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Increased Volume of Local Home Sales is a ‘Bit of a Facade,’ Prices Down as Result of Increased Volume


By Jesse Wood

Oct. 8, 2014. Volume is up. Prices are down.

That’s the general assessment of the state of the local real estate market by local real estate agents John Davis of Banner Elk Realty and Todd Rice of Blue Ridge Realty & Investments.

It’s also what the High Country Association of Realtors noted in its monthly report of August. While sale prices weren’t in line with figures from 2007 – before the economy collapsed, local realtors made the most home sales in August 2014 since October 2007.

“In [October 2007], total sales were $55.99 million with a median sales price of $230,000,” the latest report read. “Last month, total realtor sales were $39.02 million, with a median price of $188,500, a decrease of 17 percent compared to October 2007.”

Last month, 168 homes were sold by local realtors – which is only the second time in seven years that more than 150 homes were sold in a single month.

Todd Rice of Blue Ridge Realty & Investments
Todd Rice of Blue Ridge Realty & Investments

Rice of Blue Ridge Realty & Investments noted that the increasing volume, however, is a “little bit of a façade.”

From 2008 to 2011, a lot of local banks were dealing with foreclosures. These local banks would sell distressed properties through a number of local brokers, including, for example, Blue Ridge Realty & Investments.

Then, Rice said, that a moratorium, where people weren’t asked to leave foreclosed properties, took place in a span before and after the 2012 general election.

“Then in 2013 all of the remaining troubled assets went to Fannie May and Freddie Mac,” Rice said, adding that once the moratorium was lifted all of that “shadow inventory” came back on the market.

“We’ve been dealing with that a lot the past year to 18 months,” Rice said. “So that’s one reason volume is up. Now that all the shadow inventory is back on the market, Fannie wants to move it. So volume is up and pricing is down.”

Rice added that if all of the foreclosed properties were removed from the market, volume would be closer to flat – rather than appearing up.

Rice noted that in a good market, homes sell for about four percent of the average listing price, but currently that figure is in the 7 to 9 percent range. He said that homes listed for $290,000 thousand are selling for about $269,000 – about a 7.3 percent difference. If you jump out into $400,000 to $600,000 price range, the difference between sold and listing price is about 8.4 percent.

Rice also noted that a lot of the activity in the High Country is from folks looking for a second home; and those people aren’t moving with a sense of urgency that, say, people in more urban markets of North Carolina such as the Piedmont Triad or Research Triangle.

But Rice noted that the stock market is at all-time highs and the High Country has a great product as far real estate is concerned – both of which will help a soft market.

John Davis of Banner Elk Realty
John Davis of Banner Elk Realty

Davis of Banner Elk Realty noted the buyers’ market and large inventory and how folks are still looking for a bargain.

“Still wanting a good buy, and you can’t blame them because there is such a large inventory. It’s hard. For them, if they don’t get what they want right away, they move on to the next one. There are so many to look at,” Davis said.

In its latest report, the High Country Association of Realtors noted that there were 3,255 listings in the High Country MLS as of Sept. 14 – something that is the most at any point in 2014.

“It’s a wonderful time for people to be up here looking for property,” Davis said. “Prices are as low as they’ve been in some time. The market has been picking up and it’s not going to last forever.”

Even with what Rice labeled the “façade” of increased volume and Davis noting that the local market is lagging behind other parts of the state and the larger urban markets, Davis feels good about the state of the real estate market in the High Country – barring any “major national shocks.”

“Slowly, I think prices will firm up … and it’s not going to be immediate,” Davis said. “There will be ups and downs. It won’t be a straight shot up, in my opinion, but I believe it will continue to get better.”