Welcome to my first “Waterfall Chat on Mountain Real Estate”. Our new blog world offers a chance for me to share real estate insights that could help you make smarter investment decisions, whether it be for a
primary or vacation home,
investment property, or
land development.
Customers frequently ask me what is going on in our mountain region regarding the current real estate market. Is it down, flat, up - and how has the mortgage crisis affected our area for real estate sales? I have been in Bryson City, North Carolina real estate now for almost 15 years, and have lived through the land, home, and investment property sale trends of mountain real estate over all of that time.
There is a great deal of anxiety and real hardship with the current mortgage problems in many areas of the country. The Freddie Mac and Fannie Mae liquidity problems in the news this very week certainly don’t help alleviate consumer fears. Our mountain region has not experienced the residential foreclosures, excess of homes on the market, or sharply dropped home or land values.
Our western North Carolina region, specifically Swain, Graham, and Jackson counties adjacent to Great Smoky Mountains National Park, is a very different market from more populated regions of the country that have a much higher concentration of private land. Swain County, for example, is
87% national forest or national park lands. What private land there is, holds its value for the simple reason that there isn’t much of it. Consequently, land prices have not declined measurably in value, especially land that borders public lands because it is (at least somewhat) protected from encroaching development. Demand has softened, but values have not declined proportionately. (It’s a classic supply issue, there is no new land being “made”!)
Our current real estate market reflects the pre-2005 market. Late 2005 and 2006 is when we saw the beginning of upper end real estate buying. Pre-2005, there was not a large volume of trading in wintertime, and activity picks up through the summer months. What has happened is we have returned to more of a normal market – in other words, the market has corrected to reasonable levels. The volume of sales has slowed, but the value of the homes and land in this region has held consistent. Of course there are always those who sell for lower prices than they otherwise could, due to other personal reasons driving their need to sell quickly. To date, area MLS sales records show a small discount over 2007 sales.
The 2006 and 2007 markets were ones of strong demand for mountain property, where buyers could purchase high and still make a profit on the resell. In 2008, we see a correction such that you can still make a profit on sales, but you have to be more careful to buy at a cheaper price. Knowing what price to pay becomes so much more important in a market where demand has softened. That’s where experienced realtors in the opportunities and challenges of mountain property come in. Slope, drainage, access, development proximity, home floor plan, materials used, builder’s experience and history, all these things are critical to a sound purchase. A realtor who knows the area well, what sells and why, who builds and how, etc. is especially useful to the area newcomer. Real estate buyers in our market are typically not looking to move here to work. This is a prime vacation market. The buyers largely represent the second home market and split their time between the Smoky Mountains and their primary home elsewhere. Real estate targeted for this market is a large percentage of the inventory in this area.
Yellow Rose Realty didn’t reduce pricing in the homes and land in our listings, due to our philosophy of pricing right from the start. If you look in the real estate guides, you’ll note a variety of “price reduced” listings. Look carefully, the value of the home and land didn’t decline, the price was inflated and now has been dropped to a reasonable level. We have a very large percentage of repeat customers in our real estate business, and vacation rental guests who turn into real estate customers, buying their first vacation rental cabin from us as an investment and ongoing income source. We know this is because we work very hard to price properties at levels that provide fair and reasonable returns to both buyers and sellers. How do we know? Our customers tell us!
In our next Waterfall Chat on Mountain Real Estate, I’ll look at historical real estate trends in Swain County, and cover the real income picture on land sales. Let me know what you’d like to hear about in my blog. Comments are welcome, just click on the comment link at the bottom of every entry.