This update was published by Scott Russell on October 31st, 2019.
The 3rd quarter of 2019 has come to a close (yes, we’re a bit late with this market update), and we’re well on our way into the fall season. As usual, we head into the fall with lots of real estate buyers because of tourism due to the fall colors. But also as usual, we have limited inventory this time of year. Asheville Realtors get frustrated with the lack of homes for sale during leaf season. Many Realtors have several ready, willing, and able buyers, but very little new listing inventory to show their clients. This leads to lost sales, and many of those buyers don’t remain in the market when the following spring listing season comes around.
Asheville Area Inventory is Down, but Demand is Up
My own theory about why inventory remains low in the fall is because most sellers don’t realize that this is a good time to sell. Of course, it’s a shorter window than the spring/summer selling season, so some sellers simply don’t want to list their home for a short time.
Anyway, back to the inventory levels of homes, condos, and townhomes for sale. Compared to 2018 (at the end of September), inventory is down 16.5% in Asheville and 9.3% in all of Buncombe County. Black Mountain saw a modest increase in inventory of 3.7%.
At the same time, demand is still very strong.
Just looking at the number of closed home sales in September 2019 (compared to Sept. 2018) shows incredible increases, with Asheville up 36%, Black Mountain up a whopping 86.7%, and Buncombe County (which includes Asheville and Black Mountain) up 35%!
Homes that sold in September are the result of market activity in July and August mostly, so let’s expand our time frame to be sure that September wasn’t just an anomaly. If we look at year-to-date information through September, we still see impressive increases, but they’re not the astronomical numbers that we saw in September alone. Year-to-date, Asheville is up 8.7%, Black Mountain is up 21.1%, and Buncombe is up 11.3%.
So What Does this Mean for Asheville Real Estate Prices?
In terms of average price, we actually see real estate prices leveling off year-to-date in 2019. In the chart below, you can see that YTD 2018 showed price increases compared to 2017, but similar gains haven’t been realized in 2019.
It should be noted that the trend is similar when you look at median home selling prices.
What will the 4th Quarter Look Like in the Asheville Real Estate Market?
The best way to predict what will happen in the next 90 days is to look at the number of new pending sales. In September, pending home sales jumped 13.5% in Asheville, 47.6% in Black Mountain, and 7.5% county-wide. Most of these sales will close by the end of 2019, and we’ll look back on this data in our year-end update in January 2020.
So, What’s Happening with Vacant Land in the Asheville Area?
When housing inventory is tight, many Asheville area real estate buyers turn their focus to land. However, the number of closed land sales has fallen over the last couple of years in Asheville and Buncombe County. Black Mountain is the exception.
One theory I have about why land sales have slowed is the increased cost of construction and the challenges in finding a builder who can take on the job. While housing prices may be high, they at least represent a known cost. Building a home always leaves the door open for unforeseen challenges and budget overruns.
What Does this all mean for the Asheville Real Estate Market?
The incredible demand helps explain the lack of inventory. Desirable homes are being purchased almost as quickly as they come on the market. But the possibility that prices may have leveled off is interesting. If demand continues to increase, it stands to reason that prices will follow, but that hasn’t been the case in 2019. One possible explanation is that sellers are beginning to negotiate more off of their list price, and that is leading to an increase in the number of closed sales. However, I could find no significant change in the SP/LP (sale price to list price) ratio. So there must be other factors in play. It could be that sellers are less optimistic about the future of the real estate market and therefore pricing their homes more in line with previous sales, as opposed to trying to price higher than the comps and expecting buyers to increase their offers and drive up the market.
In our next quarterly update, we’ll look at the entire year in review. In the meantime, if you have questions about the real estate market, send us a question below or contact us.