“Home” is More Important than Ever: The Beverly-Hanks Q2 2020 Market Report

Before the COVID-19 outbreak and stay at home orders began, the markets were robust and healthy. Our primary concern was the shortage of homes for sale going into our primary listing and selling season. 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 Q2 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.

What's Happening with the Real Estate Market in WNC?

What’s Happening with the Real Estate Market in WNC?

Since our last quarterly report, our world has changed. The real estate markets have undergone rapid and meaningful adjustments, in turn. Our quarter one edition was released only days before North Carolina’s mandated closures and social distancing requirements. At that time, the markets were characterized by a robust sales pace, dwindling supply, and moderate price appreciation.

In a matter of 90 days, COVID-19 dramatically altered our region’s real estate market dynamics. Our homes became places where we work, places where we learn, and the places where we shelter our loved ones. And in the process, we’ve developed an even deeper understanding of the importance of home.

Locally, we notice increased interest in homes with outdoor living space, ample home office space, and interior room for exercise and wellness. If you are a homeowner with a home that boasts these in-demand features, now is an incredibly advantageous time to sell. 

WNC Supply of Homes for Sale

WNC Supply of Homes for Sale

Even as COVID-19 wreaks havoc on communities throughout the United States, it has yet to put a real dent in Americans’ willingness to buy homes. In Western North Carolina, our difficulties lie almost entirely on the supply side. Houses for sale, which were already in short supply before the pandemic, are now insufficient to meet current demand. 

At the end of quarter one, there were 3,038 residential properties on the market. Owners pulled their homes from the market as they worried about the safety of showings. Even more listings were held back because of sudden unemployment and the dire economic effects of the virus. Because of this, our supply shortage has intensified. As of July 1, the number of homes for sale dropped to 2,838. In addition to being significantly lower than Q1, that figure also represents 33% fewer homes for sale than this time last year.

At this point in time, almost every community is experiencing too few homes for sale to keep up with current demand. Across WNC, the market strongly favors sellers in most communities all the way up to $700,000. Strong demand from buyers will almost certainly continue to push home values higher as long as inventory levels remain critically low.

With a shortage of homes for sale, it’s important to review new homes for sale quickly.

WNC Regional Sales Pace

WNC Regional Sales Pace

Even as COVID-19 continues to make life difficult throughout the United States, it has yet to put a meaningful dent in Americans’ willingness to buy homes. 

Since early April, the national market experienced a dramatic slow down and then recovered much more quickly than expected. In April, national pending home sales reached their lowest mark in nearly two decades. As a result, closing activity, which follows contract signings, reached its trough in May. This pattern matched our experience in WNC. Compared to Q2 2019, this quarter was down 19%.

However, the year-to-date sales numbers for the nine-county region have only experienced a meager decline of 2% from 2019. We experienced a surge of buying activity as the stay at home orders were lifted, which buoyed overall sales. And we expect demand to remain high and even continue building in the second half of the year for two specific reasons. 

Firstly, Fannie Mae and Freddie Mac predict interest rates will average around 3.2% for the remainder of the year. The additional purchasing power and lower cost to own will most certainly drive demand, especially among first- and second-time home buyers.

And second, with shelter in place orders barely in the rearview mirror, we are already seeing a shifting preference from major metros to places like the North Carolina mountains. This trend is most noticeable in the upper price points as well-heeled buyers’ wealth and employment tend to be more portable. When paired with a staggering home supply, competition for your chosen home may be more intense than ever.

WNC Home Values

WNC Home Values

There are many things to be concerned with at the moment, but a significant decline in home values is not one of them. We have previously laid out 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 5.2% in the first quarter of the year. When taking into account our low inventory and high demand, it is likely that appreciation will continue through the remainder of the year. Canopy MLS reported a 3.5% increase in median sales price in Q2 over the same quarter in 2019.

The median sale price for homes in WNC is $275,000. Buncombe County’s median sales price continues to lead the region at $325,000. Rutherford County is the most affordable at $180,000.

Availability and Cost of Financing in WNC

Availability and Cost of Financing in WNC

Over the last 50 years, mortgage rates have averaged around 8%, which is why older generations of homeowners can’t believe the current rates near 3%. For most of recent history, rates this low were unimaginable. Quickly, the questions shift to whether rates can go even lower. The answer is, “they could,” but with the current financial market volatility, why risk it. 

Right now, Freddie Mac is reporting a 3.13% average. That’s the lowest since Freddie Mac started tracking data in 1971. Many mortgage professionals are suggesting that rates could go as low as the high 2s this summer. Even if economic conditions could support rates in the 2s, mortgage lenders seem incapable and unwilling to handle the volume. They are unwilling because there is reason to believe that the secondary mortgage market may not have an appetite for mortgages in this range. The lack of appetite is two-fold. With rampant refinancing, the opportunity to earn interest could evaporate. Also, there’s still concern about foreclosures due to the shaky economy and labor market. However, lender’s appetites could change as they clear backlogs and bow to competitive pressures. 

To make the most of the current situation, work closely with your Beverly-Hanks Mortgage Services loan officer. Supply all your income and asset documentation so you are prepared to act when you are ready to make a confident decision. There’s no substitute for being well-prepared in tumultuous times.

Is the Time Right for You? We're Here to Help!

Is the Time Right for You? We’re Here to Help!

In the wake of COVID-19, Beverly-Hanks has built upon its ability to counsel clients, showcase properties, and even manage transactions virtually. We implemented the Beverly-Hanks Safe Showing Initiative, knowing you want to promote a healthy environment while your home is on the market. In addition, our enhanced Digital-First Selling program connects buyers and sellers online. 

When the time is right for a visit, we’re coaching sellers on the best ways to prepare and keep their homes clean and ready. Meanwhile, we’re educating buyers on how to best view homes and make sure that they feel comfortable, safe, and protected. With conditions continuing to evolve, seeking assistance from an experienced Beverly-Hanks agent may never be more important. Contact your Beverly-Hanks agent to learn more about your home’s current value and how you can still safely meet your real estate goals.

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 Q2 2020 Real Estate Market Report from your Beverly-Hanks real estate agent.

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