WNC is a Buyer’s Market

Value of Expensive Homes Hit Hardest
Asheville Citizens Times
Mark Barrett
October 04. 2009 12:15AM

The large supply of expensive homes on the market in the area seems to finally be taking a toll on home values.

Federal figures suggest there has been modest erosion in home values in middle and lower price ranges locally, but experts say those selling a house for more than $250,000 to $300,000 may have to settle for significantly lower prices than they once would have.

Values in the Asheville area did not rise as rapidly earlier this decade as in some hot markets around the country and have not fallen as rapidly either.

However, there also have not been as many signs of a turnaround in the local market as there have been nationally.

“This recession came here a lot later,” said John Carroll, owner/broker at Century 21 All Seasons in Asheville. “We’re just on a different time schedule.”

“Maybe we have that syndrome where we fell later than everybody else and we’re going to rise later than everybody else,” said Don Davies, a local real estate analyst.

Still falling?

The number of existing homes sold through the Multiple Listing Service in Buncombe County was down 8.9 percent in August from August 2008. Sales were down about 25 percent for the first eight months of the year, although the rate of decline has been slower in recent months.

Davies said it appears that sales for September will be roughly the same or a little greater than in September 2008. The last time that sales for a month in Buncombe were higher than the same month a year ago was October 2006.

National existing home sales have been improving gradually since spring, although they dipped 2.7 from July to August on a seasonally adjusted basis, the National Association of Realtors reported recently.

The Federal Housing Finance Agency says home values fell 1.1 percent during the second quarter of this year and dropped 1.2 percent for the 12 months that ended June 30. That’s less than the 2.4 percent decline for the quarter seen nationally and 4 percent annual decline.

The figures are based on appraisals for purchases or refinancings involving loans of no more than $417,000 in Asheville, so they don’t include values for most of the area’s highest-priced homes.

That’s where some say values are falling the fastest — and may fall some more.

Values in neighborhoods with moderately priced homes like Oakley and West Asheville “have done OK” and have not moved much up or down recently, said Dave Earnhardt, owner/manager of Earnhardt & Associates Appraisers.

But in the upper end of the market, there are “so many fewer sales now that it’s sometimes tough to do a decent appraisal,” Earnhardt said.

Take your pick

The slow sales pace of expensive homes is not for a lack of properties on the market. There were 280 single-family homes listed for sale at $1 million or more at the end of August, according to figures from local Realtor Scott Raines. That’s more than a nine-year supply at current sales rates, a little less than it was earlier in the year but still far above what experts consider to be equilibrium.

The median price of an existing home sold in Buncombe County fell from $225,000 in August 2008 to $187,000 in August of this year, according to the N.C. Mountains Multiple Listing Service. People in the industry say the federal first-time homebuyer tax credit has brought many buyers looking for less expensive homes into the market, a shift that accounts for at least some of the decline.

Carroll said he still sees people looking for an upper-end home, but “they may just not spend as much money. A person who would buy a million-dollar house is buying an $800,000 house.”

Jon Corbin, president of The Buyer’s Agent of Asheville, said prices may continue to fall in the upper price ranges.

“At some point people that have to sell are going to have to sell. You’ve got a lot of spec properties that are in that price range,” he said, referring to homes built without a buyer lined up.

Buyers in general sometimes expect that prices would have fallen here as much as elsewhere, Carroll said.

“People are sort of shocked … when they come here from out of town at our prices,” he said. “They think we’re still too high, but they’re still buying. They’re not buying as much (house), and they’re looking for a discount.”

Improvements in the economy could firm up prices in more moderate price ranges, Carroll said, but it is also possible that some prices have further to fall.

“When you have that many people who have the mindset that they’re going to pay less, it’s really harder to convince them to pay more,” he said.