Realtors, builders in area closing more deals, prices rising
By: John Boyle - Asheville Citizen-Times
ASHEVILLE -- When it comes to home sales, "normal" has never sounded so sweet.
After a major plummet during and after the Great Recession of 2008-09, home sales are back at a level real estate professionals and builders consider much more average -- but also very sustainable -- for the Asheville region.
The inventory of houses on the market is down, which is a good indicator, sales are up significantly and the average sales price is creeping back up.
That's good news for homebuilder Tim Wright. His business survived the downturn with a combination of new builds and remodeling jobs, but he's glad to see the market return to pre-crash levels.
"It has been a very good year, and 2012 was a very good year -- people are surprised when I tell them that," said Wright, owner of Wright Family Custom Homes. "And we're already looking really good for 2014."
He'll be constructing four or five homes next year, and that's a full slate.
While Wright builds homes, existing home sales also are strong. Through October in Buncombe County, 2,873 home sales took place, compared with 2,278 in the same nine-month span in 2012, a 26 percent increase, according to Don Davies, whose company Realsearch tracks real estate trends in the region.
The average time a home remained on the market decreased from 11.2 months to 7.4, a 34 percent drop. A six-month window is considered extremely healthy for buyers and sellers, Davies said.
"As far as turning the corner, I don't know if you can exactly say that, per se, but we're in the best shape, from a low inventory number, that we've been in since 2007," Davies said. "My thinking more than 'we've turned the corner' is I think we've finally hit the balance. If we're going to stay successful and not have too many ups and down, that's something we can sustain."
This year's model -- inventory levels in a 6-7-month range, with average selling price in the neighborhood of $250,000-$259,000 -- is sustainable and would be good for long-term market health, Davies said.
"We're really probably about where we'd have been if we hadn't super-heated then super-cooled off," he said.
When houses don't sell, the supply gets too high, dropping prices. For the third quarter of this year, the supply of houses in seven mountain counties (Buncombe, Henderson, Madison, Polk, Rutherford, Haywood and Transylvania) totaled 6,520, down from 7,155 for the same quarter last year.
Sales haven't roared back, but they have steadily risen. From 2007-12, the average sales per month for Buncombe was 214, a number that increased to 289 a month in 2013, according to Realsearch. In October, it jumped to 336.
The average selling price for the home and land just this year is $259,000, compared with $262,136 over the longer period, indicating prices are returning to more normal levels.
Skip Dillingham, president of Century 21 Mountain Lifestyles, said his three offices have seen a sales increase of 38 percent this year, totaling 200 sales. The hottest price range has been the $150,00-$300,000 market, with the average sales price coming in the $210,000 range.
Before the recession, that average hovered around $260,000-$270,000, so it "takes more numbers of sales to makes up what it was in the dollar amount," Dillingham said. His offices employ 19 people.
Debbie Williams, an executive vice president with Beverly Hands & Associates, said their five offices in the region, which employ 250 people, also have seen strong increases in sales.
"There's no question the market has stabilized," Williams said. "The word I use more often than any these days is 'normal.' We're in a much more normal market. For years, we had a (home value appreciation) of 3.6 percent, but during the boom it was up to 8 percent and during the bust it was down about 5 percent. That's nationally. Now, we're back around 4 percent."
Williams said 84 percent of local sales fall under the $400,000 mark, another indication home buyers scaled back from the extravagance of the early part of the last decade.
For Wright, his company is building homes of varying sizes, but he's noticed the downsizing trend, too. For example, his company is building a 2,000 square foot cottage-style house in the Ramble, an upscale neighborhood in south Buncombe.
"My buzzword for it is 'responsible building.' It's just smarter building," Wright said. "It's smart space. You don't see people being wasteful. They're green and efficient homes, and the space is used wisely."
Higher-dollar home sales are still healthy, though. Davies said Buncombe had 34 sales of homes in the $500,000-$750,000 for July.
"That was a record for any year I've tracked since 2001," he said. "That kind of says maybe the luxury home market didn't go away, because the average house price of all houses over $500,000 was $1,024,232. That's the highest average going all the way back to 2008, so this year the luxury house market has not suffered. That could be an indication people came out of their shells."
West Asheville still hot As far as where homes sales are hot, Williams said the Ramble and other new home communities in the Beverly-Hanks portfolio "have bounced back." This year, they've sold 17 properties in the Ramble, 22 home sites in the Southcliff in the Fairview community and 40 properties in Biltmore Lake in Enka.
West Asheville, known for its walkable neighborhoods and trendy restaurants and bars, also has enjoyed strong sales, Dillingham said. Driven by popular arts and crafts style cottages, selling prices there are coming in at $161-$162 a square foot, meaning a 1,500 square foot home and the lot would go for about $242,000.
"Back in the height of new construction, it was $150-$160 a square foot," Dillingham said. "The rest of the market is averaging around $120-$130 a square foot."
Asheville and environs are seeing the best sales in the region, Davies said. Outlying counties are seeing a slower return to strong sales, but sales in Asheville and Buncombe are stronger than anywhere in the state except for the Outer Banks.
In general, urban areas have returned to normal sales levels much quicker than rural areas, Davies said.
"Asheville draws a lot of people," he said. "It's eclectic, and some people will pay more to be in Asheville than other places. Asheville buyers are able to pay more than any place except the Outer Banks."
Future looks good No real estate expert has a crystal ball, and after 2008 they're leery about getting gung-ho, but Davies, Williams, Wright and Dillingham are upbeat about 2014.
"Before the downturn, about 60 percent of our market came from out-of-town buyers," Dillingham said. "That's starting to come back. Asheville is still a destination point for a lot of people in the country. What held that up the last five years is the economy, and once the economy picks up a little more that's going to take off. The problem is we're not going to have those homes being built."
Davies suspects builders like Wright, as well as developers, will be getting busy. Land sales, he said, "probably had the best year since 2008.
"They've been averaging about 30 sales a month since 2008, out of about 2,000 pieces of land for sale," Davies said. "So, we've had years of land inventory sitting on the market. This year, we're down to an average of 1,778 pieces of raw (residential) property."
In 2007, before the crash, land sales totaled 710 parcels. This year the number is 462, which sounds low until you consider the total was 335 for all of last year. The average price for those land sales was $101,622, compared with $163,550, so it's taking a while for land prices to recover.
But Davies expects prices to continue to climb as sales go up.
"That is an indication that people are beginning to say, 'Look, there are not enough homes on the market. For some of us to get what we want, we have to build it.'"