As we reflect on the past year and turn our sights forward, there is heightened interest in the state of the real estate market—both in WNC and across the country. Our 2022 annual report is here to offer context and counsel amidst a sea of shifting influences.
For a closer look at what’s happening in Western North Carolina, Allen Tate/Beverly-Hanks President Neal Hanks has delivered our Year-End 2022 Market Report. When breaking down the markets, we examine four metrics: sales pace, supply of homes for sale, home values, and the cost of financing.
Look for the full report in our Market Research Center. Or contact your Allen Tate/Beverly-Hanks real estate expert to learn more about the up-to-date dynamics of your neighborhood.
WNC Regional Sales Pace & Supply of Homes for Sale
The pandemic years of 2020 and 2021 were difficult for our country, but they were also some of the most active years in the history of real estate. Market momentum continued at a feverish pace in 2022, but the temperature certainly cooled over the course of the year. Not only that, but the pace of the slowing market increased over the course of the year, particularly as mortgage interest rates rose quickly from the summer into the fall. All that brought year-end transaction units down 15.4% compared to a year ago.
Another factor causing the slowdown is the continued lack of inventory. Buyers are still looking, but there are fewer and fewer homes to be found! This, too, may be tied to rising mortgage rates. Many potential sellers may be reluctant to place their homes on the market and give up an interest rate significantly lower than what is currently available to purchase a replacement property. Until more sellers participate in the market, home inventories will remain low.
While home sales are cooling in our lower brackets, luxury sales remain strong. The strength of our WNC luxury real estate market can be seen in our trend lines. Luxury unit sales are going up and months of inventory remain balanced. Like the general market, the luxury market shows signs of leveling, which in turn will offer greater stability and predictability for buyers and sellers in the coming months. However, demand for upper-bracket primary and secondary homes in the mountains shows no sign of waning.
WNC Sales Prices & Home Values
Healthy demand and low inventory levels continue to bolster home prices. In fact, a 9% increase in the region’s median sales price softened the decrease in sales volume to 6%. Evaluation of overall home values continues to show shocking increases. According to the Federal Finance Housing Agency*, home values in the Asheville MSA appreciated 21% over the last year.
As of December 31, the median home sales price in the region was $400,000—as mentioned, a 9% increase from January 1, 2022. In Buncombe, our most populous and in-demand county, the median sales price reached $442,000 in Q4. However, it did not see the highest median sales price; Transylvania County ended the year at $455,000. Rutherford County continues to be the most affordable in the region at $250,000, a $10,000 decline from this time last year.
*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.
Cost of Financing in WNC
At the time of this report, encouraging news is emerging around mortgage interest rates. Rates in December climbed slightly, but not quite as high as we experienced in October and November when we saw our highest rates in over 20 years, at just over 7%. Rates have actually declined overall since early November.
This is welcome news! As rates fall, and consumers begin to see that these are actually excellent mortgage rates by historical standards, home sales will likely gain some steam as we move through the year.
The question everyone is asking is, what will mortgage interest rates do in 2023? Predictions abound and vary widely. However, many believe that interest rates will level off in 2023 to around 5–6% by the end of the year. Others say the increases will likely continue through early 2023 until inflation rates recede. For one, the Mortgage Bankers Association is predicting rates to fall further in 2023, ending the year at 5.4%.
The uncertainty of long-term mortgage rate projections underscores the need for professional mortgage advice. There are numerous tactics and strategies to help mitigate interest rate costs and plan with your specific circumstances in mind.
With advanced service offerings
front and center, we are excited to announce that Beverly-Hanks Mortgage Services has joined the Howard Hanna Mortgage team. If you’re considering purchasing a home in 2023, a Howard Hanna Mortgage Services loan officer is here to help you navigate with perspective, understanding, and expertise.
What’s Next for WNC Real Estate?
Predicting the future is seldom easy, especially during periods of change. We believe that the pace of home sales is not likely to rebound quickly, although it will remain at a very healthy pace. The National Association of RealtorsⓇ is currently predicting that unit sales will fall by another 7% nationwide in 2023.
The pace of sales will not be hampered by lack of demand, however, which remains very strong. Rather, the limiting factors are the continued low inventory levels and persistent affordability challenges faced by many buyers. New construction will not likely fill the inventory gap in the near future, as the National Association of Homebuilders is forecasting a decline in housing starts in 2023. However, we expect 2023 to be another healthy year for luxury. In fact, Gary Scott, president of Allen Tate, expects the Carolinas to outperform most parts of the country this year.
NAR’s most recent forecast is that home prices will remain flat across the country, with some markets experiencing declines and some continuing to see modest increases. Our forecast places Western North Carolina squarely into the latter category, as the desire to live in our region has never been stronger. Our demand is fueled by a renewed focus upon quality of life and accolades highlighting the area’s “work from anywhere” attributes.
All in all, we are continuing to experience a return to a much more normal real estate market after a wild three-year ride. We expect a healthy, albeit slightly slower sales pace, modest home appreciation, and interest rates that, by historical standards, are on the low side of the long-term average.
We welcome this change and the opportunity to assist our neighbors, both new and old, navigate this changing environment. If we can provide guidance on any real estate need that you may have, please contact your Allen Tate/Beverly-Hanks real estate professional.
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 2022 Real Estate Market Report from your Allen Tate/Beverly-Hanks real estate agent.