Beverly-Hanks President Neal Hanks has delivered the Q2 2017 Real Estate Market Report. Watch the video below for his short report, or continue reading for a summation.
Homeownership remains the foundation of wealth for almost every family. According to a Federal Reserve study, households that own a home have a net worth 36 times more than a household that rents. At Beverly-Hanks, we strive to make homeownership a reality for everyone in our community. In today’s hot real estate environment, that means beginning your search armed with knowledge of local markets.
When highlighting our regional real estate markets, we consider four key metrics: the supply of homes for sale, sales pace, home prices, and the availability of financing. Here’s where we stand with each of those at the end of Quarter Two:
WNC Supply of Homes
Right now in Western North Carolina, there’s an extreme shortage of homes for sale under $300,000. This shortage is driving up home prices for modestly priced homes, causing them to appreciate more quickly than the region’s average.
In the seven-county region, there are 15% fewer homes for sale now than at this time last year. Finding homes under $300,000 is becoming increasingly difficult even for diligent home shoppers. Buncombe County reported the smallest overall change in inventory, down 2%. However, the supply shortage is also most intense in Buncombe County. Due to strong demand and insufficient supply, the market heavily favors sellers up to $600,000.
In Henderson County, a similar dynamic exists up to $400,000. Outside of Buncombe and Henderson Counties, a similar scenario exists for homes priced up to $300,000.
Across the region, supply levels for homes prices under $300,000 were down by almost 30%, but demand remains strong. The dynamic is creating opportunities for fierce competition amongst buyers. To gain a better understanding of your community, request a complimentary Real Estate Review from your Beverly-Hanks associate.
WNC Sales Pace
Despite continuing issues with supply, the sales pace remains very strong for WNC. 2,447 homes sold during the last 90 days, making it the second strongest quarter in the past 10 years. That also makes the past quarter the first in the last five years wherein the sales pace slipped back from a previous high (Q1 2017).
We believe the slower sales pace is due to a shortage of homes for sale, especially in the lower price points. 9% fewer homes priced under $300,000 sold last quarter. While the pace slipped back a nominal 2% overall, we intend to monitor the market carefully for any ongoing changes in trends.
The time it is taking for properties to close remains close to 90 days. But like sales pace, we recorded a small increase in the number of days homes were spending on the market. Properties in the three largest counties continue to sell the fastest, with Buncombe County leading the way, followed by Henderson and Haywood counties.
We’ve heard your concern that we’re headed back to the heady real estate days of 2005 and 2006. However, the dynamics driving today’s market are quite different than the wild speculation and loose credit that drove the market ten years ago. To learn more about how our current conditions differ from those ten years ago, contact your agent or visit beverly-hanks.com.
WNC Home Values
The Federal Finance Housing Agency reported that Asheville MSA’s home prices appreciated 5.9% over the last 12 months. Our local MLS reported that median prices increased by 7%. It’s important to note that FHFA lags local data by 90 days, but is considered to be the more accurate indicator.
Buncombe County’s median sales price continues to lead the region at $282,750, and Rutherford County is the most affordable at $170,000.
We expect price appreciation to continue at a similar rate for the remainder of 2017. Homes found closer to Asheville, Hendersonville, and Waynesville’s central business districts, as well as those close to the region’s median sales price, are likely to appreciate more rapidly.
Availability and Cost of Financing in WNC
The unpredictability of our political climate makes it difficult to offer meaningful guidance on the direction of mortgage interest rates. At the beginning of the year, almost every forecast called for interest rates to increase to 4.25%–4.75%. At this point, those forecasts appear to be off the table. Instead, rates continue to hover at historic lows.
Many buyers don’t realize that it takes less of a downpayment to buy a home than they think. According to mortgage professionals, 69% of first-time homebuyers either think it’s impossible or very difficult to get a loan without 20% down. In our region, there are local loan programs through Mountain Housing Opportunities, as well as federal programs like FHA (Federal Housing Authority) and USDA (United States Department of Agriculture), that offer low or zero down payment loan options.
Contact a Beverly-Hanks Mortgage Services loan officer to learn more about low and no down payment programs that may be a good fit for you.
Quarter Two 2017 Market Summary:
Demand for housing will continue to be strong throughout 2017, but supply is struggling to keep up. In real estate, there is a guideline that often applies: when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. There is currently an overall supply of 5.4 months in the region, and houses are going under contract fast. In many cases, homes priced under $300,000 spend fewer than three months on the market.
The sales pace will remain brisk, but with fewer sales of modest homes, the overall number of homes sold in Q3 is likely to decrease. The pace is likely to accelerate in the outlying counties as buyers search for affordable options. The supply shortage will cause home prices of modest homes to appreciate above the regional average of 6%. The combination of strong demand and extremely limited supply will remain challenging for homebuyers purchasing homes under $300,000.
Even with these market dynamics, it is still possible to buy a home. Buyers will need to be prepared to move quickly by being well educated about the market and being pre-approved for a mortgage. You’ll need a website that gives you daily alerts when new properties arrive on the market, a knowledgeable real estate agent who can guide you through the home buying process, and specific market knowledge for your neighborhood of choice.
All real estate is local. In order to make confident real estate decisions, we believe it is important for you to have timely and neighborhood-specific information. For more information about your real estate market, ask your Beverly-Hanks associate or view a copy of our latest 24-page Quarterly Market Report.