The pandemic accelerated market dynamics already present before COVID and which will persist well into 2022. The combination of recession-induced low mortgage rates, remote workers relocating to our area, and the demographic wave of Millennial home buyers were already driving a frenzied sales pace in the Asheville region before March 2020. Since then, the demand has only intensified.
For a closer look at what’s happening in our region, we’ve prepared our Year-End 2021 Market Report. When breaking down the markets, we examine four metrics: sales pace, home values, supply of homes for sale, and the availability of financing.
Look for the full report soon 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
Last year was great for selling homes but a difficult one if you were trying to buy. Locally, our sales pace is up an impressive 39%. It is worth noting that all of 2021’s gains were realized in the first six months of the year. The sales pace has been slowing down for the past six months and could be signaling a trend towards a decelerating market, which most consumers would welcome. The monthly sales pace is now up 9.6%.
Buyers were successful in 2021. But success required adjusting expectations, budgets, time tables, and purchasing preferences. On average, homes spent mere days on the market before going under contract and closing in 30 days or less.
WNC Home Values
Demand for real estate in Western North Carolina, low mortgage rates, and limited supply continued to drive home values up for a second year in a row.
According to the Federal Finance Housing Agency*, Asheville MSA’s homes appreciated 18.2% from Q3 2020 to Q3 2021. Our local MLS data supports a similar trend through quarter four. However, industry predictions expect this appreciation to slow. The industry consensus is that the 2022 housing market is transitioning into a period where appreciation will moderate but continue to increase.
In WNC, we saw the median sales price of a home rise 12.1% from January 1, 2021 to $364,270. In Buncombe, our most populous and in-demand county, the median sales price reached $405,000 last quarter. This is in large part thanks to the record-breaking luxury sales we saw in the final months of the year. Rutherford County continues to be the most affordable in the region at $260,000.
*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 lags our local MLS data by one quarter.
WNC Supply of Homes for Sale
WNC’s supply of homes for sale is down 80.4% from where it was in 2012.
The longstanding shortage of homes for sale will continue to drive prices upwards. And market experts predict that with no significant influx of inventory to counterbalance buyer demand, these market fundamentals could favor sellers once again in 2022 and for years to come. Flexibility will be essential to finding a home in our most competitive markets.
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
While mortgage professionals generally agree that rates will rise in 2022, there is a difference of opinion regarding how much rates will increase. Many economic variables can influence current borrowing rates, but arguably, the Federal Reserve’s mandates and corresponding action can have the most profound impact.
With inflation at its highest point since 1982, the Fed has turned its attention to managing it.
In November 2021, the Fed began tapering its purchase of mortgage backed securities and treasury bonds. By this March, the Fed will no longer be supporting the interest rates we’ve become accustomed to over the past 18–24 months. During their December 2021 meeting, they announced a plan for three rate hikes in 2022, assuming solid economic growth and inflation above 2%.
On average, most economists and industry groups believe rates will hover around 3.3% for the first half of the year and climb towards 4% by this December. Ongoing employment concerns and the corresponding economic fallout caused by the latest wave of COVID infections will likely blunt reactions to the Fed’s plan and allow for a slow organic increase in rates over the next 12 months.
Of course, you may be wondering if you have time to purchase a home or even complete a refinance before rates rise. With the help of a professional loan officer, you can develop a plan based on current market conditions and your financial situation. It’s never too early to sit with a Beverly-Hanks Mortgage Services loan officer and devise your plan.
What’s Next for WNC Real Estate: 2022 Forecast
The big question for 2022 is whether the market will remain red hot or lose some steam. The industry consensus is that this year’s housing market is transitioning to a period where appreciation will moderate. Still, the degree of moderation appears to be anyone’s guess. We’ve seen predictions range from 13.6% appreciation by the end of 2022 to a 2.5% year-over-year drop in home prices.
Why are forecasts all over the map?: Inflation and its indirect impact on home mortgage interest rates.
Rising mortgage rates will make affordability more difficult for home buyers, especially Millennials who are at their prime home buying age, between 26–35 years old. This dynamic and the question of what impact it will have on home buyers’ appetites to purchase is the cause of the wide range of opinions regarding the degree of sales pace deceleration we may see in 2022.
The good news is that the mass labor reshuffling is pushing projected incomes 3.3% higher. Combined with many employers looking to attract and retain talent without adding costs, we expect the working from home trend to continue. This freedom should allow buyers to broaden their search parameters to include areas further from major metropolitan centers and consider high quality-of-life regions like Western North Carolina. We expect these trends to mitigate some of the loss in demand created by declining affordability.
As the market transitions to a slower rate of appreciation and buyers who have been sitting on the sidelines decide to get in the game, the value of a skilled, full-time real estate professional will be even more evident. The bottom line for buyers is to make sure they are comfortable with their timeline and budget. For sellers, it will be critical to consider their local market conditions, the likely increase in the number of homes for sale, and the need to price more competitively and accurately than in the recent past.
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 Year-End 2021 Real Estate Market Report from your Beverly-Hanks real estate agent.