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Real Estate Rebound in Asheville, N.C.

From: www.wsj.com

By: Cecilie Rohwedder

Attracted to the climate and culture of Asheville, N.C.? Be prepared to pay a premium for real estate. For houses priced above $500,000, 2013 was the strongest year since 2007.

Slideshow

The outdoor market outside at the Grove Arcade in downtown Asheville. Mike Belleme for The Wall Street Journal

Families are drawn to Asheville, N.C., for its small-town feel, good schools and great outdoors. Young hipsters come for the eclectic vibe, craft breweries and lively music scene. And older Americans like the gentle seasons, health-care facilities and educational opportunities, such as the Osher Lifelong Learning Institute at University of North Carolina Asheville, which offers courses and activities for seniors.

But the great life comes at a price. For houses priced above $500,000, 2013 was the strongest year since 2007, said Don Davies, owner of a real-estate agency that bears his name and includes Realsearch, a service that tracks real-estate trends in Asheville and surrounding Buncombe County. In the first four months of this year, the average asking price rose to $459,500, from $409,400 in the year-ago period.

"We're approaching the record asking prices of 2008," said Mr. Davies. At the same time, he noted, the number of homes sold from January through April dropped by 6% from the same period last year, mostly because of thin inventory and buyers' difficulties in securing a down payment or mortgage.

Earlier this month, Hadley Cropp, an agent with Asheville Realty Group, represented buyers from Chicago who bought a home on Reynolds Mountain in trendy North Asheville, at the asking price of $860,000. The four-bedroom, three-bathroom property sold within two weeks of its listing. "The market has totally shifted," said Ms. Cropp. "It's a seller's market."

Boosting Asheville's appeal are its distinctly different neighborhoods. Young, progressive residents flock to the burgeoning River Arts District, with its vibrant arts scene. The cool crowd also likes West Asheville, a funky area across the French Broad River that has tattoo parlors, bike shops and creative eateries.

" This is like a resort, but there is enough infrastructure to get done what you need to get done. " --Home buyer John McNabb

Older, more established home buyers prefer the pricier community of Biltmore Forest near the Biltmore Estate, Asheville's biggest tourist attraction, and the Ramble, a newer, gated community nearby that is attracting young families. Demand for luxury homes above $1 million is coming back with strength, said Ann Skoglund, an agent with Beverly-Hanks & Associates. Her most expensive listing is a $10.75 million house modeled on a French château in Biltmore Forest, but most homes in the leafy suburb cost between $1 million and $1.5 million.

Houstonians John and Darlene McNabb bought a 9,000-square-foot Tudor-style house last year in Biltmore Forest, a community located a few minutes from Asheville and near a private country club that was started in 1922 by the Vanderbilt family.

The McNabbs paid $2.8 million for their four-bedroom home on 2.4 acres overlooking a golf course. While still Texas residents, they now spend several months a year exploring the Blue Ridge Mountains, along with the food and art scene in Asheville.

"This is like a resort, but there is enough infrastructure to get done what you need to get done," said Mr. McNabb, vice chairman of investment banking for Duff & Phelps Corp. in Houston and chairman of Willbros Group Inc., WG -1.87% a Houston-based company specializing in energy infrastructure.

Recently, Asheville's downtown Art Deco district was filled with evening strollers, to a backdrop of street music and noise spilling out of restaurants, many of them with a farm-to-table approach. At one, a modern tapas place called Curate, every seat at the bar was taken. In the summer, there are free downtown concerts, along with art gallery walks and annual events such as an arts and crafts show and a beer festival. Beer is a big part of Asheville's ascent. Sierra Nevada Brewing Co. and Colorado-based Oskar Blues have expanded into the area, and craft brewer New Belgium is building a new brewery in Asheville.

"It will bring in jobs, it will bring in tourists and it will bring in money," said Mike Miller, co-owner of Town and Mountain Realty. At the same time, he is concerned that Asheville will be "loved to death," as he said, with new arrivals driving up property prices and causing future home buyers to look elsewhere. Mr. Miller said that in the past most buyers came from the New York area and Florida, but he is now getting calls from across the country, as well as Canada and Japan. He also noted a growing interest in new and green construction.

Terri King, president of Coldwell Banker King in Asheville, said she is seeing increasing demand for downtown luxury condominiums, especially from older residents who retired to large houses outside Asheville who then downsized to more manageable homes within walking distance of local attractions. Properties currently under contract include two contemporary condos atop the Hotel Indigo, IHG.LN -0.55% a high-rise with sweeping mountain views. One, a three-bedroom, was listed for $918,900, while the other, a two-bedroom, was listed for $810,900.

"The challenge of being a destination market is that the cost of living is higher than in, say, Knoxville, [Tenn.]," said Ms. King. "When people come to Asheville, they typically get sticker shock."

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