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Kingsport faring better than other areas during troubled economic times

October 10th, 2008 12:00 am by Sharon Caskey Hayes

Kingsport faring better than other areas during troubled economic times



Downtown Kingsport continues to draw shoppers, browsers and visitors, as evidenced by this group of people Thursday. David Grace photo.


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KINGSPORT — Turn on CNN or Fox news these days and you’d think the world’s economic engine has ground to a halt, with banks lending no money, people unable to buy homes, and businesses going bankrupt.


Is Kingsport feeling those same effects?


“I’ve certainly seen better times, but the sky is not falling on the Tri-Cities market,” said Doug Alley, owner of Alley’s Chrysler Dodge Jaguar Saab on East Stone Drive in Kingsport. “I’m sure there are lots of places around the country where it’s really tough, places where the subprime mortgages are weighing on the local economy. But that’s not the case here.”


The most recent statistics paint a positive picture in Kingsport.


According to the latest retail report issued by East Tennessee State University, retail sales in Kingsport were up 9.9 percent in the second quarter, fueled by new shopping opportunities and high gas prices that compelled many Kingsport consumers to shop closer to home.


Meanwhile, the local housing market appears healthy. According to recent data from First American CoreLogic, the rate of foreclosures among outstanding mortgage loans in Kingsport and Bristol was 0.50 percent for the month of August, the same rate reported for August of 2007. The number of outstanding foreclosures in Kingsport and Bristol was 105 for August.


In comparison, the national foreclosure rate was 4.4 percent in August 2008.


In addition, the Kingsport and Bristol metro area ranks 14th in the nation for housing price appreciation, according to the Office of Federal Housing Enterprise Oversight. Home prices here grew 4.75 percent from June 30, 2007, to June 30, 2008, while housing prices in the Kingsport and Bristol areas have appreciated 34.32 percent in the past five years.


In comparison, some areas of the country, particularly in Florida and California, have posted sharp drops in home prices, resulting from foreclosures and defaults on subprime mortgages.


The crisis has led to bank failures, and many in the housing market have left the business entirely.


Ivan Tilley, president of the Northeast Tennessee Association of Realtors, said the housing market here doesn’t reflect what’s happening in other areas.


“Unlike many areas of the country that are really in some dire straights in their housing markets, we here in Northeast Tennessee are fortunate,” Tilley said.


First, he said, housing appreciation has been slow but steady in this region, unlike some areas of the country, where home prices were overly inflated.


Secondly, very little if any subprime mortgage lending occurred in this area.


“We’ve stayed pretty steady through the whole thing,” Tilley said.


As a result, lenders in the region — including banks, credit unions and mortgage companies — are still in the business of loaning money.


And now is a good time for home buyers, Tilley said. He noted that interest rates are near historic lows, while housing inventory on the market is good, and buyers have plenty of choices.


“And if a potential buyer has good credit, it’s an excellent time to buy,” Tilley said.


To get that word out, Wells Fargo held a workshop in Kingsport last week to let area real estate agents know that money is available for their home-buying clients.


“We don’t want the CNNs and the Fox news channels of the world telling you what’s going on with the mortgage business. If you’re a home buyer watching CNN or Fox, you might want to run the other way. But it might just be the best time to buy a house,” Olin Chamberlin, a Wells Fargo manager out of Atlanta told local real estate agents.


“It’s unfortunate what some of the companies have gone through. But we’re here to stay,” Chamberlin said.


Wells Fargo operates an office on West Main Street in Kingsport.


Lenders say money is available through various home loan programs, from conventional to federal options such as VA, FHA and USDA “Rural Housing” loans, to reverse mortgages for seniors.


In addition, Congress recently enacted legislation providing a tax credit of up to $7,500 for first-time home buyers.


And some borrowers can still get 100 percent financing.


Mike Trent, with Primary Residential Mortgage on East Center Street, said some people who may be thinking of purchasing a home may be too worried to make a move.


“We have folks out there that are very credit worthy that are sitting there in some state of fear, waiting for things to change, the wait-to-see type of attitude,” he said.


Russell Street, with Allied Home Mortgage Capital on East Center Street, blamed the news media for spreading fear among the viewing public.


“I think the news media is hurting our area worse than anything,” Street said.


Still, he said, people here are borrowing money and buying homes. Refinancing options are also available.


“Probably the biggest thing I encourage people to do — don’t be afraid to buy a home. Our economy here is great,” Street said.


Alice White, owner of Pinnacle Equity Management, said people with good credit and good jobs shouldn’t have any problems getting a mortgage.


“Kingsport is one of the few places in the country where houses are still appreciating,” she said. “We’re just a little pocket of economic stability in a world of economic instability.”


Sam Kassem, president of the Home Builders Association of Greater Kingsport, said the sale of spec homes has slowed somewhat in recent months. But sales of contracted homes are steady.


“We just had a builders meeting last night and the builders there said things are going well,” Kassem said.


Some businesses are starting to feel the effects of the nationwide downturn more than others.


Shannon Monroe, manager at Fairway Ford on Lynn Garden Drive, said his dealership has experienced a “big slowdown.”


“We saw an increase in the sale of smaller cars when gas first shot up, but now it’s across the board,” Monroe said of the slowdown.


Still, he said truck sales have picked up recently with big incentives being offered by manufacturers.


At Alley’s Chrysler Dodge Jaguar Saab, owner Doug Alley said his business often reflects the strength of local industries — particularly Eastman Chemical Co. And lately, Eastman has been bucking the downward national trend. On Thursday, the Kingsport-based company announced it expects to beat Wall Street expectations when it releases its third quarter sales and earnings report later this month.


Meanwhile, the company continues its “Project Reinvest,” a plan to pump $1.3 billion to upgrade the local manufacturing operations.


“Eastman is doing well, and it’s the backbone of this area. That’s what really matters,” Alley said.


Still, he said he has noticed a difference at the dealership.


“To be honest in the last few days we’ve not had as many people in looking as we’d like to have, and the national news — the CNNs and all screaming the sky is falling, has got people concerned,” Alley said.


Vehicle financing is another area impacted by the national crisis. Alley said it’s “a little bit more of a challenge” to find financing today for new and used car buyers than it was just two or three months ago.


“Banks are being a little more cautious. It takes a little more effort on both our part and the customer’s part to provide the information and background that they (banks) want to feel comfortable,” Alley said.


Aundrea Wilcox, executive director of the Kingsport Office of Small Business Development & Entrepreneurship, said her office has seen an increase in the number of business owners seeking help these days.


“A lot of the difficulty is with loans. I have people coming in saying, ‘I can’t make it.’ Cash flow is the problem. It’s very tight, and then they wait until the last minute and try to get that funding, and it can’t get there in time,” Wilcox said. “We’re not totally immune” from the national crisis, she said.


Now more than ever, Wilcox said, businesses need to monitor their finances closely and recognize when they need to seek help.


“Don’t wait and sit on your hands until the last minute, because funds are out there, but the loan process is lengthy. So if you see the signs, take action. Don’t say it’s not going to happen to me.”


Wilcox said businesses should look for ways to cut expenses. But they shouldn’t reduce marketing efforts.


“So many times they cut the marketing and that’s damaging. They need to increase marketing,” she said.


Wilcox said she’s seen an increase in the number of people wanting to start their own business these days. Many of them have been employees of a business that’s failing, and they want to keep the business alive.


“I’ve seen a lot of employees say I want to buy the business, and that’s pretty interesting,” Wilcox said. “People are wanting to be in control of their own situation. People are still trying to have that American dream.”



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