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Residential Department: Spotlight: Tennessee: September 2017

 

Spotlight: Tennessee

Tennesseans are getting back to work.

The big story of the Tennessee economy is job growth. This state of only 6 million people has gained more than 100,000 jobs in the last two years. Estimates published by the Tennessee Department of Economic and Community Development (ECD) put nonfarm employment at 2.91 million as of September 2015. The U.S. Bureau of Labor statistics estimates that 3.01 million Tennesseans were employed in nonfarm jobs as of this past May.

Nonfarm employment in the state increased by 2.4 percent in 2016, according to an annual report published by the Boyd Center for Business and Economic Research, about a third higher than the 1.8 percent national increase. Although the trade, transportation and utilities sector employs the most Tennesseans (about 1 in 5 nonfarm jobs), much of the state’s recent gains came from manufacturing jobs, which showed a 2.7 percent increase in 2016 — during a year when manufacturing jobs actually decreased across the nation.

A lot of these new jobs are coming from new businesses opening in — and coming to — Tennessee. Business filings have been on a steep upward trend in the state since 2012. In the 12 months leading up to this past March, Tennessee registered more than 36,000 new business filings, according to a Boyd Center quarterly report published this past April. The report states that 259,282 business entities were active in the state as of April 1, 2017, a 5.2 percent increase year over year. In the first quarter of this year alone, Tennessee recorded 10,372 new filings, 8.7 percent higher than the first-quarter filings from 2016.

New businesses and more jobs should equate to income increases in the state. Tennessee ECD data show, however, that the state’s per capita personal income only increased by 1.2 percent year over year as of second-quarter 2016. In fact, the Boyd Center annual report reveals that the state’s per capita income in 2016 was 14.4 percentage points below the national average. Only two counties in the state had per capita incomes above the national average: Davidson and Williamson.

Tennessee’s income woes may be related to the state’s low educational-attainment levels. As of 2015, only 85.5 percent of Tennesseans had a high school diploma, according to the Boyd Center annual report, a full 1.2 percentage points below the national average. The number of residents with a bachelor’s degree or higher was just 24.9 percent, compared to a 29.8 percent national average.

A recent state initiative — Drive to 55 — hopes to remedy these low numbers by setting a goal of having at least 55 percent of Tennesseans with bachelor’s degrees by 2025. Tennessee Promise, another new initiative, offers tuition-free access to community and technical colleges for two years to all Tennessee high school graduates.

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Home sales and prices

r_2017-09_Spotlight_chart1.jpgThe annual number of homes sold in Tennessee dropped significantly after the housing crisis, but median sale prices did not, according to data from the Tennessee Housing Development Agency. More than 100,000 Tennessee homes sold in 2006, but by 2009 that number had been cut in half. Interestingly, annual median home-sales prices only declined once in the past 10 years, dropping just 2.3 percent in 2009. Tennessee home prices have risen ever since and closed sales reached 2007 levels in 2015.

The Nashville area is posting record sales numbers this year. The 11,155 closings posted in the second quarter of 2017 was the highest on record, according to the Greater Nashville Association of Realtors, just edging out the previous record of 11,046 closings in second-quarter 2016. Inventory in the Nashville area as of this past June was more than 10 percent lower than the previous June, however.

Unemployment

This past May, the Tennessee unemployment rate dropped to 4 percent, lower than the state’s prerecession low of 4.3 percent in May 2007, according to the U.S. Bureau of Labor Statistics (BLS). In fact, the Tennessee unemployment rate had been below 5 percent for 13 of the past 18 months, and seems to have recovered from a five-month bump from October 2016 through February 2017 that saw statewide unemployment reach as high as 5.4 percent.

The number of unemployed people in Tennessee has decreased dramatically over the past two years, according to the Boyd Center annual report. The total number of people in the state who were unemployed dropped by 10.3 percent in 2015 and by an additional 18.1 percent in 2016, according to the report.

Delinquencies and foreclosures

r_2017-09_Spotlight_chart2.jpgTennessee’s recovery from the foreclosure crisis has been uneven over the past four years, according to Attom Data Systems. After peaking at nearly 12,000 auctions and lender repossessions in each of the first two quarters of 2010, those quarterly totals were cut in half by the end of 2012. Foreclosure actions continued declining through 2014, but then began climbing again, spiking back to 2010 and 2011 levels twice in the last two years.

As of this past May, only 0.4 percent of all Tennessee mortgages were in foreclosure, according to Black Knight Financial Services. This is less than half the national foreclosure rate. More than 5 percent of Tennessee mortgages were delinquent this past May, however, well above the 3.8 percent national rate, which could mean the state’s foreclosure crisis is not quite over.

Sources: Attom Data Solutions, Black Knight Financial Services, Boyd Center for Business and Economic Research, chattanooga.gov, downtownchattanooga.org, Forbes, Greater Nashville Association of Realtors, memphistravel.com, Tennessee Department of Economic and Community Development, Tennessee Housing Development Agency, U.S. Bureau of Labor Statistics, U.S. Census Bureau, visitmusiccity.com



3 Cities to Watch

Nashville

Known as “Music City” since the late 1800s when the Jubilee Singers sang for Queen Victoria, Nashville is probably best known as the home of the Grand Ole Opry. But Nashville also has a red-hot jobs market and was ranked No. 8 in job growth by Forbes. The city also posted the ninth-lowest metropolitan unemployment rate in the nation this past May. The median sales price of a single-family home in the Nashville area this past June was $293,753, a 12.7 percent year-over-year increase.

Memphis

r_2017-09_Spotlight_city.jpgIncorporated in 1826 by Andrew Jackson and two other Tennessee entrepreneurs on the bluffs overlooking the Mississippi river, Memphis may be best known as the home of Elvis Presley. The city also has been home to many firsts, including laying claim to the first blues song, Memphis Blues by W.C. Handy; and it is home to the first supermarket — Piggly Wiggly. FedEx, AutoZone and International Paper are all headquartered in Memphis, which is ranked No. 100 on the Forbes list of best places for business and careers.

Chattanooga

The fourth-largest city in Tennessee, Chattanooga has experienced a resurgence in recent years, marked by its nationally recognized downtown revitalization and the redevelopment of its riverfront. Amazon has a major distribution center and T-Mobile runs a large call center in the Chattanooga area. In addition, Volkswagen recently completed a $1 billion production facility with plans to invest another $600 million that could add up to 2,000 jobs. Unemployment in the area stood at 3.3 percent this past May.

What the locals say

“Our biggest issue is inventory. I think it’s that way with a number of markets. In the middle and lower price ranges, you’re looking at almost every single listing getting multiple offers — some up to 20 at a time. Realtors aren’t even showing the homes one person by one person. They’re waiting for an open house, having an influx of people coming in, and then accepting multiple offers that day. We’ve got stacks and stacks of pre-approved buyers that just can’t find a home and make an offer fast enough.”

r_2017-09_Spotlight_local.jpg

Matthew Clarke
Chief operating officer and chief financial officer,
Churchill Mortgage 


 

Will McDermott is managing editor for Ask a Lender. Reach him at willm@scotsmanguide.com or (800) 297-6061.

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