What do we think Asheville's Market looks like through 2021?
Hey guys, something I've been thinking a lot about lately (as I'm sure most of you have as well) is what Asheville and the surrounding area's RE markets are going to look like going into 2021. This has been a strange year for all of us as we watch many aspects of our lives rapidly change due to Covid. I'm going to present some statistics, both local and national, to try to paint a picture of where we are right now. I would love to hear all of your thoughts on this, and where you think we go from here. I apologize in advance if some of my figures are off, they come from a variety of different sources.
Midway through the pandemic as unemployment rates were rising it looked as if RE was going to start taking a massive hit and cause floods of new inventory to hit the markets, but to this point that doesn't seem to be happening (in Asheville at least). There was an initial slow-down in sales in early spring, but that quickly changed as Asheville saw a 23% increase in September home sales over 2019 figures, with some areas like Waynesville up almost 40%. Median sale prices and average sale prices in the area are up substantially compared to this time last year as well. We're seeing Average Days on Market figures remaining nearly identical to last year at around 60-70 days. Even now, properties under $200,000 are being bought especially quickly and being put under contract in a matter of days. Secondary and tertiary market movement tends to happen after larger primary markets, and some big cities in the US are starting to see substantial drop offs in home sales figures- Manhattan is down 56% from one year ago and have 31 months!! of inventory- while the country as a whole have about 3 months of inventory.
The ability to refinance homes at record low rates seem to be keeping elevated delinquencies in check with over half of all mortgage loans created since the start of the pandemic being non-cash-out refinances (with up to 70% of all recent mortgage loans being refis). While rates of non-current loans are still higher than last year, serious delinquencies of more than 89 days are now leveling off for the first time since the pandemic started. The national delinquency rate (30 or more days past due) is about 6%, which is still about 2.5% higher than this time last year. 16% of all FHA loans are 60 days delinquent, which is the highest amount ever, and over 2 million people are over 90 days delinquent nationwide. About 30% of all renters are not paying their rents timely, and the commercial sectors are even worse. The CARES act foreclosure moratorium is causing the foreclosure inventory rate to remain lower now than it was pre-pandemic, and that seems to have recently been extended further into 2021. But what happens at the end of this? Are we going to see all of those 2 million properties over 90 days delinquent hit the market, or will the fed come and extend the moratorium to ease the supply dump? When we start to see that inventory hit the market from mortgage forbearance, do we think there will be a substantial dip in housing values around Asheville? Or is the market here too red-hot to slow down with the mass exodus of people still moving here daily? The tsunami always hits after the earthquake, but was the Covid earthquake big enough to impact our markets? Selfishly as RE investors, whether we want to admit it or not, I think we would all relish a substantial inventory dump and market dip to have the opportunity to feast in a long awaited buyer's market for awhile.
Thanks for indulging me guys, and I think this is an important conversation to be had. Obviously it's impossible to predict the future, but we're sitting at a crossroads and having some clarity from more experienced investors could help newer investors in our area decide if they want to pull the trigger now or possibly wait to see what the next few months bring.
Not to have too much faith in Asheville and the surrounding areas but I think people will continue to come whether it is short term or long term. It really is a special place for better or worse. We didn't fair too bad during the mortgage crisis in 07 and even then some people made money and got into the market while the larger markets in the country did not. While there really isn't much corporate employment in the area it is supported by larger cities in the southeast like Charlotte, Atlanta, Raleigh and basically anywhere southeast of us. Asheville is politically conscious and progressive and surrounded by mountains. I think those traits will weigh more heavily as time passes.
Very well written and excellent data...
If there is a good deal I would personally take advantage of purchasing now. It is very difficult to predict the future given the uncertainty to perfectly time the bottom of the market. What is certain is that interest rates will increase above today’s historical low and there is a high probability of future inflation. Don’t get caught by recency bias that there will be a replay of 2008. There is a lot of irrational behaviors in the stock market and real estate is a much safer investment vehicle as we near end of 2020.
Will the tide go out before the tidal wave of inflation?
I’m always searching for a good location and Asheville is an opportunity for long term appreciation. If you see a good deal and need an investment partner to make the purchase decision easier, message me.
I have some Buncombe County stats for you for November:
Average days on the market including all price points is 46 days, that is 21 days less than it was last November.
Sales price is averaging out at 99% of list price, and in the $400k-$500k price range the average sales price was over list price based on 112 homes going under contract.
There were 6% more homes listed this November than there was last November, so that's interesting.
Our team are helping 3 main categories of sellers and buyers right now.
Oh and by the way Buncombe County has 1.3 months of inventory right now.
People from the upper NE, Florida, CA relocating to the area.
People that have come to realize that they are paying so much in rent, that they can use these low rates, (working with someone right now that has 30 yr conventional at 2.4%) to buy a house and effectively pay the same or less that they were paying.
People wanting to capitalize on the market with their current home and are downsizing.
We have all been amazed on how red hot this sellers market has been and how long it has been maintained.
It really depends on how long the Fed and the powers that be keep kicking the low rates, the eviction ban and forbearance offerings down the road.
I love this conversation, recently I was looking for a property in Asheville and we wound up in Maggie Valley instead. Over the past year or so I have watched it gradually rise in purchase price. Right now my biggest concern about buying there is the quality of the homes that are on the market between $200 - $300k. It is almost like you have to buy a new build because some of the homes that are going on the market are "riding the wave" but have a lot of structural issues, roof issues, major repairs that need to be completed. Then you have a similarly priced new build a tiny bit farther out and they are the same price. I think overall the prices are going to continue to rise but if it was my choice to buy, I would be trying to stay away from those houses that are overpriced and are going to be a headache to fix and focusing on the newer homes in Fletcher and Arden.
Asheville has always been a niche market and I don’t believe we are going to see the dip in home prices that investors are wanting and waiting for especially with Amazon opening a warehouse in Mills River and Pratt & Whitney coming to the area in the near future. If anything, home values will continue to rise.
Great conversation here. I think it is very interesting to discuss. I am bullish for the Asheville area. I continue to see market forces pushing upward.
First, the obvious bad news for the Asheville area.
- - Many local people are not able to buy in this area because they don't have high paying jobs.
- - If the virus continues at the rapid pace it is at, it's going to be hard for the vibrant local economy (restaurants especially) to stay afloat.
- - Aging homes at elevated prices MAY be less attractive to out of towners.
Second, the obvious good news for the Asheville area.
- - Asheville is a destination city. It's easy to travel to locally and nationally. It has amazing food, outdoors, and culture.
- - Asheville is a part of the rising tide in the "Charlotte" metro which is third fastest growing in the country. https://www.biggerpockets.com/...
- - Asheville has a relatively stable and temperate climate which means it is a haven when extreme weather happens.
- - Growing job market as more corporations hop on the Asheville band wagon. (Mini-Austin?)
- - With construction costs rising, (~$200/sq.ft.) it's not unreasonable for housing prices to rise.
- - Out of town buyers may not mind buying a fixer-upper at $200/sq.ft. to end up at $300/sq.ft.
- - Outside investors have long taken notice of Asheville. Right @Curt Wortman?
- - Asheville area has room to grow. There is good opportunity for redevelopment and growth in small towns where you have 30 minute access to Asheville. Think of Old Fort, Marion, Mills River, Fletcher, Fairview, Canton, Waynesville, Mars Hill, Alexander, Burnsville, etc. Many cities have commuters living over an hour from where they work.
Summary -
When you consider the demand in the area, influx of capital, rising cost of construction, low inventory, low interest rates, and growth trends/opportunity we could see the prices in Asheville continue to rise. I would not be shocked to see ~$350/sq.ft. become the average for the Asheville area in 2021.
Of course, it's all speculation, but there are a lot of upward forces in Asheville right now. I'm hopeful but certainly not buying for inflation!
Small sample size, but I only expect Asheville to keep getting more and more expensive. Asheville is "cool" now, and is attracting retirees not just from Florida and the North East, but now is getting lots of Texas and California moving in, and it also attracting a lot of tech nomads. Through moderate growth in manufacturing into the mix, and it's not going down hill.
The biggest driver of prices is retiree money, and they don't care much about all the things us working age folks think about. A large stock market decline might effect that supply of new money. The biggest driver will be the fact that people want to be near downtown and West Asheville, and there simply isn't much buildable land in those areas. As you get into Fletcher, Candler, and Canton you may see bigger swings, but I think Waynesville, Black Mountain, and Hendersonville have become destination towns all by themselves, and will continue to have upward pressure. Time will tell, and these could be famous last words, but I think that as expensive as it seems right now, folks in 10 years will remark how low the prices in Shiloh, West Asheville, and the areas just north of downtown.
I definitely think Raleigh is on everyone's radar, and probably Charlotte. Asheville probably has various tailwinds, I think. Heck, throw a dart at the Sunbelt region and you won't do too awful badly if you don't buy over market value and can wait five to fifteen years.
I am interested in Asheville and have been investing in that area for years. However, Asheville and Buncombe County leadership is starting to get a lot of attention. As you would expect the opinion is divided, whether for better or for worse. However, you can do your own research on the grave staffing issues APD is having, mostly due to the lack of support from their community leaders. So, there is something here to at least consider. Many, non-locals, continue to move to Asheville and will continue to do so and drive up prices due to high demand and low supply, but others that have lived in Asheville have left for better communities and leadership in Madison, Haywood, Transylvania, and Henderson Counties. This is especially true with more work from home capabilities and the commute is not as much of an issue. Combined with the rent to price ratio, among other REI metrics that are hard to make sense in Asheville, Asheville will continue to be an investment stretch as prices continue to grow significantly faster than rental amounts. As Asheville becomes metro with metro problems, I look to take advantage of the area growth without the Asheville problems and leadership dichotomy. Instead, take a look at Mills River, South Asheville, Hendersonville, Fletcher, Waynesville, Weaverville, Brevard, Mars Hill, and possibly even Sylva.
I personally like just across the county line in Henderson County, around the airport known as South Asheville. It is easy access to Biltmore Park and the Outlets. This area is notorious for competing for large and medium businesses with Buncombe, due to the easy access to the airport and other egress and ingress advantages. This is the area where the Amazon distribution center was established this year.
Also, I am keeping an eye on the forbearance and eviction stays. This could flood the market with a substantial amount of inventory and vacancy within a short span of time in early 2021. This could impact pricing and rental amounts downward. It might present buying opportunities. However, I and others that I have spoken with, have not had to dig-in greatly into forbearance, if at all, and do not have many tenants, if any, that are delinquent. I realize many of things are propped up with stimulus right now but as long as unemployment remains low and consumer sentiment stays high, I don't see much of a slow down for this area in real estate.
Wow I feel like I just ran across a 1-cent Benjamin Franklin stamp from 1840. You wrote a fine post, but it's your FIRST. Neato-mosquito. Welcome to BP.
Originally posted by @Jason Merchey:Wow I feel like I just ran across a 1-cent Benjamin Franklin stamp from 1840. You wrote a fine post, but it's your FIRST. Neato-mosquito. Welcome to BP.
Thanks. I'm a long time lurker, but could have sworn I'd made a post before. I guess not.
As a local agent, I am seeing a lot of the same things that @MattPayne talked about. We have a huge influx of people from Florida (which isn't new), California (which is new), and cities in NE like DC and New York. People moving from these more expensive places don't seem to have a lot of issue with paying prices that only two years ago would have seemed outrageous. Living north of town in Weaverville, the value of our home has increased $100,000 in two years since it is on an acre and a larger family-sized home. I am unsure if the evaluation will stay this way into 2022 when people are vaccinated and are drawn back towards city life, but it's nice for now.
My firm is are seeing A LOT of activity in the Burnsville and Spruce Pine area, and other smaller outliers in Waynesville, Maggie Valley, and Black Mountain.
The low inventory issue at least partially stems from the fact that those who live here can sell a house in a few days, but don't feel they can find a new one at any sort of a reasonable price. I know numerous people in my age group who have young, growing families that need to move out of town to get more space, but are afraid they will end up in a situation where they can't find a house they can afford. We moved to Weaverville from West Asheville 3 years ago and couldn't afford Woodfin at the time. If we were trying to do that this year we wouldn't be able to afford Weaverville.
Will the ending of the CARES act lead a large amount of people to list and relieve some of the pressure? Maybe, but I am not convinced that the backlog of people actively looking to purchase won't fill that gap quickly. I have numerous buyers on hold just waiting for properties to come on the market. The buyers are there, it just seems that at this point the sellers can't afford to move.
@Abigail Gibson, I'd be interested to hear your opinion/view on the macro market for Buncombe county. Your last post on this thread/topic was about 11 months ago when the influence of the pandemic was in my view distorting the supply/demand aspects of WNC real estate. Are buyers still lined up to buy? Has the market returned to some type of normalcy? Do you see pockets of opportunity for investors?
In the greater Raleigh area, for many of the past four or five years we lost the seasonality of the market. Selling/buying never really slowed down. I don't know if that is still the case or not, but I suspect the real estate raging bull market continues here in the greater Raleigh market. Just curious if that is the case in Asheville/Buncombe county. Also would be interesting to hear about Wilmington and Charlotte if anyone in those markets has insight.
I think the Big-4 (Charlotte, Raleigh, Wilmington, Asheville) as I've called them for 5+ years will outpace other markets in the next decade as they have in the past few decades. Unfortunately, Bigger Pockets lately removes many embedded images, which in many of my post are 90% of the content. An image is worth a thousand words, right? I don't know why they delete content, IMO valuable info. But I'm not in charge.
My expectation/observation is that people bought 'stuff' during the 'pandemic recession' and now that things are relaxing and getting normal, they will soon (12 month or less) be off-loading some of those assets (e.g. off-grid campers, prepper-style land acquisitions, generators, etc.) My observation is based on selling excess solar panels (container left overs from Sampson county solar farm build,) primarily to off-gridders. Demand >> Supply. I see these real estate price spikes occasionally and they historically are not sustainable. I expect vacant land to be price challenged in the next 12 months in the Big-4, more so than the secondary and tertiary markets in NC which have underperformed price-wise for a decade.
Would be curious to hear everyone’s thoughts on Asheville for the rest of 2022 and 2023?
With rising interest rates and market uncertainty, have you noticed any sort of slowdown in Asheville? If so, do you think it’ll continue to slow down over the next 12 months?
There has been a slowdown, and to be expected, as the appreciation and demand were unreasonable essentially. To me it depends on what you compare the current market too. Compared to the covid years then yes slow, compared to the run up years to 2020 then it's still swift and supply is still lagging. If something is priced appropriate it will sell in 2 weeks tops. If it is not priced appropriate, it will sit until it becomes priced appropriate and then it will sell. The demand for housing and investing is still strong here, sellers are just having to adjust their pricing to not forward think about 15-20% appreciation and go back to the "standard" 5-6% annual appreciation when they price a property. Market is correcting, but still biased to the seller as inventory is still lagging... my 2cents.
Quote from @Matt Payne:I agree with you here Matt. Overall, inventory is still lagging the demand, and still in the sellers favor if they go in with preCovid realities and perspectives.
There has been a slowdown, and to be expected, as the appreciation and demand were unreasonable essentially. To me it depends on what you compare the current market too. Compared to the covid years then yes slow, compared to the run up years to 2020 then it's still swift and supply is still lagging. If something is priced appropriate it will sell in 2 weeks tops. If it is not priced appropriate, it will sit until it becomes priced appropriate and then it will sell. The demand for housing and investing is still strong here, sellers are just having to adjust their pricing to not forward think about 15-20% appreciation and go back to the "standard" 5-6% annual appreciation when they price a property. Market is correcting, but still biased to the seller as inventory is still lagging... my 2cents.
However, originations are down 10% and affordability has taken a hit of 30% (based on rates almost doubling with some lenders in the $350k purchase price range). I also think we are getting back to some regionality, some of your more rural counties are seeing adjustments back to preCovid levels much quicker and even sometimes deeper. I would also say those in the $200k-$400k range are seeing this adjustment happen quicker as well, as this is the demographic where affordability is taking the biggest hit.
I think I’m seeing some upward demand for rentals due to the purchase/mortgage/affordability demand adjustments. This is a relief for rental investors, as rent figures have not kept up with appreciation over the last 3 years in this region. I will be testing this with some vacancies over the next 60-90 days.
I think we are trending toward preCovid levels as we sit right now. Should the Fed continue with more rate hikes, like the last few, we may see this thing turn toward an imbalance to a buyers market since demand will continue to adjust lower. Where a well qualified or cash buyer may have an upper hand again. But then again this becomes part of the cyclical nature of the housing market, we’ve not had in really 5-10 years, so long as it’s not too deep it is probably healthy.
Curious to see what everyone else thinks.
@Nathan Whitson, @Matt Payne: I'm speculating, and perhaps with too much optimism, but I believe we're going through a temporary adjustment rather than a long downturn. I believe this because although mortgage rates took off like a runaway train early 2022, and although they're still rising and falling by the day right now, from afar the trend of the last 3 or so months looks like a plateau with a slight angle upward. Meaning, not stable, but not so scary either. Last Spring, many of us thought we might be at 7% or more by now, and buyers understandably feared that by the time they got under contract their rate might cause the monthly bill to be significantly higher. Thus many of them voluntarily quit the pursuit, including many first-time investors, while many others learned from us that they now could only qualify for a purchase price that is far too small for our market. The fear of runaway rates seems to have calmed down some lately though, causing a few of the former buyer pool to reignite their pursuit, and also giving confidence to a new pool of buyers and prospects. The fact that we suddenly lost what felt like 2/3 of the former buyer pool, and the fact that we had to wait for the crop of new people to come online, seems to me to be one major reason we're in a time of adjustment, where many sellers are having to lower their expectations due to decreased demand (note that this doesn't seem to be across the board...some homes are still receiving many offers within days of listing). Perhaps some markets will take a harder hit from these and other factors, but I don't see demand cooling much for our market. It's not a place where people live only because they have to. People really want to be here, due to the incredible outdoors opportunities, the climate, etc.
@Nathan Whitson@mirch@Mitch Davidson@Nathan Whitson
So, I live in the same camp as Mitch (perhaps also much too optimistically) but I think we are seeing a correction and yet buyers are still buying. The sub $350,000 range is still going under incredibly fast if it’s priced right. It’s not 10 offers but if you don’t get in to see it in 2 days, it’s gone. (IMO, This is of this/last week. Prior to this week people were in vacation mode and still a bit nervous about the ever changing interest rates). I’m already seeing buyers (including investors) getting back in the game because it feels less “scary”. I’m personally looking forward to purchasing some deals that have sat on the market over a month or two. Deals are out there if you are willing to not fall in love with a specific property and shop around with aggressive offers.
Full disclosure, I believe in the long term vitality of the Asheville market for the next 30 years. I moved here in 2004 and it was a totally different place. You didn’t go downtown the way you do now and as a local, I now longer go downtown because it’s so busy-ha. I think we are in a correction but I have long term hold strategy so I’m just not that concerned. I bought an expensive (to me) home in April that probably wouldn’t sell for what I paid for it now, but it’s a personal residence that allowed me to turn my previous primary into a rental (for triple the mortgage because I refused in 2020 into a2.675 mortgage.) If the numbers make sense, they make sense. Make sure you have a decent sized safety net for your portfolio size and keep buying if you plan to hold long term. I personally think in the greater Asheville area, it will pay off.
Quote from @Matt Payne:I agree with this, from a distance. I'm hunting for my first property in the area but am an investor based in the Charleston area. We're in a pretty similar situation. As long as you buy right, rehab right you're still selling quickly. Those that bought aggressively these last few years have made enormous gains but are also the ones with properties sitting right now 2-3 months still significantly overpriced. I've never been one to buy needing to set a record in the area to make a good profit. I've always put out a good product in a good area at 95% retail value because I buy a bit more conservatively.
There has been a slowdown, and to be expected, as the appreciation and demand were unreasonable essentially. To me it depends on what you compare the current market too. Compared to the covid years then yes slow, compared to the run up years to 2020 then it's still swift and supply is still lagging. If something is priced appropriate it will sell in 2 weeks tops. If it is not priced appropriate, it will sit until it becomes priced appropriate and then it will sell. The demand for housing and investing is still strong here, sellers are just having to adjust their pricing to not forward think about 15-20% appreciation and go back to the "standard" 5-6% annual appreciation when they price a property. Market is correcting, but still biased to the seller as inventory is still lagging... my 2cents
We just listed a property last week and had 25 showings, 4 offers with three over list in the first 48 hours during a tropical depression. I think a slowdown is needed and believe we're in that tough time where sellers still think their property is worth X but it's worth Y. A few months of education is needed to reset expectations.