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Inflation, rising interest rates haven’t slowed home building

A 1,176-square-foot three-bedroom home is one of the dwellings the Housing Assistance Corp. plans to build in Apple Ridge, an affordable housing development off Sugarloaf Road. At $228,000, it’s less than half the average selling price. A 1,176-square-foot three-bedroom home is one of the dwellings the Housing Assistance Corp. plans to build in Apple Ridge, an affordable housing development off Sugarloaf Road. At $228,000, it’s less than half the average selling price.

EDITOR’S NOTE: Ask Matt columnist Matt Matteson took a deep dive into the local home-building market — from raw land to finished product, from pricing to days on market. His reporting found that homebuilding is back — in a big way. In his special two-part report, readers will hear from builders, real estate agents, lenders and new homeowners on the state of the market and what the future may bring.


Despite rising interest rates, Henderson County remains a seller’s market, says Hilton Swing, a broker with Coldwell Banker-King. He describes a much different landscape 15 years ago.
“Lending was the Wild West until the market crashed in 2008, but it took Henderson County two years to feel it,” said Swing. “Following the crash, it took until 2015 for home prices to stabilize but banks were still not aggressively lending. Then Covid hit in 2020 but it took another year for the market to pick up.”

Swing attributes the current real estate strength to our desirable location plus the millennial factor.
“They are working from home and competing for the same homes the downsizing boomers want,” he said. “Add the homeowners reluctant to sell and you have a perfect storm.”

And it’s raining profits. A three-bedroom 876-square-foot home in Cypress Run is listed by Janice Moore of Keller Williams Realty. If it goes for the asking price of $480,000, the owner will clear $175,000 in just three years. “I don’t know why it hasn’t sold yet,” said Moore. “It’s move-in ready.” Moore said she gives her sellers about four weeks on the market before discussing pricing.

“We have fewer days on market than any other county in Western North Carolina,” said Steve Dozier, a broker with Allen-Tate/Beverly-Hanks Realtors. Dozier closely tracks the “days on market” for homes because it indicates how things are trending. He also checks the average six-month home sales price which was $402,648 for single-family homes. Dozier spoke of homes that he sold in just a few days. “My guess is that at least half the buyers are out-of-town buyers,” he said. “Although things are easing a little, a balanced market is not around the corner.”

Show me the lots

Four years ago the Lightning ran a story about local builders who were scouring the county for affordable home sites. We caught up with Steve Wilkie, one of the in-fill builders, at his cabinet shop in Mills River. His beef was that hometown builders were suffering. “There’s still plenty of land, they just can’t afford it,” he said. “Prices have tripled since before Covid.” Wilkie said big developers can buy in bulk and price out the little guy. Wilkie, who sits on the county Board of Equalization & Review, is well-schooled on property values. “Just a few years ago $200 a square foot was a good price but now its $300,” he said. Wilkie spoke about the recent backlog of building materials. “It used to be you could build a home in five months but the last home I built took 13.” Today, he does mostly cabinets. “Business is good,” he said.

“Finding a residential lot is difficult and sometimes manufactured housing is the only affordable option,” said Vickie Wyatt, branch manager of Highlands Residential Mortgage. “If you find a lot for $60,000 it is likely to be in a less than desirable location or maybe in Polk County.” Wyatt recalled the days of the “no-doc loans” before the recession. “If you walked in with a pulse you could get a loan,” she quipped. “That’s all changed.”

Gwen Lanning, a loan officer with United Community Bank echoed Wyatt’s lament on finding lots but was concerned about home financing (interest rates were then 6.9%). “There are two schools of thought,” she said. “Either wait for lower rates as some predict or buy now to get the house you want and refinance when the rates go back down.”

Finding lots has been a challenge, too, for the Housing Assistance Corp., the nonprofit that has built more than 200 single-family houses in the past 20 years.
“There are lots out there but not affordable for nonprofit developers,” said director Kristin Dunn. HAC was fortunate to acquire property off Sugarloaf Road for its Apple Ridge development, which will offer 60 apartments and 20 single-family homes for qualifying buyers. HAC’s “Chestnut” model is a 1,176-square-foot three-bedroom home.
“The units are small but they look bigger than they are,” said Dunn. “There is no wasted space.” The home can be built for $228,000, which includes land and closing costs. Qualified buyers usually need no down payment but must put sweat equity into the project.

Habitat for Humanity is having the same problems finding land. Habitat president Linda Saturno said the agency wants to build another 35 homes in the next three years but affordability is getting harder. “We recently had a home in Dodd Meadows appraise at $317,000,” said Saturno. “We could never have dreamed of that but that's the world we live in.”

Woodrow Way, a gravel road in Edneyville, is the site of an unnamed 9-home development affiliated with Clayton Homes. Manufactured units are now being set on one-acre lots and you can snag a move-in ready home for $273,000 – lot included. Manufactured home dealers have felt the pinch and have begun finding their own sites. Today’s manufactured homes tend to have more curb appeal, greater energy efficiency and affordability.

Covid drove inflation

In the years before Covid, single-family home permits were averaging a little over 500 per year. The pandemic hit in March 2020 with two spikes to follow but local homebuilding never slowed for the 3,365 employed in construction here. In fact, after Covid, countywide building permits rose to more than 800 per year and this year the pace has continued.

The pandemic triggered a worker shortage in the forest products industry, driving up prices which often quadrupled. “They predicted a 20 percent reduction in business but we were busier than expected during Covid,” said Josh Collingsworth, who manages GBS Lumber on Duncan Hill Road. “Sure, prices went up but we managed. We had to find other suppliers for plywood and paneling. Those products went through the roof.”

Drive to the end of award-winning Highland Lake Village and you will find a new 27-lot development named The Farm at Highland Lake. “We’re a niche operation here and we build maybe five or six homes a year,” said project manager Steve Collins. “For us, we are a fixed-cost builder so you are buying a finished product. Collins represents the builder who didn’t have a price escalation clause during Covid. In each case a solution was worked out with the client and construction never stopped.

During the Covid years there were significant backlogs for lots needing well or septic tank permits from Henderson County. “Today we are two to three weeks or better on permits,” said Seth Swift, who heads the county’s Environmental Health division. “Compare that to a couple of years ago when we lost staff and we were sometimes 12 weeks out,” said Swift, who was down to just two inspectors. “We’ve got seven on staff now.”

Custom builders find plenty of clients

Custom builder Chris Brock just opened a new office in Hendersonville, where his walls are adorned with photos of elegant homes. “I do custom building, not spec homes,” said Brock, who has contracts through 2025. About 60 percent of his clients are from out of town. Brock, who has been building for 20 years, said he gets many referrals from architects.

No glitzy website for Duane Scholz.
“My business is word of mouth,” said the 30-year custom homebuilder. “It has kept me in business and I typically have two projects going at once.” Scholz has no beef with big builders. “Sure, there are guys swinging for the fences. That’s OK but that’s not what I do. I think I deliver a better product even though I’m in the sweat and dust sometimes.”
Scholz sees the homebuilding industry as retirement and destination driven and trending toward more cash buyers. Many of the builders and Realtors we spoke with called this “California money.”

The average county resident will never see the gates of Couch Mountain, reached from a steep road far above Fletcher. The new development boasts 81 large home sites, a nature preserve, trails and “jaw dropping sunsets.” Mike and Cristy Tinsley, a husband and wife business team, have two large homes under construction on Couch Mountain. Mike, who comes from a family of local builders, does the site work and Cristy handles the finances. “We would love to build spec homes for first-time buyers but finding lots is the problem,” said Mike. “The person out of college has been pushed out of the market. The incomers have the assets.”

David Mayo, owner of Providence Custom Homes of WNC, has been doing residential and commercial building in the area for 18 years. Mayo, a civil engineer turned contractor, spoke of how important it is to keep a project going. “Having a project sit is the worst thing,” he said. “If it sits, we lose money. It’s all about efficiency. Building is the easy part – we do it every day. The hard and most important part is communicating with clients.” Most of his are out-of-town buyers that he updates with schedules and budget reports. “You can’t over-communicate,” he said.