So, how’s the real estate market? Realtors hear that question at least twice a day. For the past five years, from early 2008 through the end of 2012, the answer was generally depressing. The economy went from great to “oh my gosh” and the realty bubble popped big-time.
Now, things are better. Much better. 2013 was the best year since 2007 with more than 7,289 homes sold. In 2007 a record 7,772 homes were sold through the Western North Carolina Regional MLS system. The average price back then, however, was $278,799 and a sales volume of $2.166 billion was recorded.
[dropcap]S[/dropcap]o are we back to 2007 levels? Not by a long shot. The average sales price for a house throughout the area in 2013 was $229,986, an increase of just 4% for the year. MLS dollar volume will be just over $1.676 billion when all the last-day transactions are recorded.
Still, compared to 2012 and the other bust years, buyers have come back into the market and sales are up significantly. In 2012 the entire MLS sold only 6,127 units at an average price of $221,579. The two prior years, 2010 and 2011, sales didn’t even reach the 5,000 unit mark. But comparing 2013 to 2012 shows unit sales increased 19%. Charts 1 and 2 below show unit sales and prices from 2007 through 2013. Obviously, with sales plummeting from 2008 through 2011, this was a market designed for buyers, if they had any money.
Buyer’s markets exist whenever the available inventory in any price range exceeds a six month supply. Below that level it is a seller’s market. A scarcity of inventory means that new listings that are nice homes, well priced and well maintained will receive offers immediately upon listing. Sometimes there will be multiple offers and sometimes the offers will be higher than the MLS price.
We saw some of that in 2013 in certain price ranges and, in particular, in the Asheville market. MLS data shows we have entered 2014 with just a 7.8 month supply of homes throughout the region in every price range up to $200,000. In Asheville there is just a 3.8 month supply between $50,000 and $200,000.
Prices in our region increased a modest average of 4% in 2013, following on the heels a very slight increase in 2012. Buncombe and Henderson counties both saw 5% increases in 2013. Buncombe’s sales volume, however, shot up 23%. At the opposite end of the spectrum Transylvania County saw an 8% reduction in the average price, from $255,048 in 2012 to $233,886 last year. Transylvania also recorded just a 6% increase in unit sales. The mitigating factor in this regard is that Transylvania is a relatively small market with just 485 homes being sold vs. more than 3,400 in Buncombe. That also helps explain why the Brevard Board of Realtors late in the year decided to merge into the much larger Asheville Board. With low sales and just 154 members, Brevard was on the verge of becoming unviable as a separate business entity. It made good business sense for them to find a merger partner.
The Residential Absorption Rate Comparison for the first 10 months of 2013 is found below in Chart 3.
Transportation and the inconvenience of commuting to and from Asheville/Buncombe County no doubt helps justify the $26,000 price differential buyers are willing to pay in the region’s largest city. Also, no other community can match Asheville’s variety of neighborhoods, wealth of cultural resources and vibrant downtown. Those factors draw people whether they’re working or retiring.
Asheville, as always in Western North Carolina, is at the center of it all. It is the junction point of two major Interstate highways, the location of the regional airport and the undisputed economic capital of the region. The city’s River Arts District is a significant attraction for tourists who have already seen the Biltmore Estate and are looking for something unique to take home. Of course, that could be one of more than 100 local craft beer offerings; but since there are too many brews and not enough time, we modestly suggest they just buy a house and stay.
The buying/selling prices by county can be found below in Chart 4; similarly, the median prices (half higher, half lower) are shown in Chart 5.
Another key factor in pricing is the size of the house. All things are not equal. Asheville has more commerce and industry, by far, than any other city or town in the area. This means more jobs, more younger people, more young families, more children, and a need for larger houses.
Buncombe’s profusion of larger homes, old and new, generally means working families who can afford larger homes and want to be close to their work. Last year, 19% of all sales in Buncombe County were homes with four or more bedrooms (Chart 6).
The other communities each have their own charm and attractiveness. Haywood County has become a retirement community with great mountain vistas and, in Waynesville, a unique downtown that is an absolute magnet for folks escaping to their mountain dreams. The mid-summer Folkmoot Festival set for July 18 – 27 in 2014 is an international music festival featuring folk musicians and dancers from around the world performing in the traditions of their native lands.
About five weeks later each year, Hendersonville puts on the region’s longest-running street festival when the four day Apple Festival takes over downtown on the Labor Day weekend. It’s a family friendly, alcohol-free celebration of just about everything it means to be American and working.
Each local mountain community has its own charm and traditions. All offer mountain environments for those seeking escape from the hustle and bustle of lives lived elsewhere. Hendersonville’s serpentine Main Street is a unique, pedestrian-friendly five block area that offers everything from crafts to Irish pubs, jewelry to unique hiking boots and even a very knowledgeable music store where you can learn to play a guitar or a violin.
Unit sales of residential units (houses, condos and townhouses) increased significantly in 2013 (Chart 7).
Buncombe County Realtors sold nearly twice as many houses as did their counterparts in Henderson County and nearly half of all sales within the Western Regional Multiple Listing Service were in Buncombe. But Henderson County Realtors were the most productive with an average of 3.87 sales per member vs. 2.86 in Buncombe (Chart 8).
Now, having started this unnecessary controversy, let us hasten to add that sales per Realtor are misleading because Realtor members sometimes maintain their licenses and membership even though they are not actively working in the business. Also, as the market has improved many new, young Realtors have gotten their real estate licenses and joined realty firms in the younger areas of the region, specifically Asheville. It takes time for a new person to find their way and get established. And while Hendersonville Realtors do score high on this chart, the same chart shows that in the past year Asheville’s Realtors increased their business five percentage points more than their Hendersonville compatriots.
Finally, there is the entire issue of the housing slump. Are we done with it? Will the economy continue its modest recovery? Will mortgage money and interest rates continue to be favorable enough for non-cash buyers to continue buying homes in our area?
That’s a big unknown. Our modest 4% price recovery is less than half the national average of 10.9% according to Clear Capital, a national provider of real estate data. Western North Carolina is a trailer, not a leader. With a high percentage of retirees and second-home buyers, we trail national trends. If the economy is good in New York and Florida, it is probable that many residents of those areas will have the resources to buy homes here. The old saying goes that when the leading markets get a sniffle, Western North Carolina catches pneumonia.
I am loathe to predict what will happen in 2014. While my Realtor side wants to be as Pollyannaish as possible, my dark side has a hidden economic pessimism. Still, the facts on the ground are that markets are doing well elsewhere, the economy is growing and we have many reasons to be optimistic.
So I’ll go with that, borrowing lines from Jackie Gleason along the way. First, “How sweet it is” after these long, dismal years.
And second, no matter what the future may be, “Away we go.”