I have received several questions from clients regarding the current state of the real estate and rental market here in the Smokies. I thought I would post my analysis for all to see regarding the Sevier County area real estate market, foreclosures, and the impact of the “real estate/mortgage bubble” on the local rental management companies. Below is my sometimes critical and as straight forward as possible analysis of the market.

The overnight cabin rental business realized a decrease in business during the early summer months (compared to the same time frame in previous years) when gas prices spiked to around the $4 mark. I think it discouraged some visitors from traveling here and some from making plans to travel during the later months or at least waiting to book their vacations. The good cabin management companies adapted quickly once they came to the realization their occupancy was not as high as it was in the past by offering incentives. The rental management companies typically offer some sort of “incentive” such as stay 5 nights get the 6th night free or something along those lines. But a few management companies were smart and tied their discounts directly in to what the consumer was seeing as the reason for them not making the trip - gas prices. So, they advertised on their websites things such as Summer Gas Incentives - 10% off cabin rentals and things of that nature. For instance, a cabin that would typically rent for $200 per night would be a savings of $20 per night and the typical summer stay is at least 3 or 4 days, so it was enough of an incentive to entice the visitors to book the cabins. The average visitor to the Smokies is not extremely affluent, they are your normal average Joe for the most part. This ultimately resulted in slightly less rental income for cabin owners, but far outweighed the alternative of having no rentals at all!

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I had this day marked on the calendar for quite some time. July 19th, 2008 Marty Loveday & Associates were to auction off a couple pieces of property located off Wears Valley Rd. One was a 62+/- acre tract with a house, barn, and approximately 395′ of road frontage on Wears Valley Rd. The land was to be sold as a court ordered auction from the Headrick Estate (NOTE: Correction - According to Peggy Headrick it was a “court ordered divorce sale”), so any bids would still need to be approved by the Sevier County courts come next week. The acreage is located between the Smoker Holler development and Wilderness Mountain.

With the selling of 25 acres on Wears Valley Road next to the TN State Bank just a few days prior for $2,325,000 ($93,000 per acre) I was not sure how the 62 acres would fare. They were two distinctly different properties. The 25 acres has city water, in an already thriving commercial zone, and had a sign announcing a future grocery store and outparcels on the land. This had brought a lot of commotion to the citizens of Wears Valley, wondering if a Food City was coming to town. Similarly, on Newport Highway (411) next to Chambers Market, land has been cleared for a “Food Country” which is a division of Food City dealing with more rural markets. The thought around town was something similar was coming to Wears Valley. I was thinking the 62 acres would bring between $10,000 and at very most $15,000 per acre. Continue reading this post…

I am a frequent visitor of local auctions - partially looking for a bargain on some real estate and in some ways for curiousity, entertainment, and getting a better feel for the real estate market.

Recently, I have attended auctions by various companies including Furrow Auction Company for some beautiful commercial land in Wears Valley - where my family ended up purchasing 2.6 acres for what we feel was a good bargain (approximately $85,000 less than the current tax appraised value of the land).

Other auctions included some large land parcels for sale by Thompson Carr (180+ acres off Henrytown Rd.) and McCarter Auction (70 acres off Thomas Cross Rd. in New Center). In both of these auctions the large parcels of land sold for shockingly low figures in comparison to what most people are used to seeing for acreage in Sevier County. I even attended an auction for a lot where nobody showed up. We had our eye on Lot 32 E. Harvest Moon Rd. in The Homestead for a while and noticed it was to be auctioned off by Jax Auctions. Much to our surprise my dad and I were the only people to show up - including the auctioneer! As soon as we arrived and saw nobody else was on-site we quickly called the auction company and were told Mr. Jax (the auctioneer) had become sick and was unable to conduct the auction. We also attended the auction of the James Lee Fox farm with prime frontage on Veterans Parkway (by Marty Loveday) and the large Commercial Motorcycle shop with living quarters above off Wears Valley Rd. (auctioned by Kennedy Auction). Needless to say, I enjoy going to auctions! Continue reading this post…

About one month ago I blogged about the number of new listings on the market in comparison to sold properties. The statistics from March 6th to the previous 30 days indicated there were 902 new listings and 152 properties sold. A month later, the numbers show a similar trend with slightly fewer new listings on the market, but less real estate sold as well.

The ratio of new listings to sold one month ago was about 5.67. This month the ratio takes a slight turn for the worse at 6.58. This creates a very attractive market for buyers with the surplus of inventory on the market. With the increased number of foreclosures and short sales within Sevier County, some non-foreclosed owners are drastically dropping prices in order to compete with the bank owned properties. On the other hand, many overnight cabin rental owners are fairly affluent and can weather the storm by maintaining more stable prices. The largest market effected with foreclosures has been Planned Unit Developments (PUD’s). Continue reading this post…

The Sevierville Police Department’s Relay for Life team is gearing up for its 2^nd annual Blazing Pig 500 on Saturday, April 19^th, benefiting the American Cancer Society.  The race originated 15 years ago, organized to benefit a local young man to aid with medical bills after he was severely injured in a car accident.  Norma Russell revived the event to help raise money for her Relay team, and to benefit the countless people who, like her, are stricken with cancer.  Last year’s race was in honor of her valiant fight against the disease.  Unfortunately, this year’s race will have to occur in her memory.  To quote her obituary –she won her fight with cancer this past year.

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“Until now, the issue of whether a vacation home qualifies for tax deferral treatment under IRC §1031 was the subject of much scrutiny and uncertainty.

To the delight of many tax practitioners, on Feb. 15, the IRS eliminated that uncertainty by issuing Revenue Procedure (”Rev. Proc.”) 2008-16, effective March 1 which provides a safe harbor for exchanges of vacation homes (defined as “dwelling unit” in the Rev. Proc.).

Now taxpayers can have a clear understanding of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property “held for investment” under §1031.

Vacation home as relinquished property

For a vacation home to qualify as relinquished property, it must meet the following criteria:

• It is owned by the taxpayer for at least 24 months immediately before the exchange (”qualifying use period”); and

• Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit at fair rental to another person for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental value.

The first 12 month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day). The second 12 month period ends on the day before the first 12 month period begins (and begins 12 months prior to that day). Continue reading this post…

I always try to keep up with trends and statistics within our local real estate market. I decided to implement some searches today and analyze the data from the sales thus far in 2008 in comparison to 2007. The Great Smoky Mountains Association of Realtors has recently upgraded our MLS Paragon software and I am thrilled with the changes. Not only is the new system much more user friendly, but it allows greater function and enormous capabilities. With the click of a single button I can determine the number of new listings, solds, and price changes within any time frame of the current date.

Of concern with the graphic (pictured at left) is the number of new listings coming on the market compared to the number of sold listings within the past month. For a while now, it has been a buyer’s market in the Smoky Mountains and the entire nation for that matter. From the looks of the past 30 days it seems the trend is continuing as a buyer’s market and perhaps strengthening. There were only 17.62% as many sold listings as new listings on the market. At that rate it would take almost six months to rid the new inventory of the past 30 days…if NO new listings were added. Creating more inventory when there is already a buyer’s market should push prices further down in the future. However, our situation here in the Smokies is unique.

The majority of listings are cabin rentals. With a cabin rental, the necessity to sell is much less than a primary residence. The cabin rental generates income, second home owners are typically in a better financial situation, and there is usually no absolute need to sell due to a job relocation. This scenario causes cabin owners to typically hold a tight line on prices causing the inventory to increase. Continue reading this post…

Every year, Cure Finders, a charity organization benefiting Cystic Fibrosis research holds a Valentine’s dinner and dance. This year was my third year working the event – and Jay’s 2^nd year. I started working for the City a little over three years ago, but didn’t get recruited to help till after my 1^st anniversary with the City. The first year Kristi and worked the coat check station – freezing the entire night. We, of course, were positioned right beside the door and it was cold enough to snow that evening. I hadn’t thought to bring shoes to change into, so my opened toed sandals were cold as I walked through the snow to my car.

I’m not sure what she did right (or wrong) but the next year she got moved from the position and Jay and I worked as the coat checks for the evening. We were scheduled to do the same this year, but at the last minute we got promoted. We would be working registration and silent auction check out for the evening.

First thing I had to do was find a formal dress for the event. I started my search several months before hand at the store where I purchased last year’s dress – Ross Dress for Less. I tried on several dresses at the store in Bristol, as well as the

Knoxville store – neither with any success. At the mall, I found a strapless purple dress at B. Moss. It had two major things going for it – the price was right and it was from my favorite store. It didn’t hurt matters that it was a size 4! I took it home and tried it on for Jay one evening. “That’s nice. Isn’t that a lot like what Kelly wore last year?”

It was nothing like Kelly’s dress from 2007 – hers was a gray spaghetti strapped dress, my dress was strapless and purple. The one common factor between the two was that they were both knee length. But the damage had already been done. I didn’t want be guilty of the fashion faux paus of wearing a similar dress, even if it was for a different year. Not to mention the fact that the size 4 dress was too big for me. If the evening’s festivities called for me to raise my arms above my head, my dress was sure to head south. The dress was definitely headed back to the store – but not before I told absolutely everyone that I knew I would need a size 2 in the dress for it to work.

Unfortunately, since I got it off the sale rack, a smaller size wasn’t available. Kelly and I went shopping at West Town Mall and I took the dress back for a refund. She and I hit every store in the mall that could possibly sell a dress nice enough for this event. I had some pretty strict criteria, so finding “the dress” was difficult. I didn’t want to spend over $50 and I wanted my knees covered. Ideally, I wanted a sapphire dress, because I thought it would look good with my hair/skin coloring, but I was going to take what I could get for the price.

After trying on countless dresses all day, I tried on one that I doubted would work. It was the perfect color blue, so I doubted I could be so lucky for it to look right on me. I was right it didn’t look good – it looked perfect. This dress seemed to be made for my body. The low cut halter worked because of my lack of endowment up top, and the a-line cut of the dress floated away from my booty, so it wasn’t too tight on my lower half. I explained to Jay later that evening I was sure God was looking out for me and rewarding my thrifty shopping. Kelly later rejected that idea – “With a neckline like that, God didn’t have a thing to do with it!”

The day of the event I helped set up before hand, and brought all my stuff to get ready at the hotel. Since I wouldn’t get a chance to wash my hair before the event, I wore a banana clip circa 1990 so that I wouldn’t get a line in my hair from a ponytail holder. When set up was complete, Kelly and I headed to the hotel to get ready. I had just put the finishing touches on my hair and makeup when Jay called, saying he had arrived. Since we had a few moments before the real work began, we got in line to have our professional portrait taken by Gary Woods Photography.

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