Key Messages: Current housing market conditions across the 13-county Asheville region are very similar to what’s being experienced nationally and in a number of areas across the southeast – that is: • A market that highly favors sellers • Low inventory and supply • Steady buyer competition, and even heavier in highly sought-after areas • Steady price growth • Faster days on the market
What’s driving this phenomenon: • The low mortgage rate environment • Existing homes& new construction more affordable than renting • Millennials coming of age and ready to buy • Pandemic-fueled buying from remote workers • Recent rankings from livability.com showcasing Asheville, NC as one of the Best Places to live in 2021, rankings from vacasa.com, showing Banner Elk, NC as “Best Places to Buy a Winter Home 2021-2022 and rankings from realtor.com ranking Asheville, among its Top 10 Cities Job SeekersAre Now Flocking to. Key Indicators – • Year-end sales figures show a tremendous amount of growth has come to the region. At year-end, there were nearly14,300 sales, which is up nearly 12 percent year-over-year. • Pending contract activity shows demand will continue to be strong. At yearend, contracts totaled more than 14,500 -- an increase of 10 percent over buyer activity in all of 2020. This means that when the spring selling season gets underway, buyer competition will be quite strong and sales steady in the first quarter of 2022. • Buyers will be relieved that seller confidence is rising, as indicated by year
end figures showing more than 15,600 listings added to the market in 2021. With activity starting off relatively strong at the beginning of 2022, buyers still in the market during the winter selling season should have a steady number of homes for sale, depending on the local market (county, city, neighborhood). • Pending contracts tend to predict future sales, as these are sales that tend to close 45- 60 days later.
• Prices are rising in relation to tight inventory, however in a number of counties, new listing activity has been steadily increasing and over the short term, this should help buyers with more homes to choose from, and long term, as this activity continues, it should help the market become more balanced by adding to inventory over time. Still, inventory is challenged, and at report time showed 1.2 months of supply or about 1400 homes for sale.
• The market is seeing a lot of activity in the luxury tier. According to page 10 of the Asheville Region 2021 Housing SupplyOverview report, sales activity in 2021 was concentrated in the price ranges of $350K and up.
Table: Closed sales by price range from page 10, Asheville Region Housing Supply Overview.
Buyers are also seeking to be near job centers and retail activity, which means that demand is extremely high for those seeking homes in and around the MSA.
• Inventory is critically low and was down almost 40 percent, to about 1.1 months of supply in the MSA and that has caused prices to continue to rise closer to the city of Asheville. And given the increased competition among buyers, price growth overall will continue, with some areas seeing increased volatility due to rapidly dwindling supply. We had double-digit year-over-year price increases in the MSA at yearend and largely across the region in December. Prices closer to Asheville or in the MSA averaged about 15-20 percent higher than prices compared to yearend 2020. Asheville MSA’s median sales price for all of 2021 was $365,000, while the average sales price for all of 2021 was $449,935.
• Sellers who are ready to list have the opportunity to receive high visibility for their listings and spend less time on the market. Days on market (DOM) continued to break records in 2021. Properties averaged 39 days on market for all of 2021 across the region and spent even less time (31 DOM) in the MSA. In 2020 homes were averaging 69 days on market across the region and 59 DOM across the MSA.
• Sellers are clearly in the driver’s seat with current housing conditions. Yearend figures showed the original list price to sales price measure for all of 2021 98.5 percent, which means sellers are getting most of asking price.
General Outlook into 2022 –
• The most recent builder sentiment survey, showed builders will still be dealing with supply chain and labor issues, which have driven up costs and will now push housing starts expected into the second half of 2022. This will not help affordability and could present a risk to the outlook as buyers could become weary of price increases.
• Mortgage rates are predicted to rise, and further squeeze affordability. Most experts predict mortgage rates will rise at least 3 times over 2022, which will continue to affect affordability, especially for first-time and workforce buyers.
• Home prices are also predicted to rise, but much slower than they have over the past year as rates impact buyers.
• Fannie Mae Economist expects affordability to remain challenged in the coming months, driven by escalating construction prices and consumer demand.
• Fannie Mae also suggests that rising mortgage rates could present a risk to the housing outlook, but overall, the principal risks for next year come from the varying responses of consumers, the labor market, and policymakers to the evolving health risks created by the pandemic, as well as the related speed at which global supply chain disruptions are resolved.
All info provided by CANOPY MLS.