Beverly-Hanks President Neal Hanks, Jr. has delivered the 2017 End-of-Year Market Report. Watch the video below for his short report, or continue reading for a summation.
Consumer confidence is the highest it’s been since December 2000. What does that mean for the housing market?—More buyers. This includes not just first-time home buyers, but more people saying, “Maybe it’s time for us to move up to the house we’ve dreamed about.” Here in Western North Carolina, that optimism has translated into a 2% increase in sales compared to 2016.
Why isn’t the market even hotter than that? There are simply not enough homes to sell and meet that demand. We have 63% fewer homes on the market now than we did when the supply levels peaked in 2011. The continued demand for WNC real estate and a shortage of homes for sell is putting upward pressure on home prices. Across our region, home prices are up 8%, making it a great time to own real estate in our area.
When highlighting our regional real estate markets, we consider several metrics: sales pace, the supply of homes for sale, home prices, and the availability of financing. Here’s how the 2017 broke down by each metric:
WNC Sales Pace
In 2017, 9,244 homes sold in the nine-county region—more than 770 homes per month! This is the highest sales pace we’ve seen since the height of the market in 2006. Overall, sales were up 5% for the year and signed contracts were up 13%!
However, a shortage in the supply of homes for sale and subsequent escalation of home prices are slowing the sales pace in Buncombe and Henderson counties. Almost all of the smaller outlying counties, with lower median sales prices, are reporting double-digit increases in their pace. Rutherford and Yancey Counties are leading the way with 18% and 30% increases respectively.
The upward trending sales pace has also not impacted all price points evenly. The number of homes sold under $300,000 has dropped by 5% over the last year, in large part due to the lack of supply. But the sale of homes priced over $1 million has shot up from 87 to 128 sales, a 47% increase.
WNC Supply of Homes
An increasing sales pace, coupled with steep declines in home supply, is driving all of the other trends in our region. We have started 2018 with 12% fewer homes to sell than the beginning of last year. Many communities have dropped to the lowest supply level in a decade. That means that finding homes under $300,000 is becoming increasingly difficult.
In places like Buncombe, Haywood, and Henderson Counties, the supply of homes priced under $300,000 are down by as much as 30%. Meanwhile, the supply of luxury homes at $1 million and up remains largely unchanged despite a steep increase in the number of homes sold.
Specific neighborhoods with luxury-priced homes are experiencing different trends than the region as a whole, so checking with an agent specializing in your preferred community is always a good idea.
WNC Home Values
The shortage of homes for sale and increasing demand are all pushing home values higher. Despite this, demand is not expected to change significantly in 2018. Low interest rates, the draw of our region’s lifestyle, and active real estate markets in other parts of the country are all pressing values higher.
Nationally, Freddie Mac expects prices to increase by 4.6%, a slight decline from 2017’s projected 6.3%. The lower projections are due to ongoing housing affordability difficulties caused by increasing prices and interest rates.
The Federal Finance Housing Agency reported that Asheville MSA’s home prices appreciated 7% in 2017. Our local MLS data calculates an 8% average increase in median sales prices to $244,000. However, some areas like Henderson County have seen double-digit increases year over year. Buncombe County continues to experience the highest median sales price in the region at $275,000. Rutherford County was the lowest at $175,000.
Availability and Cost of Financing in WNC
Immediately following the presidential election in November 2016, analysts suggested mortgage rates would rise to 5% by the end of 2017. During the last weeks of 2016, 30-year mortgage rates jumped past 4%, adding credence to the predictions. In the end, though, those predictions were flat wrong. Rates fell and remained low all year long. With that in mind, we encourage buyers to take 2018 mortgage predictions with a grain of salt.
Modest economic growth, solid job gains, and low mortgage rates are likely to extend into 2018. The Mortgage Bankers Association predicts gradual increases to 4.8% by year end. At Beverly-Hanks Mortgage Services, we don’t expect interest rates to have any significant impact on our markets as long as rates remain below 5%.
Buying a home only makes sense if you’re able to own a home within your budget. A conversation with a Beverly-Hanks mortgage loan officer is a great way to determine if a home purchase is prudent.
Looking ahead to the 2018 Real Estate Market:
2017 was a record-breaking year for Beverly-Hanks & Associates, REALTORSⓇ and for most of our real estate markets. The region’s sales pace clicked along all year and hit inflection points in Asheville and Hendersonville. We expect 2018 to be another great year, but like 2007 and 2012, a year of adjustment and challenges.
With the consumer confidence hitting a 17-year high, we believe 2018’s real estate sales pace will remain strong. Demand will be invigorated by Millennials joining the fray and increasing their market share of homeownership. The record low supply of homes for sale is making competition fierce among home buyers. We expect this to continue for most of 2018 with supply levels rising nominally late next year. Prices are expected to increase, and we’re expecting to see a bigger increase in lower-priced homes. It will get a bit worse before it gets better for buyers of starter and mid-price homes.
All in all, strong demand, low supply, and rising prices are making for an intense market in 2018. But there are still plenty of opportunities in the local real estate markets if buyers and sellers are willing to think creatively.
Learn how to find opportunity in today’s dynamic market—Request a Real Estate Review from your Beverly-Hanks & Associates professional or visit our Market Research Center.
All real estate is local. In order to make confident real estate decisions, we believe it important for you to have timely and neighborhood-specific information.