10.2.2023 PropStream
Disclaimer: PropStream does not offer financial advice. This article is for information purposes only. We recommend consulting a licensed financial professional before investing in Asheville real estate.
Nestled in the Blue Ridge Mountains of North Carolina, Asheville is a small city with a population of over 93,000. Currently, it’s a seller’s market, meaning there are more interested buyers than homes for sale.
In this article, we’ll unpack Asheville’s most notable housing trends and what they could mean for local real estate professionals.
Table of Contents
- Housing Inventory Is Low but Picking Up
- Mortgage Rates Are Elevated but Set To Fall Slightly
- Pent-up Homebuyer Demand Is Heating Up
- Home Prices Are Rising
- Home Sales Are Down
- Rising Rents and Lower Housing Affordability
What This All Means for Asheville Real Estate Professionals
Reasons To Invest in Asheville Real Estate
Start Investing in Asheville Real Estate With PropStream
1. Housing Inventory Is Low but Picking Up
Housing inventory in Asheville is currently low. In Q4 2023, every home price range saw a monthly supply lower than five months, meaning it would take less than five months to sell all homes for sale at the current sales rate (a balanced market is considered six months).
Furthermore, active home listings have trended downward since the end of 2019, with a slight tick upward in 2023. As of 16 February, the 7-day inventory average was 194.
The lack of supply is also evidenced by how fast homes are bought. In 2023, the average days on market (the number of days it takes to sell a property after it’s been listed for sale) was 36, up from 29 in 2022 but still well below historical averages.
One reason for the Asheville home shortage is a construction lag. Since the 2008 housing crash, new home construction has been slow to recover. As of June 2023, new housing authorizations fell 26% after peaking in December 2021. This is partly due to rising construction costs from supply and labor shortages, and higher interest rates. It doesn’t help that Asheville has abundant mountainous terrain, which can make construction more difficult and expensive.
Another reason for the housing shortage is a lack of existing homes for sale. This is mainly driven by current homeowners refusing to sell and give up their low rates (aka the “lock-in effect”).
2. Mortgage Rates Are Elevated but Set To Fall Slightly
As of February 15th (2024), the average 30-year fixed mortgage rate is 6.77%. That’s up from an all-time low of 2.65% in January 2021.
This steep climb is the indirect result of the Federal Reserve hiking its key interest rate—which serves as a benchmark for all other interest rates—since March of 2022 to lower inflation. However, now that the U.S. inflation rate has fallen from a peak of 9.06% in June 2022 to 3.09% in January, the Fed may be done raising interest rates. Though interest rates have yet to fall to the Fed’s 2% target, they’re headed in the right direction. Some experts predict the Fed will cut rates in 2024, with mortgage rates landing between 5.8% and 6.6% by the end of the year.
Lower mortgage rates could help loosen inventory from homeowners locked into low rates and increase demand among homebuyers. After all, 80% of recent homebuyers financed their home purchase, and a lower interest rate can dramatically improve home affordability.
3. Pent-up Homebuyer Demand Is Heating Up
Since 2022, elevated mortgage rates have pushed many in Asheville out of the housing market, leaving homebuyer demand dormant but growing.
If mortgage rates fall, pent-up demand could swarm the market. Furthermore, as Americans age, start families, downsize, and undergo other life changes, homebuyer demand tends to increase despite the constrained market, pushing home prices.
4. Home Prices Are Rising
Over the last decade, Asheville home prices have risen steadily. In 2013, the median home sale price was $217,000. By 2023, it reached a peak of $485,000.
Part of this is natural home appreciation. However, the appreciation rate has been especially high since 2019 (when the median home sale price was $316,000). This is due to the record low mortgage rates of 2020 and 2021 fueling demand and the continued housing shortage constraining supply. When there are more potential buyers than homes for sale, prices tend to rise.
5. Home Sales Are Down
Higher mortgage rates and limited home supply have slowed Asheville property sales. In 2023, just 1,269 homes sold, the lowest level since 2013.
This largely follows national trends. 2023 U.S. home sales reached a 28-year low of 4.09 million, down 19% from 2022. If mortgage rates fall and inventory increases, home sales may pick up. But for now, the market is relatively constrained.
6. Rising Rents and Lower Housing Affordability
At the start of 2023, Asheville ranked 4th for the most competitive rental market. According to the U.S. Department of Housing and Urban Development (HUD), the city’s median rent has increased from $1,347 in fiscal year 2020 to $1,761 in fiscal year 2024 (a 30% increase).
Rising rents have hurt housing affordability. With an average salary of $50,450, the typical resident can only afford to spend about $1,400 on housing (one-third of your monthly income is considered affordable). That’s well below the median rent of $1,761 or the monthly payment on the median $485,000 house at today’s mortgage rates.
What This All Means for Asheville Real Estate Professionals
Working in the current Asheville property market can be challenging as a real estate professional, but that doesn’t mean you can’t find lucrative deals. It just means you may need to get more creative.
For example, real estate investors can search for off-market properties, explore creative financing options, and monitor neighborhoods where housing activity is heating up, helping you uncover deals you could not find otherwise.
Similarly, real estate agents can educate buyer clients on creative financing options like seller financing, assumable mortgages, and equity sharing to help them get more favorable loan terms. Agents can also inform seller clients about current housing trends and the best time to sell.
Reasons To Invest in Asheville Real Estate
Despite the constrained market, Asheville has a lot going for it. Prospective investors may benefit from all of the following:
Landlord-friendly laws. Compared to other states, North Carolina is relatively landlord-friendly. The state preempts rent control, there’s no landlord license or entry notice requirements, and landlords can file for an eviction after ten days of overdue rent.
Population growth. Asheville is growing every year. In 2020, the metro area was home to 354,000 residents. By 2030, it’s projected to reach 400,000. That’s a 10-year growth rate of nearly 13%. With more people coming in, home prices will likely rise, increasing appreciation rates.
Strong economy. The Asheville region has a diverse $24 billion economy. Some of its top industries include manufacturing, healthcare, and hospitality. Furthermore, the city’s GDP in 2022 was over $26 billion. As of December 2023, the city also has a low 2.5% unemployment rate (the national average is 3.7%). The healthy economy here may attract workers nationwide and contribute to housing demand and low vacancy rates.
Luxury homes are on the rise. Over the last five years, demand for luxury housing in Asheville has increased. Consequently, real estate professionals who serve the luxury market may find unique investment opportunities.
Tourist attractions. Asheville offers countless tourist attractions: The Biltmore Estate, craft beer, the Blue Ridge Mountains, the dome-topped Basilica of Saint Lawrence, and more. As a result, the city brings in $3 billion in visitor spending each year, making it an ideal location for long- and short-term rental investors.
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Frequently Asked Questions (FAQs)
Will Asheville home prices drop in 2024?
Asheville home prices are unlikely to fall in 2024. This is primarily due to the continued housing shortage, which puts upward pressure on prices. That said, lower mortgage rates and a slight increase in supply could relieve some of that pressure. Still, any home price declines will be minimal if they occur at all.
Is the Asheville housing market going to crash in 2024?
Unlike during the 2008 housing crash, Asheville homeowners are in much better financial positions than they were then due to stricter lending standards. Plus, many owners have more home equity with locked-in low mortgage rates. Consequently, widespread foreclosures are unlikely.
Is Asheville real estate a good investment?
It can be. Though the current Asheville real estate market is constrained, you can still find good investment opportunities. This may require looking for off-market properties, exploring creative financing options, and more networking, but the opportunities exist.
When is the best time to invest in Asheville real estate?
It’s impossible to time the market. Instead, focus on improving your financial position and studying the market to seize investment opportunities when they arise. Additionally, remember that real estate tends to appreciate over time. So, the longer your time horizon, the safer the investment.
Notes on sources:
- Asheville monthly housing supply, average days on market, median home sale price, and number of homes sold taken from a recent Mosaic Community Lifestyle Realty report
- Asheville inventory averages taken from Altos Research
