Our mountains are becoming ablaze in color and remind us once again why we are so blessed to call Western North Carolina home. As the seasons change, we are also noticing changes in our real estate markets.
For a closer look at what’s happening in our region, we’ve prepared our Q3 2021 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 in our Market Research Center. Or contact your Beverly-Hanks real estate expert to learn more about the up-to-date dynamics of your neighborhood.
WNC Regional Sales Pace
2020’s roller coaster sales pace rocked real estate markets around the county. Now, nationally and across WNC, we are detecting a slight shift towards a more balanced market. However, market activity is nowhere near the level needed to imagine a balance between buyers and sellers.
Speedy home sales continue in all areas of our region, which in turn is driving up competition. The closed days on market metric remains under 30 for our core markets in Buncombe, Haywood, and Henderson counties. And as we’ve learned from the laws of supply and demand, increased competition drives up prices.
WNC Home Values
As of September 30, several counties continue to have double-digit growth in their median sales prices. Many counties passed their peak appreciation rates last quarter. According to the Federal Finance Housing Agency*, Asheville MSA’s homes appreciated 13.0% over the last 12 months. But industry predictions expect this appreciation to slow.
The CoreLogic HPI forecast offered a somewhat modest prediction that home prices will increase by 3.2% from June 2021 to June 2022. Freddie Mac had a more aggressive opinion and predicted home prices would rise by 6.6% in 2021 but slow to 4.4% in 2022. Zillow offered the most bullish view, predicting home values would increase by 10.5% in 2021.
While house values are still rising, albeit more slowly, motivated sellers should consider pricing more competitively than they have in recent months. Nationally, there are reports that the share of homes with price reductions in August surpassed 2020’s level and is approaching a similar rate to a few years ago. We saw 17.3% of active home listings reduce their price in August, an increase of almost 0.75% over a year’s time. According to Realtor.com, this is still within normal ranges, but it may indicate that some sellers are adjusting prices more aggressively than they have over the last 18 months.
Locally, we’ve seen that the median sales price of a home in WNC has risen 13.9% from last year to $361,743. In Buncombe, our most populous and in-demand county, the median sales price reached the $400,000 mark last quarter. Transylvania currently shows the highest median sales price in the region at $403,000. Rutherford County continues to be the most affordable at $259,000.
*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.
WNC Supply of Homes for Sale
The continued upward trend in prices is no doubt caused by an ongoing supply-demand imbalance. According to a recent analysis from Freddie Mac, the U.S. housing market is 3.8 million single-family homes short of current needs. With the combination of a strengthening economy, the Millennial cohort hitting its peak home buying years, rising construction costs, and real estate investors scooping up starter houses, a shortage of supply will continue into 2022.
All hope for buyers is not lost, however. In the coming months, we expect to see a slight increase in the number of homes for sale from would-be sellers worried that they may have missed the top of the market. In Fannie Mae’s National Housing Survey, 77% of sellers believed it was a good time to sell a home, up from 67% last month.
As we approach the end of the year, we expect supply levels to creep up, delivering more options for buyers and alleviating some, but certainly not all, of the competitive pressure. Buyers will still need to make strong enough offers to win in the multiple bid scenarios that remain common in our current environment.
With such intense competition in the market, 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.
Availability and Cost of Financing in WNC
Federal Reserve officials expect the U.S. economy to end the year with higher unemployment and with less economic growth than they previously anticipated. Despite the forecasts, the pace of economic improvement is likely to warrant a decline in federal stimulus within months. As the stimulus is dialed back and inflation fears weigh on forecasts, mortgage rates could go up as we approach the end of 2021.
Housing authorities across the industry are predicting that average mortgage rates could go as high as 3.14%. While rates hovering around 3% are extremely low by historical standards, those rates would be the highest since spring 2021, when average rates ran up to 3.18%.
In addition, many economists believe the Federal Open Monetary Committee (FOMC) will begin tapering its purchase of mortgage backed securities (MBS) after the Fed’s November meeting. If members of the Fed continue to signal their intentions to raise rates and taper the purchase of MBS, rates could begin rising ahead of the meeting as investors shore up positions.
Home buyers needing to be financially conservative should consider locking their mortgage interest rates before the Fed’s intentions become more clear in November. Speak with your Beverly-Hanks Mortgage Services loan officer today.
What’s Next for WNC Real Estate
Even if supply were to dramatically increase in the coming months, today’s housing market is nothing like the bubble that preceded the Great Recession. During the Great Recession, an oversupply problem became inflamed by loose underwriting and speculation. The current supply scenario offers us the opposite problem. Now, a severe housing shortage lingers on due to strong demand and minimal new supply being delivered from home builders. Local builders and developers remain focused on the custom luxury market, with very little supply added to the price brackets needing it most.
During times of market transition, experienced real estate agents are prized for their ability to help their clients anticipate and adapt to change. Working with an agent who has their finger on the pulse of your neighborhood’s market conditions will be an invaluable asset for making the most of today’s opportunities. Our professional Beverly-Hanks brokers are standing by to help you navigate these challenging market conditions.
All real estate is local. In order to make confident real estate decisions, it’s important to have timely and neighborhood-specific information. Request a Q3 2021 Real Estate Market Report from your Beverly-Hanks real estate agent.