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High-end home sales surge

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10/10/2012 - High-end home sales surge
by Dale Neal - Asheville Citizen Times

 ASHEVILLE -- High-end home sales and construction have surged since August, signaling the hard-hit housing market may finally be on the upswing from the Great Recession, local brokers and builders say.

 The sale of million-dollar-plus properties doubled in Buncombe County to 19 this August versus eight in August 2011. 

"We're beating records going back five years. We sold more units this August than we did in August 2007," said Neal Hanks, president of Beverly-Hanks & Associates.

The Cliffs at Walnut Cove in Avery's Creek has 30 homes under construction or review -- double what the golf course community had previously seen at any one time, said Kent Smith, of Walnut Cove Realty.

The benefits spread beyond just jobs in the hard-hit construction sector, which has struggled since the 2008 financial meltdown.

"New homes don't just support construction," said Tom Tveidt, an economist with SYNEVA Economics in Waynesville. "There's continual demand after people move in that helps support retail and all other businesses."

"What's made the Asheville economy unique is not just our strong health care and manufacturing sectors, but people moving to the area," Tveidt said.

The building of one house alone can employ 40 people, Smith said.

"There's a guy doing the framing, another doing the electrical, another driving the truck and so on," he said. "These houses are bringing money into Asheville, and it doesn't stop after the home is built."

The building boomlet started in the spring, at least for C. Skip Brewer, a state accredited builder and owner of Walnut Cove Builders.

Brewer is at work on a million-dollar home now and has two more projects in planning. "We're able to put subcontractors back to work, and they are grateful."

Buyers are interested in lots at higher-end developments that survived the fallout from the Great Recession, including the Cliffs at Walnut Cove, Southcliff, The Ramble and Biltmore Lake and elsewhere.

And those who have bought lots in those developments are starting to build now.

"People had been sitting on the fence before," Brewer said. "This has been our most positive year since 2008."

At The Ramble, 16 homes ranging from $780,000-$2 million are under construction, raising the total to 110 homes in the development with more in the pipeline, said Brad Galbraith, vice president of community development at Biltmore Farms.

Biltmore Lake has seen contracts for 12 homes averaging $330,000-$500,000 since August.

"We've had 21 contracts so far this year, and we're entering the height of the fall market, which creates a lot of home sales," Galbraith said.

The story is repeated at Fairview's Southcliff, which has sold half of the 144 single family lots.

"We have five homes under construction and five in review. We've doubled our sales since last year," said Mike Romero, of Beverly-Hanks' Southcliff office.

Asheville's housing comeback can be credited in part to strengthening markets around the country.

"There's a lot of pent-up demand. People in Chicago and Florida and Texas are able to sell their homes and make the move to Asheville," Romero said.

Nationally, existing home sales in August were the strongest since May 2011, rising 7.8 percent for the month to a seasonally adjusted annual rate of 4.82 million, according to the National Association of Realtors.

Dale Akins, president of The Market Edge based in Knoxville, Tenn., saw construction picking up steam across the region beginning in January.

Construction up, too

Western North Carolina has seen an increase in residential building permits as well as markets in the rest of North and South Carolina.

Buncombe issued 303 permits for the first two quarters of 2012, up 18.8 percent from over the same period last year.

Third quarter figures won't be available until later this month.

In 2011, Buncombe issued 512 permits, significantly down from the peak of the building bubble with 1,749 permits in 2007 before the Great Recession.

Akins doesn't expect numbers to return to those pre-recession levels "because that market was unsustainable."

"We reached the bottom in July 2010, and we've seen a steady climb since then," Akins said.

The rise in building permits could translate into improving job figures for the Asheville area within the next quarter or two, depending on the lag "between issuing the permit and actually putting nails in wood," Tveidt said.

"It may be trickling through the economy now," he said.

Malcolm Morgan, of Morgan-Keefe Builders, sees more interest with clients coming into the market, ready to go ahead with building plans that may have been postponed for years.

"We've built up a base of good subcontractors. So, we're hopeful things are going to loosen up in the market for our subs and vendors, all of us having struggled for so many years."

Along with historically low interest rates, the cost of building materials and labor is lower than the housing boom around 2005, Brewer said.

"Then there was spike in costs with no end in sight, but now the roller-coaster has come back to the bottom," he said. "That makes it a great time to build a house."

After years of sluggish sales, Galbraith remained somewhat cautious about saying that the market had finally turned a corner.

"I don't know how many corners there are, but I'm definitely not a pessimist," he said.

Hanks said almost 10 months of improved sales make him feel more confident about the housing market.

"There's a strong trend. We're seeing movement in the upper end homes -- that was the area had that had been very sluggish," he said. "We're still going to have some dips, but the recovery is clearly on the way."

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