Asheville Real Estate Market Report
Increasing Inventory, Increasing Sales, Increasing Rates...
As we approach the end of the year, traditionally I like to report on the conditions of the Asheville Real Estate market.  This report has helped clients make decisions relating to their buying, selling and investing needs.  In addition, I have recently developed the Asheville Real Estate Investment Fund for interested investors who would like to participate in the growth of the region.  Please let me know if you would like a copy which includes valuable information on real estate investing and the market dynamics of Asheville.
 
Below is a sample of current market conditions and related statistics.  Feel free to contact me anytime for a complimentary market analysis of your home or to discuss the current housing market. 
 State of the Market
Residential real estate activity throughout the region is currently fairly strong.  Existing inventory levels are growing rapidly as conditions have improved for sellers therefore increasing confidence to list.  In contrast, many buyers are facing multiple offer situations and are finding desirable properties selling very quickly.  
 
As usual in Asheville, It seems as if there is a lack of highly desirable inventory and a plethora of homes which are lacking in demand.
 
In the beginning of the year with mortgage rates at historic lows buyers flocked to the market.  As mortgage rates began to climb rapidly, sellers anticipated conditions were going to continue to improve therefore many listed their homes.  Rate increases will continue to quickly shift markets as affordability becomes an even bigger issue throughout the region. 
 
Overall, Asheville is seeing a much better pace than in 2012 in terms of sales volume. Overall, the region is up 20% compared to year-to-date sales from  2012.  The average listing home price jumped from $239,144 to $245,395.
 
 
 
Homes which are priced correctly in conjunction with their street and local competition have a good chance at getting close to their asking price.  Some homes are selling very quickly as demand is increasing and supply levels in their respective areas are reducing.
 
Buyers are still finding plenty of inventory on the market in many price-points, although many of the homes are not desirable due to location, updating needs or pricing issues.
 
Several price-points and locations are doing much better than others.   If your home is not updated it is going to be a tough time to sell.
 
Excess supply is still an issue in many areas thus providing a drag on pricing and increasing the time a home spends on the market.  Many homes are selling very quickly if they are priced correctly and many homes are sitting on the market for a very long time.  Correct pricing in any market is the key to maximizing value.
 
Mortgage Rates on the rise
 
After years of historic lows, rates are on the way up and will most likely close in on 5% by mid 2014 and go even higher in 2015, from an average of 3.5% in early 2013, according to Lawrence Yun the Chief Economist of the National Association of Realtors.
 
Mortgage rates have been rising fairly steadiliy because they tend to track the yield on the 10-year Treasury note.  As economic conditions have improved throughout the United States, mortgage rates have been tracking the strength.
 
 
 
 
Here is an example of how rising rates will affect the market:
 
1) There are about 17.8 million renter households with sufficient annual income of at-least $36k to buy a $177,000 home at a 3.5% mortgage rate compared to 14.9 million households at a 5% mortgage rate.
 
The good news is that lending standards are beginning to ease in securing a mortgage.  Losening conditions will assist people with gaining access to mortgages and assist the overall market.
 
However, buyers and sellers must be aware of the rising mortgage rate environment when planning for the future as this will directly affect values and affordability.
 
Sales Volume Statistics 
 
a) 2009 - 4,704 homes sold
b) 2010 - 4,772 homes sold
c) 2011 - 4,847 homes sold
d) 2012 - 6,137 homes sold
 
YTD - 6,783 homes have sold and with projected December sales this will increase to over 7,200.  Sales volume is projected to be up around 20% compared to levels in 2012. 
 
*Single family homes only
Price Range Differences
Specific price ranges are doing better than others.  Some examples of closed homes throughout the region include:
 
1) $160-$200k range
 
2013 YTD sold - 975
 
 
2) $200-$250k range
 
2013 YTD sold - 1,424
 
 
3) $250-$299k range
 
2013 YTD sold - 554
 
 
4) $300-$350k range
 
2013 YTD sold - 350
 
 
5) $350-$400k range
 
2013 YTD sold - 277
 
 
6) $400-$499k range
 
2013 YTD sold - 261
 
 
7) $500-$599k range
 
2013 YTD sold - 152
 
Good Deals Possible
As for buyers, there are ample opportunities for good deals.  Sellers are budging from their asking price, but not as much as over the past few years.  In 2013 the average list-to-sales ratio is 93.8% compared to 92.7% in 2012. 
 
Deal making is still possible, but much of the negotiating power is shifting to the sellers, especially if they receive offers quickly.  For example in June, 2011 the rate was 91.9%.  Seller pricing power is improving, although they are willing to negotiate if their home has been on the market for a decent amount of time.
 
I am seeing desirable and fairly priced properties sell quickly with multiple offers presented immediately when the home hits the market.  The list-to-sales percentages are based primarily on how aggressive a home is priced, location, desirability and several other factors including updates and neighborhood.
 
 
Increasing Inventory
Homes that are priced properly are generally selling quickly.
 
Homes that are overpriced for their location are sitting on average 177 days in 2013. These homes need to be priced suitably based on current market activity for their neighborhood.  The potential to sit even longer exists if the home is over-priced.
 
Average days on market had increased from 183 in 2011 to 189 in 2012.  As an example of how things have changed, in 2008 the average days on market was 126. In 2013 the level is now at 177 days.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Price and Inventory Levels
 
a) 2013 average home sales price in the region was $230,000 compared to $221,000 in 2012.  In 2011 the average home price was $217,000. 
 
The 2013 average inventory levels ran at about 10,727 for the year.  As of November the inventory level was at 11,704 which is on the increase.
 
2012 Avg Inventory on Market - 8,330
2011 Avg Inventory on Market - 8,566
2010 Avg Inventory on Market - 7,690
2009 Avg Inventory on Market - 5,463
 
You can see that inventory levels are starting to increase rapidly as market conditions have improved and sellers are attempting to sell their homes.  These inventory increases do not bode well for pricing power for some of the less in-demand areas in the future especially with a rising interest rate environment.
 
b) If you price your home with the expectation built-in of about 5% less than asking, you are putting your home in a much more competitive situation compared with other homes within the location and price-point.
 
c) For example recently in North Asheville I listed a home for $539,000.  The second day on the market we received close to asking price, with a sales/list ratio of about 97%.
 
The price point was attractive based on comparisons and we had 10 showings in 2 days due to proper pricing.
 
As always in Real Estate, some areas and some price points are simply more in demand than others.
 
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