent below last June. It reverses a slight recovery in May, when home sales across the South rose 0.4 percent.

Elsewhere, home sales rose 1 percent in the West, but declined 3.4 percent in the Midwest and 6.6 percent in the Northeast, the report shows.

The national median price for a home was $215,000 in June, down 6.1 percent from last year’s $229,000 average.

The selling-price figure is greatly affected by the national glut of foreclosures, according to Lawrence Yun, the realtor association’s chief economist.

“With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago, when they were only a minor portion of the market,” Yun said in an association news release.

Home loan volume slows

“What we’re seeing is steady, but with less volume in mortgage loans than six months or a year ago,” said Lynn Shipley, president and chief executive officer of Kingsport-based TriSummit Bank.

“We’re fortunate the Tri-Cities is a pretty stable market,” Shipley said. “My concern is what we’ll see in fuel prices and how that will affect overall retail sales.”

Thus far, the region has not seen the catastrophic numbers of home foreclosures like more populated areas of Virginia and Tennessee, Shipley said.

Prices down

For homeowners looking to sell, sale prices are generally lower than a year ago, according to the TCI research.

During the first six months of 2008, the average selling price of homes fell by about $7,700 in the Tri-Cities – from about $152,700 in 2007 to about $145,000. The average selling price across the Northeast Tennessee market ranged from $125,000 in Greeneville to a high of $165,000 in Johnson City. The average selling price for a home in Bristol, Tenn., was almost $150,000, compared to $154,000 last year.

Kingsport was the only exception, as average sale prices increased from about $137,000 last year to $140,000 during the first six months of the year.

In Southwest Virginia, the average selling price declined 10 percent during the second quarter, from more than $161,500 last year to about $145,500, according to the Virginia Association of Realtors.

Lower prices also can reflect a return to reality, said Callebs of Callebs Realty in Bristol, Va.

“In many cases, sellers are getting more realistic about the prices,” Callebs said. “I have a couple of cases in mind where the houses sold promptly after the prices came down. The days of getting in a lucky shot [higher price] are gone.”

On the market longer

Homes also are remaining on the market for longer periods – especially in Johnson City, figures show.

Across the Tri-Cities, sellers saw their homes remain on the market for about 140 days during the first three months of this year, compared to about 110 days in 2007.

The Johnson City average climbed to about 200 days on the market, while homes in Bristol remained on the market about 120 days, according to the TCI research.

Construction slowed

In addition to fewer sales of existing homes, permits for new construction in the region dropped by almost 34 percent during the first half of 2008, according to The Market Edge, a Knoxville-based research and information firm.

Permits for new construction fell off between 21 and 44 percent across five counties in East Tennessee and two in Southwest Virginia when compared to 2007.

“2005 was a banner year for housing starts, and we had three record years in a row,” said Dale Akins, president of The Market Edge. “In 2007, [building] permits dropped off 13.6 percent compared to 2006. The good news is the housing market reacts sharply to strong numbers, so that means there won’t be an oversupply of inventory.”

The numbers are somewhat skewed, he said, because of the years of substantial growth.

Overall, the local market has fared much better than other parts of the country, Akins said.

“We have a tendency to think we’re in the ocean, but actually we’re in the bay,” he said. “When there’s a disruption, we just get the ripples.”

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