For those who have ever contemplated selling their home, now is the time to stake the “for sale” sign in the yard, as home prices rose again in 2021 and show no sign of slowing down.
The 2021 annual report from Canopy MLS data was released this past week, and the news was good for sellers.
Home prices in Haywood County rose, demand from eager buyers has increased, and the inventory of homes on the market remained low. All of that made it a perfect storm of a seller’s market.
In Haywood County, the median home sales price for 2021 was $311,000, a 19.7% jump from $259,900 in 2020.
Compared that to 2017, when the median sales price was $194,000, a 60.3% price hike.
“What’s really driving the market in Haywood in short-term rentals,” said Tom Mallette of the Mallette Real Estate Team with Better Homes and Gardens Real Estate. “A lot of those folks consider themselves investors. They’re buying those homes in hopes of getting a return on investment.”
Mallette said the red hot market for short-term rental opportunities has boosted prices in Haywood, but in the mountain region in general.
“If you start heading west [of Asheville], are you going to find better pricing in Swain or Jackson County? Probably not. They’re in a very similar market that we are. Short-term rentals have become very popular in those areas,” said Mallette.
The Mallette Team is opening a new office in Bryson City in the next few weeks and said there are many people flocking to the mountain communities, which drives up prices.
Those buyers are looking to invest in properties that will bring $2,000 a week or more as short-term vacation rentals.
To compound the problem for families looking for homes, buyers are willing to give sellers exactly what they’re asking — and more.
Sellers are getting 99% list to sale, he said, meaning that sellers are getting nearly the entirety of their asking price, if not more to account for houses that undersell.
That’s a great incentive for potential sellers who intend on listing their home in the future to help refuel the low inventory currently plaguing the region, he suggested.
Another factor in creating the seller’s market is the low inventory of available homes, which rose just 7.0 in 2021 compared to 2020, when a total of 1,417 homes were sold in Haywood. The Asheville region as a whole experienced an 11.8% inventory increase from 2020.
“Inventory is really tight. When you don’t have homes to sell, you’re not going to sell as many,” said Mallette.
With low inventory and eager buyers, the market absorption rate becomes low. The absorption rate in 2021 was 1.3 months of supply, meaning that if no new homes entered the market, it would take 1.3 months to sell everything currently available.
Mallette explained that anything under six months’ absorption rate is considered a seller’s market. At just over a month of supply, there’s no room for negotiation from buyers.
A long road
It was a series of unfortunate events that led to sky-high prices and low inventory, beginning during the 2008 recession.
Mallette said the construction of new homes fell during the recession, and current estimates say the nation is about 5-6 million homes short.
Add to that the millennials, who experts predicted would not purchase homes at the same rate as their predecessors but have surprisingly become the largest group of home buyers.
Finally, Mallette said, there are the baby boomers.
The thought nationally was that they’d sell their large homes, downsize, and relocate to retirement communities, but it’s not happening at the predicted rate.
“And now we’re playing catch-up. Then COVID changed the dynamic. People say: I can almost live anywhere I want to, and work remotely,” said Mallette.
All in all, circumstances created a hot market for real estate nationwide, and buyers in Haywood County have been particularly hard hit, making it all that more tricky to find a home in 2022.
“Buyers keep telling us that we’re going to wait until the price comes down. We’re not so sure that’s going to happen for a couple of different reasons,” said Mallette.
Mallette said buyers need to be reactive, and prepared, if they’re looking for the perfect home.
“In most cases, they may have to raise the price point of where they want to be. Be patient. Homes will come on the market that fit their criteria,” said Mallette.
Mallette advises buyers to get preapproved before they start looking for homes, too. In this seller’s market, they need to be reactive.
“It’s similar to having a cash offer. You’re just waiting for a house to add to that file. Find a realtor who can work with you and guide you through the process,” said Mallette.
Buyers waiting for the perfect home or a market downturn are advised to be cautious, said Mallette.
The interest rates are currently a little over 3.0%, which is a historically low number, but he predicts the federal interest rate will probably reach 3.75% or higher by year’s end.
“The fed has been basically funding this recovery over these last two years. You cannot do that forever. Even at 3.75%, that is still very, very low, historically,” said Mallette.
It’s a tricky situation for buyers. They have balance cautiousness with risk and hopefully find a home that fits their criteria. There’s no time like the present, though, as the market could shift at any moment, for better or worse.
“We don’t have the crystal ball. We have some ideas that we think is going to happen based on market metrics, but things can change,” said Mallette.