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Interest rates, falling inventory heat up home sales

Chart shows home sales and dropping inventory of homes for sale. [SOURCE: BEVERLY HANKS MARKETING] Chart shows home sales and dropping inventory of homes for sale. [SOURCE: BEVERLY HANKS MARKETING]

When the Covid-19 pandemic shut down life 11 months ago, real estate agents gazed at the horizon with trepidation.

“We were scared to death in March what was going to happen this year to the real estate market,” said Steve Dozier, a broker with Beverly-Hanks. “It’s been a phenomenal year. It just blows everybody’s mind how well the market has been.”
All the standard measures the industry show that the real estate market in Henderson County is booming. In 2020:
Homes sold per month soared to 193, up 137 from the recession of 2010.
Days on the market plunged from 188 10 years ago to 56.
The list-sell ratio — asking price compared to price paid — was at 98 percent.
Median sales price climbed to $325,000.
Months of inventory for every price range up to $700,000 was either zero, one or two months.
“Even up to $800,000 is considered a sellers’ market right now,” Dozier said. “Average days on market in 2020 was 69 days, the lowest it’s been in years, and the price is the highest it’s ever been.”

Lack of inventory driving price up


David Noyes, broker-in-charge of the Remax Results office in Arden and immediate past president of the Hendersonville Board of Realtors, said the market is hot across the region.
The list-sell ratio for the “entire MLS (multiple listing service) from east of Charlotte to Waynesville is 100 percent and the reason for that is we’re seeing, some (that are) maybe 92 percent. It could be homes that weren’t in good shape, overpriced, whatever. And there’s other stuff that’s closing above 100 percent of asking prices. And that’s the amazing to me.”
“Lack of inventory is everybody’s problem right now,” Noyes said. Six months’ supply is generally thought of as a balanced market between buyer and seller. When supply drops under six months, the market tilts in favor of the seller.
“Back in 2010, 2011, we were definitely in a buyers’ market,” Noyes said. “Now, in Henderson County, we’re at 1.4 months of inventory” across all home values.
Dozier shared a fresh illustration of the red-hot market.
“I listed a house in Haywood Knolls a week ago this past Friday,” he said. “Friday morning when it went on the market around 9 o’clock until Sunday at noon I had 23 showings and six offers.” He sold a home recently in Fletcher for $25,000 above the market price.

Both Dozier and Noyes said about half or more of new buyers are from out-of-state.
Some buyers are from the Northeast, “where their real estate taxes are more than our average mortgage,” Noyes said, and some are migrating from California, “where absolutely everything is more expensive, so they can afford more home here.”
Some are buying second homes and others are retirees. “We are seeing some career-oriented relocations — with Amazon and G.E. and Pratt Whitney,” Noyes said. “Hospitals are recruiting heavily. There’s a lot of professionals coming here.”
Dozier, too, is seeing the migration in reverse of the Gold Rush.
“I’ve had three folks from California that were moving here in the last month to get out of Covid, the protests, the cost of living,” he said. “Our price is just going through the roof right now.”
Historically low interest rates are helping middle-income buyers move from rentals into homes and ratcheting up how much buyers are willing to pay.
“There are brokers now that are changing people’s lives because they are putting them in a house as opposed to renting,” Noyes said. “People are getting into houses they never thought they could get into. There’s many more people who can afford a home now than ever could before.”

Housing starts

In 2020, Henderson County’s inspection department issued 573 building permits for new dwellings, down 1 percent the total in 2019. The value of the new homes proves the inflation factor. At $168 million, the total value was up 12.7 percent over the previous year. Overall, the value of new residential and commercial construction spiked by 25 percent over 2019 while the value of remodeling and additions for both business and residential property shot up by 32.5 percent.
Is new home construction keeping up with demand?
“Absolutely not,” Noyes said. “The next question is, Is it affordable. If I’m a builder, I’ve got labor, I’ve got lumber and I’ve got land. If I’m going to put labor on a job building a $200,000 home, I can use the same labor and work a little bit longer and I can make a million-dollar home and make a lot more profit … You use 2x4s in a $200,000 house, you just use a few more in a million-dollar house. So, what am I going to build?”

Slowdown? What slowdown?

After a few weeks of gloom last March, Realtors adapted and started selling at a furious pace. They make masks available and they always have hand sanitizer handy. Sellers sometimes leave all the lights on and leave closet and pantry doors open so prospective buyers don’t have to touch anything. Realtors seldom if ever drive buyers around from home to home any longer.
“I think for buyers, most agents know the common practice is, we’re meeting them at the listing,” Noyes said. “We’re doing the video tour or a 3D tour of the house. We’re now embracing technology whereas before we were kind of learning this stuff. We’re kind of upping our marketing game.” Via a 3D tour, buyers can look around each room, look in the closets and pantries, even look out the windows.
The hot market does not look to be cooling off any time soon.
With low interest rates, a steady parade of buyers and the time it will take to finish the homes currently permitted, “I don’t see this market changing much over the next year,” Dozier said. “When we had the recession back in ’08, we had 22 to 24 months of inventory. We don’t have any inventory now.”