Chart shows rise in building permits issued in Henderson County.
The average price of homes continued a sharp rise in 2017 and the total number of homes sold hit the second highest total since 2000 as well.
That’s good news for sellers — especially those with a house on the market for under $300,000. But it’s exacerbating the county’s affordable housing shortage for working families.
“With the cost of land and the cost of construction, builders just aren’t able to build at the average price,” said Noah George, an agent with Keller Williams who helped 137 clients buy or sell homes last year. “The amount of inventory under 250, it’s so low. I could sell 20 $200,000 houses. … That’s why people are paying $280,000 for these 1970-1980 brick ranches, because no one is putting new inventory on the market.”
The inventory of homes is down, which is driving the price up.
“The cost of land in Buncombe County is driving folks here,” Steve Dozier, a real estate agent with Beverly Hanks and chair of the Henderson County Planning Board, told the audience at Business Morning Update last week. “The cost of land and homes in Polk County because of the International Equestrian Center is going through the roof right now. If you want to hear a protest about tax values go down to Polk County because they’re definitely talking about it.”
North Carolina’s growth, the bubble of retiring baby boomers and Hendersonville’s popularity is driving home sales here.
Home sales totaled 2,151 in 2016, second only since 2000 to the 2,169 homes sold in 2005 during the pre-recession peak.
Last year, 2,062 sales closed, down slightly from 2016. Yet the average price continued an upward climb. At $275,000, the price was up 13 percent over 2016. (In Buncombe the average was $358,000.)
“We have not ever seen those kind of appreciation rates and part of the reason driving that is the inventory within Henderson County is at an all-time low now,” Dozier said. “So when inventory is that low, any house that’s out there can demand a little more and it’s driving that cost up.”
Indeed, the 451 single-family homes on the market is less than a third of the total of 1,313 in October 2013. And even that 451 is inflated.
“There’s 51 homes on MLS that just have pictures of a proposed house on a lot,” George said, meaning they’re under construction. “Buyers want to buy something they can move into in the next 45 days.”
There’s also only 46 total condos on the market now and again the number is misleading because 16 of those are not finished. In July 2012, Henderson County had 282 condos on the market.
Dozier and George said low interest rates and the county’s strong growth means strong real estate sales will continue in 2018.
“We will probably see a slight adjustment but I do not believe it will be anything like what we saw in 2009, ’10, ’11 and ’12,” Dozier said. “When you look at the chart, we’re even better (in price) than 2007 and everybody thought that was the peak of the market. We didn’t sell quite as many homes this year but our average price is $274,000 versus $260,000” — 7 percent higher than 2007, “what everybody refers to as the peak of the market.”
Apartment construction soars
Although the number of new residential units climbed to 596 — a 7.4 percent increase over 2016 — many of those were new apartments in fast-growing Fletcher and in new complexes on Frances Road. The overall value of residential construction reached $141 million, up 27.4 percent from 2016.
“The reality of the situation is that the number of permits requested is going up,” he said. “The number of inspections is also going up. The number of residential units is continuing to rise. … The numbers do indicate that there is a large amount of construction going on in the county.”
Most of the new units are not single-family homes but are apartments.
“I think that’s pushing these numbers,” Mitchell said. “Looking at the data and what we know, there have been a large number of apartments permitted within last two or three years at Ballantyne Commons, a number in Fletcher, a number (on Francis Road) across from Walmart.”
Of those, only new apartments on Francis Road are considered affordable housing. Built with tax credit financing, the developments charge a lower rent.
County rejects high-density housing
The trend for new housing is unfavorable for higher density developments, and thus lower prices. The county Board of Commissioners or Planning Board have denied rezoning request or master plan approval for 600 units in the past 14 months. Although they rejected a building moratorium that one commissioner sought, commissioners directed the Planning Board to look at restrictions on higher density housing developments.
As planning board chairman, Dozier is leading the committee that’s doing the review. He plans to update the Planning Board today on the zoning rewrite, which comes during a period of heightened anti-growth activism across the county.
“You’ve heard of nimby, not in my backyard? I would dare say if you tried to take a nice development like a Kenmure or a Champion Hills today and tried to put it in you’d have a lot of that same issue with not in my backyard,” Dozier said. “But they are very nice developments and they’ve settled in extremely well.”
Dozier acknowledges that higher density developments, especially when they don’t have sewage treatment plans in place, can overwhelm rural residential areas. He cast the tie-breaking vote against a 299-unit development at the old Hammond Farm in Etowah.
“That is just not a good fit for the small area of Etowah,” he said. “The issue we have with roads, water and sewer … that was the reason I voted not to allow that.”
The county is still working on striking a balance that allows development but at a manageable pace.
“Does anyone here think Henderson County is not growing? I’ve lived here 25 years and I cannot think of a better place to live,” he told business leaders last week. “The problem is with the nimby folks — they have come here to live and they enjoy it and they don’t want anything to change now. Things changed to allow them to come in so we need to have controlled growth, controlled ways of allowing growth in Henderson County and be smart about our growth.”
George echoed that.
“We have a massive demand from families for 3-bedroom, 2-bath homes $300,000 and below,” he said. “We need first-time homebuyers. Then when people have the empty nest that’s when they sell it.” The imbalance here is created because when empty nesters move out of their big house, “they can pay a premium for the smaller house, which is pricing out the local families.”
Zoning that requires home lots of a half-acre or acre in a county with high land prices means developers won’t build small houses. And that creates the conflict again. People comfortably settled in on those one-acre lots only want other acre-lot subdivisions next door.
“I’m not against the zoning or against restricting growth,” George said. “There’s a cause and effect here. I don’t like seeing Hendersonville change like the next local. There has to be controlled growth but it has to be done smart.”