Written by Bill Fishburne
“It was a very good year…” – Frank Sinatra
In 2015, for the first time in nearly a decade, Western North Carolina realtors are reporting that real estate had a very good year. Everything that should be up was up, and only inventory is down. All in all, it was easily the best year for residential home sales in the region since 2006.
Ed. Note: The charts, below, accompanying this report were provided by Bill Fishburne of Beverly-Hanks & Assoc. All charts date sourced by: CarolinaMLS. Report provided by Charlotte Regional Realtor® Association. Data deemed reliable, but not guaranteed. Powered by 10K Research and Marketing.
Preliminary figures show that 8,285 homes, condos, and townhouses sold in 2015 in the seven county region that comprises the Western North Carolina Regional Multiple Listing Service (WNCRMLS). By contrast, total residential sales in 2014 were 7,374 units. (The counties in the WNCRMLS are Buncombe, Henderson, Haywood, Transylvania, Rutherford, Polk, and Madison.)
Western North Carolina scored an overall market improvement of roughly 12 percent in both units and dollar volume prior to adjustments. To be specific, residential market volume was $2.085 billion, up from $1.708 billion in 2014. Residential unit prices also increased by 4.6 percent, with the average single family home selling for $258,282 versus $246,247 in 2014.
That’s not a big increase. According to Standard & Poor’s/Case-Shiller, the residential price index in 2015 is expected to show prices increased an average of more than five percent nationwide.
The National Association of Realtors (NAR) is in agreement with Case-Shiller. Although final numbers have not been released, NAR sees existing-home sales reaching 5.25 million units for 2015, the highest in nine years, with continued growth through 2016. Bank of America/Merrill Lynch (BOA/ML) is also bullish, predicting a 10 percent growth rate in existing home sales, coupled with 1.275 million new home starts.
But while pricing normally has a direct relationship between supply and demand, BOA/ML is not so bullish about 2016. BOA/ML only sees a one percent price appreciation nationwide “as a reflection of home price overvaluation relative to income.” What that means is that prices might not climb because the buyers just can’t go much higher without generating more income. Asheville is in the middle of that situation now, with low unemployment but relatively high housing prices relative to income.
BOA/ML also discounts the impact of long-overdue mortgage rate increases. The argument is that the Fed’s go-slow approach will alleviate that financial impact as market demand continues to grow. BOA/ML’s bottom line is that sales will climb, but prices will increase only a nominal amount because people just can’t afford to keep on paying more and more for houses.
Not everyone shares that nationwide perspective. Locally, many realtors look at today’s low inventory and believe that the desirability of the region will override everything and lead to another year of significant price increases. Additionally, there are hundreds of new rental properties coming onto the market in and around Buncombe County that will meet the needs of highly price-resistant buyers. Many homeowners who want long-term income will also choose to rent. Combine everything and it would be reasonable to expect a higher than average upward price adjustment in 2016.
More Government Help: TRID
It is not true that the unfortunate (and slightly skewed) acronym for the new federal government mandated mortgage closing process, TRID, stands for The Reason I Drink.
TRID might tend to push buyers, sellers, real estate agents, and mortgage brokers in that direction, but in fact, it stands for the Truth in Lending Act-Real Estate Settlement Procedures Act. A mortgage applicant’s first introduction to TRID will come in the form of an enhanced briefing from their mortgage broker and will end when they finally sign their Integrated Disclosure form at the closing table.
Except it doesn’t end there. The Consumer Financial Protection Bureau’s training program for agents provides an example of the process: In the example, the application is received October 5, 2015, then ends at closing on December 30, 2015, for a total of 85 days. But in an effort to make sure that consumers have every possible chance to have a perfect closing, TRID includes post-closing remedies up to 60 days after the deed is filed.
All this is in response to the real estate crash of 2007 and the Great Recession that followed. Inarguably, the mortgage problems of that time began when politicians began to think everyone should be able to buy a house. Mortgage requirements were gradually dropped, to a point where the primary requirement for a mortgage was a pulse. Far too many bad mortgages were issued, and both Fannie Mae and Freddie Mac bought them by the millions. Markets were created for Mortgage Backed Securities (MBS) and Credit Default Swap (CDS), products that were so complicated as to be incomprehensible. No one knew how much debt there was hidden on a balance sheet because the bankers themselves often didn’t know—or didn’t want to know. Institutional financial liabilities at the end of 2007, when the financial walls were tumbling down, were estimated to exceed $62.2 trillion (Source: International Swaps and Derivatives Association). The United States economy floundered, and politicians flailed away at finding some magic bullet to stop it.
In 2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which ultimately created the Consumer Financial Protection Bureau. Five years later we have TRID.
Prior to TRID, buyers were looking at 45 to 60 days between contract and closing when the buyer applies for a mortgage. Today, that figure is at least three days longer and many say more. According to TRID examples, a mortgage application received October 5 would close on December 30. That can be shortened but it can also be lengthened. It is, in the opinions of many, too soon to tell what long-term impact TRID will have.
In early November, Victor Lund, Founding Partner of WAV Group consultants, reported a downward trend in residential sales beyond explanation other than a TRID impact. “October was the kind of month that researchers like the WAV Group would prefer to remove from results, or at least circle,” Lund reported. “Whenever certain technical anomalies like the implementation of the new TRID requirements impact home sales processing, it throws off the data.”
Lund went on to report an acceleration of mortgage applications in September as the industry moved things forward to avoid TRID. Unsettlingly, mortgage applications fell more than expected in October and resulted in fewer closing than forecast in November. The monthly index for the National Association of Realtors (NAR) also fell to 106.9, after rising in October for the first time in two months.
NAR says recent index performance shows a “modestly slowing trend” that began after pending sales hit a nine-year high in May. NAR Chief Economist Lawrence Yun said, in a November statement: “Affordability issues could creep up enough to temper sales growth—especially to first-time buyers in higher priced markets.” Whether these market changes are related to TRID or more to other economic issues remains to be seen.
COUNTY BY COUNTY
Real estate in Buncombe County is on a roll. Prices and sales are up but inventory is down. To maintain today’s sales pace, houses will have to be put on the market at an increasing rate and new homes/condos/townhouses will also have to come on line. Yet for these same reasons, plus the economic outlook, it’s a good time to buy in Buncombe. Residential unit sales exceeded 4,000 in 2015, the highest sales volume since 2006 when they hit 4,122 units. Sales volume in 2015 was $996 million, compared with $970 million in 2014 and $1.131 billion in 2006 (not adjusted for inflation).
Buncombe’s average single-family house price was up five percent in 2015 to $290,728—up from $275,841 in 2014. Condos and townhouses saw a 1.6 percent decline in average selling price, from $237,169 to $233,219, possibly representing a shortage of newer properties with their attendant higher prices.
Buncombe County has changed from being a Buyer’s market two years ago to being a Seller’s market today. At the end of the year, there were only 1,173 units on the market in the county, down from 1,629 in 2014. That equates to a 3.5-month supply at the December sales rate. A balanced market (equal advantage to buyer and seller) is a six-month supply. If Buncombe’s sales and listing rates continue to be unbalanced, there will be significant upward pricing pressure.
Other positive factors for Buncombe County include its eclectic growth pattern, the influx of jobs (everything from beer to bicycles), and Asheville’s unique blend of tradition and the avant-garde. Someone once said that Asheville is where the necktie meets the tie-dye; while that phrase may be out of style today, it was apt in its time, and it certainly captures what Asheville is all about.
The county is also working hard with major programs designed to attract desirable new businesses. At a Metro Economy Outlook meeting in September, the Asheville Area Chamber of Commerce announced a program to generate 3,000 new jobs in the next five years that pay an average of $50,000. The program will also target acquiring 50 new “high-growth” companies that will make Asheville their national headquarters.
A new Chamber slogan might be: “Asheville—it’s not just the beer.”
Haywood County is one of Western North Carolina’s secret treasures. On one side, it is the gateway to the Cherokee Indian Reservation, while the gateway to Asheville is on the other. Haywood County residents enjoy some of the prettiest scenery in the mountains and there is no shortage of cultural events or good schools. If you look at houses there, you’ll have to dig deep to find a reason not to buy one. Prices are relatively low compared to Buncombe and everything in Asheville is still very convenient. In fact, you have to locate deep up in a cove somewhere to get more than an hour from the Asheville airport.
The average single-family residence in Haywood County sold for $194,693 in 2015, up just 3.4 percent from the year prior. At the peak in 2006, the average home in Haywood County sold for $234,716.
Haywood County sales reached 932 units in 2015 versus 781 in 2014, an increase of 16 percent. That’s huge for anyone and especially for a small county (60,000 residents) where the total residential sales dollar volume was just $178 million. At year’s end, there were 701 houses, condos, and townhouses on the market, down from 1,016 in 2014. With December sales of 78 units (preliminary figures), there still is an overall 8.9-month supply of houses, making it a very competitive and reasonably priced alternative to Buncombe County.
Considering all the factors, Haywood County’s real estate outlook in 2016 is positive and getting better. What buyers Haywood doesn’t attract on its own may come anyway, after their realtors have shown everything they can find in housing-starved Buncombe. It isn’t much of a problem to shoot over to Haywood to check things out. And don’t miss Waynesville’s Main Street, the Folkmoot dance festival in late July, or Maggie Valley in the spring, summer, and fall. Lovely places, lots of things to do, and vibrant, friendly people.
Time was when folks said Hendersonville rolled up the sidewalks at 6 pm, Fletcher was the third place you looked to buy a Chevrolet, and Flat Rock was equally well-known for its Playhouse and Lilian Sandburg’s goats.
Times have changed. Hendersonville today is still small, around 14,000 residents, but Henderson County has grown to a population of more than 109,000. It still retains its character as the state’s largest producer of apples, but Hendersonville’s sidewalks are now filled with people long after dinnertime and well into the night. The four-day North Carolina Apple Festival on Labor Day weekend is family centered, and there is Music on Main Street with free concerts all summer long. And that little Flat Rock Playhouse is now one of the nation’s finest professional theatres and is the official State Theatre of North Carolina.
For family fun, dinner with a date, or local shopping, Hendersonville is hard to beat. So too is Fletcher, now incorporated and conveniently bordering on Buncombe County, halfway between Hendersonville and Asheville. Fletcher is the actual physical location of the Asheville regional Airport, and they’ve done a good job of offsetting any of its negative impact. Traffic is light; there are plenty of houses and other dwelling places for sale; taxes are relatively low.
The average price of a single family residence in Henderson County last year was $243,860, up from $227,015 the year before. Sales in 2015 reached 1,972 units versus 1,814 in 2014; Hendersonville’s inventory at year’s end was down to just 677 units, single family residences, and condos/townhouses. That equates to a 4.2-month supply in both categories, based on December sales.
All things considered, the real estate outlook in Henderson County is excellent. More and more traffic is coming from Florida, and the traditional feeder regions of Ohio, Michigan, Pennsylvania, and New York/New Jersey remain active. Gorgeous mountainside developments, golf communities, and more modestly priced subdivisions have all seen a resurgence in popularity in 2015. The odds of this slowing down during the coming year are slim.
For many retirees, there is nothing that can equal Brevard and Transylvania County. The county is small, at just 34,000 people, but it borders Henderson and Buncombe Counties and provides a cultural scene that is unsurpassed. And it has white squirrels.
The heart of Brevard’s summertime is the Brevard Music Center (BMC). For seven weeks each summer, June through August, classical musicians from around the world gather to teach, study, and perform. The concert venue is the 1800-seat Whittington-Pfohl Auditorium. This covered amphitheater features excellent acoustics, plus theatre quality seats and side curtains that are generally left open during concerts in good weather. Families and friends often sit outside on the grass to take in the music on cool summer nights.
More than 400 students, ranging in age from 14 to seniors, attend classes and training sessions each summer at BMC. Under the direction of Artistic Director Keith Lockhart, students and faculty present more than 80 concerts in the Auditorium and other nearby locations. The program of instruction includes ensembles, private lessons, and chamber music. Alumni of BMC range from famous musicians (including Lockhart), to local orchestra members and directors, soloists, and well-known professionals from around the world. Lockhart is also the music director of the Boston Pops and the BBC Proms Orchestra in London.
Many other musical styles fill the air in Transylvania County. Fiddle players (you can’t tell a fiddle from a violin until the bow hits the strings) abound, as do guitarists and banjo pickers. A steadily rising number of followers participate in the Mountain Song Festival in September, and Brevard’s growing microbrew industry is drawing many folk singers, reminiscent of the coffee house scene of the late 1950s in Boston, Newport, and Greenwich Village.
As for real estate, 503 houses and 60 condos/townhouses were sold in Transylvania County in 2015. That’s an increase from 423 houses and 64 condos/townhouses in 2014. The average single family residence price last year was $262,741 versus $275,277 in 2014. The apparent decline is an anomaly because in 2014 two houses sold for more than $2 million each and skewed the averages. None of these higher priced homes sold in 2015.
The outlook in Transylvania is pretty much the same as elsewhere in the four larger counties: Very Good to Excellent. Growth figures and forecasts don’t really apply due to the small baseline. People pick Transylvania because they fall in love with it, not because the houses are less expensive. Our opinion is that houses will continue to sell well throughout the county as long as there is no great international financial crisis. The area is highly attractive, has more waterfalls than Niagara (www.visitwaterfalls.com), and is downright gorgeous from April through Thanksgiving. Even the winters are mild. And if it ever snows again at Christmas, you won’t want to be anywhere else.
Did we mention it has white squirrels?
Madison County certainly is a unique and distinct market, but it is small and is part of the Land of the Sky Association of Realtors (Asheville-Brevard). Madison features Mars Hill University, the Wolf Laurel ski slopes and development, several other developments, and a few famous places, including Shelton Laurel and Hot Springs. Shelton Laurel was the setting for the sad and tragic book and movie, Cold Mountain by Charles Frazier. One of the featured songs in the movie, “Wayfaring Stranger,” was in D minor, as was Sinatra’s version of “It Was a Very Good Year.” It is alleged that scientific studies have shown music in D minor makes you want to cry, go to a movie, and buy a Sinatra album.
Hot Springs has been one of the East Coast’s premier destinations for the medicinal benefits of the hot spring waters for more than 200 years, dating back to the days when it was Cherokee Indian territory. The springs are still a destination point for thousands of people each year, including those hiking the Appalachian Trail, which runs down the middle of Main Street.
According to MLS data, 188 houses were sold in the county in 2015, at an average price of $208,868.
Polk County includes the towns of Tryon (on the South Carolina border), the county seat of Columbus just off of I-26, and Saluda further up U.S. 176 near Hendersonville. It is the home of the Tryon International Equestrian Center and has significant growth potential, due to the excellent transportation system and the breathtaking beauty of its location. Polk County is served by the nearby Greenville-Spartanburg International Airport, as well as the Asheville Regional Airport.
Polk County saw sales of 207 houses and condos in 2015, at an average price of $261,478. The units were down slightly from 230 in 2014, but the average price increased from $238,441.
Rutherfordton is the county seat of Rutherford County and is located at the intersection of U.S. 221 and U.S. 64. The Western North Carolina Regional MLS reports 422 units were sold in the county in 2015 versus 348 the previous year. That is a significant 14 percent unit growth. Dollar volume in 2015 was $82.5 million versus $62 million in 2014. The average home sold for $195,575 in 2015, an increase from $178,160.
Living in Western North Carolina doesn’t guarantee happiness, but it’s a pretty good start. Residents often see their children go away to see the world, but they are also pretty sure the kids will come back when they’re ready. Low crime rates in most areas are a big attraction, as is truly seasonal weather. The best altitude for any individual is up to them, but most of the mountain regions described in this article range from 1,500 to 2,500 feet. Lake Lure is about 1,000 feet above sea level (in Rutherford County). The French Broad River Valley, running from Brevard and Hendersonville through Asheville, is about 2,100 feet. Haywood and Madison Counties are somewhat higher, with delightful resorts and full-time developments that start at over 3,000 feet. There are lower valleys and higher mountains, of course, which means you really need to be there to appreciate it.
Check us out. It will be a very good year.
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