While “sensational news headlines” paint a picture of a weak real estate market, a new report from Allen Tate/Beverly-Hanks Realtors says the regional market is still strong for sellers, despite some slowdowns from last year’s record highs.
Although regional sales are down 13.8% and the number of homes on the market increased 14.3% over last year, the 2022 Quarter Three Market Report notes that demand continues to outpace supply, which is shown by a 13.3% average price increase year-over-year. That rise is much lower than the dramatic rise in 2021, which is helping moderate the market, said Brian Cagle, vice president and managing broker at Allen Tate/Beverly-Hanks
The “days of skyrocketing listing prices and intense competition may be behind us for now” and sales are projected to continue falling into next year, but the report says long term data suggests the market is starting to balance out.
“A balanced market in the real estate world is when you’ve got six to nine months of inventory. The past two years … were real outliers for us, and our inventory levels got down to less than one month. So we’re swinging back toward a more balanced market, which is a very healthy thing and a good thing,” Cagle said.
The report echos what many, including experts at the National Association of Realtors and Goldman Sachs, have noted: Sales will continue to decline until the second half of 2023, when they will begin to rise again but still be down 7.1% overall.
Asheville is shielded somewhat from national trends, allowing the region to see slower falls than other major metropolitan areas in times like these, said Winston “Rusty” Pulliam, CEO of Pulliam Properties and an Asheville-born and raised investor and developer.
“The demand to retire and live in Asheville is so strong. That helps keep the market decent even though there’s a national downturn with mortgage rates rising,” Pulliam said.
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High mortgage rates, the report notes, still plays a part in the falling regional sales. The average long-term mortgage rate recently rose above 7% for the first time in 20 years, according to reporting by the Associated Press.
Amy Congdon, vice president of Beverly-Hanks Mortgage Services and president-elect of the Mortgage Bankers Association of the Carolinas, said high rates mean that borrowers can borrow less and some people, like first-time home buyers and those with lower incomes, may not be able to get a loan at all. Last year, long-term mortgage interest rates averaged 3.14%, AP reported.
Not everyone is affected by the rise in mortgage rates, however, as the study points out that between 35% and 40% of all transactions at Allen Tate/Beverly-Hanks were paid in cash, not with a loan. It was these transactions, not the low mortgage rate, that led to last year’s dramatic increase in prices, Congdon said.
“Cash buyers are not subject to constraints the same way that mortgage buyers are. So when you get a mortgage, you also are subject to things like appraisals, which means that the house you’re buying has to appraise for whatever the asking sales price, but when you’re buying a house for cash you can buy that house for whatever you are comfortable buying that house for,” she said.
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The report says that more inventory and settling construction costs could help slow the rapid increases that home prices have seen. Currently, inventory is rising, but not fast enough to meet historic norms of market saturation, the report says, and homeowners happy with their low interest rates from years past may be reluctant to put their homes up for sale, furthering shrinking inventory.
Vicki Meath, executive director of Just Economics, said even though price increases are slowing down, prices are still so high that many no longer care about market trends.
“I think real estate in Asheville has moved way out of the range for working class, first-time homeowners, so I am not sure whether interest rates or buyers vs. sellers market really matters,” she said.
The commercial real estate market, Pulliam said, is also going strong in the region. Each of the three types of commercial properties, industrial, retail and office, all have strong markets in Asheville, even as the office market has fallen in other cities.
Christian Smith is the general assignment reporter for the Asheville Citizen Times. Questions or comments? Contact him at RCSmith@gannett.com or 828-274-2222.