These days we are getting only one question, although it comes in many forms: How will the novel coronavirus impact our local real estate market? As of now, buyers are still buying homes and sellers are still selling—and Beverly-Hanks is still here, at the ready, to serve our community.
To give you the rundown of the current market, Beverly-Hanks President Neal Hanks, Jr. has delivered the Q1 2020 Real Estate Market Report. When breaking down the markets, we examine four metrics: supply of homes for sale, sales pace, home prices, and the availability of financing.
Read the full report or contact your Beverly-Hanks real estate expert to learn more about the dynamics of your neighborhood.
WNC Supply of Homes for Sale
As of March 31, home supply in Western North Carolina was already at the lowest level in over a decade. Keep in mind, it takes the better part of three weeks to professionally prepare a home for the market. So, we believe that the lion’s share of the reported shortage represents pre-existing market dynamics and not the impact of the virus.
Current reporting for early April, when the effects of the virus, social distancing, and stay-at-home orders began to impact in the real estate market, suggests that new listings may be down by as much as 50%. When we emerge from this, a severe shortage of homes for sale will shape our market and drive home values.
The shortage of homes for sale intensified in seven out of our nine counties in Q1—in some areas by as much as 33%! Overall, there are 15% fewer homes for sale now than this time last year. Yancey and Mitchell are the only counties in our region seeing more homes for sale now than Q1 2019, up 12%. The market there remains balanced or tipped in favor of buyers in all brackets above $100,000. Throughout the rest of the region, it is common to see a sellers market for homes priced under $600,000.
With a shortage of homes for sale, it’s important to review new homes for sale quickly.
- View new homes for sale in Asheville.
- View new homes for sale in Brevard.
- View new homes for sale in Hendersonville.
- View new homes for sale in Waynesville.
WNC Regional Sales Pace
The regional sales pace was going strong through the end of the first quarter. Year-over-year regional sales were up 15%. Of our nine counties, only one didn’t report at least a 10% increase in the number of homes sold each month (Transylvania County). Rutherford County moved homes the fastest, at an increase of 43%!
Again, it’s important to note that since our Quarterly Market Report details the past 90 days, the data only reflects the first few weeks of the more aggressive social distancing recommendation. We expect to see more significant changes to the local sales pace later this month when the public’s adoption of social distancing more accurately reflects their need and desire to tour properties.
Total closed sales across the region were up 16% over the first quarter of 2019. 2,051 homes sold in the last 90 days. That’s more than 22 homes every day! When paired with a staggering home supply, if this strong sales pace keeps up, competition for your chosen home may be more intense than ever.
WNC Home Values
Despite many worries to the contrary, we don’t anticipate any significant declines in home values. (See below.) There are many reasons why the current economic crisis is unlike the housing crash of 2008.
The Home Price Index provided by the Federal Housing Finance Agency is one of the most accurate in the industry for home values. However, it does lag our local MLS data by one quarter. According to the Federal Finance Housing Agency, Asheville MSA’s home prices appreciated 5.1% in 2019. Similar appreciation is expected this year.
The median sale price for homes in WNC is $279,925. Buncombe County’s median sales price continues to lead the region at $314,500. Rutherford County is the most affordable at $183,250.
Availability and Cost of Financing in WNC
The economy is uncertain and unemployment is skyrocketing. With financial markets bucking wildly, it is virtually impossible to forecast the direction of mortgage interest rates. And it is unlikely we will receive reliable insight for many months.
As of March 23, the Fed lifted its cap on the purchase of mortgage-backed securities (MBS). And, it’s the price of these, rather than anything else, that determines the overall direction of mortgage rates. Under normal circumstances, the Fed’s action should have driven mortgage rates considerably lower, but due to the market’s queasiness, the change had limited impact.
In the final days of the quarter, interest rates began to fall relative to before the Fed’s new policy went into effect. The Fed’s plan should stabilize rates in the coming weeks, but not without swings. With rates in the mid-3s and a jittery economy, if you hope to close in the next 90 days and can obtain a mortgage, lock and close.
Work closely with your Beverly-Hanks mortgage loan officer, and be ready for additional scrutiny. Our loan officers have decades of experience and are prepared to help. Contact your Beverly-Hanks Mortgage Services loan officer today.
Will the Current Crisis become Our Next Housing Downturn?
Many housing experts, including our team at Beverly-Hanks, do not believe so. With the housing crash of 2006–2008 still visible in the rearview mirror, many are concerned that home values will again tumble. What’s taking place today is nothing like what happened the last time.
Last time, the S&P 500 fell by over 50% from October 2007–March 2009, and home values depreciated between 2007–2009. However, that economic slowdown was caused in large part by collapsing real estate and mortgage markets. This time, the stock market correction is being caused by COVID-19 and has no connection to the housing industry.
Many experts believe that our current situation more closely parallels the challenges we faced when the dot.com crash was followed by the 9/11 terror attacks. The S&P dropped 45% between September 2000–October 2002, and home prices in our part of the world appreciated nicely. Public fear likely spurred our markets as people longed for the simpler quality of life found in our mountain communities. We expect a similar response after this most recent crisis passes.
Read more: 5 Simple Graphs Proving This Is NOT Like the Last Time: Part I
So, What’s Next?
Historical analysis demonstrates that crisis-inspired recessions are usually V-shaped. These V-shaped events are characterized by sharp drops in market activity that recover quickly, causing little damage to home prices. Going into this health-inspired crisis, all of our market metrics pointed to a healthy and robust real estate market.
Our projection for the real estate markets is that we’ll have a tough first half of the year, but the economy and our local real estate markets will bounce back nicely during the second half of the year. Our agents are currently reporting fewer showings, but website and video traffic remains on par with last year. Current web traffic and interest in property videos suggests that buyers are postponing showings, but remain actively engaged online. We believe that when the ordinances are lifted, we’ll see a spike in real estate activity.
Ready to Learn More?
Even in difficult market conditions, our team never stops working tirelessly to provide exceptional service to our clients and communities. To continue supporting our clients and comply with local and state ordinances, we’ve shifted to a digital-first mentality. Luckily, we were already well positioned for such a move because of our prior focus on 3D tours, in-house video services, and a largely paperless contract process.
We stand ready to assist you. Our entire team is adapting, adjusting, and working together like never before. We remain ready to provide the same high level of support and counsel as ever.
If you have questions, contact your Beverly-Hanks agent to learn more about COVID-19’s impact on local real estate.
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. Request a Q1 2020 Real Estate Market Report from your Beverly-Hanks real estate agent.