For sale: There's two sides to market
by Scott Nicholson
The 2010 real estate market held both good news and bad news,
depending on which side of the "For Sale" sign you were standing.
Last year, 830 residential units were sold in Watauga and Avery counties, totaling $216 million in real estate transactions. That was down from 2009's total of 886 units worth $240 million and less than half the total sales value of four years ago. However, as prices fell, cheaper homes generally sold more quickly, as cash buyers entered the market to take advantage of unprecedented bargaining power.
Carol Sommer-Isquith, agent with Advanced Realty and a board member of the High Country Association of Realtors, said property is selling well around Boone but the higher-end houses might be sitting empty for a while. Of the units sold last year, 527 were on the market for more than four months. Houses and condominiums that sold were on the market an average of six days longer than in 2009.
"Boone is always in transition because of the (Appalachian State) university and the hospital and medical providers," Sommer-Isquith said. "Outside Boone are resort sales and disposable-income issues. The outlying resort areas are suffering on two levels, because there are different regulations on bank requirements and large lenders are now going to require 30 percent down instead of 20 percent. Raising the bar will seriously cut into our production."
Although overall sales were down, more of those buyers paid cash for their homes last year, comprising more than a third of all home buyers. Conventional financing declined about 15 percent and median sales price dropped by $10,000.
"We had a lot of cash buyers last year," Sommer-Isquith said. "A lot had to do with people saying, 'You know what? I am taking my money out of the bank. Now is the time for me to move my money into something that will grow over time and, more importantly, that we can enjoy as a family.'"
Foreclosures have offered buyers the opportunity to be selective about spending their money and negotiating from a position of strength. Lenders are sometimes selling properties at values lower than the amount remaining on a mortgage, a process known as "short sales," because lenders would rather face a moderate loss than a risk of extended foreclosure.
"The numbers are skewed by foreclosures, which makes for unhappy sellers," Sommer-Isquith said. "Good properties are sitting there either overpriced, or in an area where you had several foreclosures bringing down price. There's a huge glut on the market, coupled with sellers still locked into thinking it's better than it really is."
Sommer-Isquith said people don't like the idea their home or property may be worth less than they paid for it. Appraisers must take foreclosures into account when coming up with a value, and buyers are happy to disregard an owner's expectation and issue a "Take or leave it" offer.
Sommer-Isquith believes the days of "flipping," or buying a house and selling at a fast profit in a year or two, are in the past.
"I think there's a completely different dynamic now, with people looking at the long-term investment and so much uncertainty in the lending industry and interest rates still very low," she said.
Of the residential sales last year, six were for less than $30,000 and 11 were for less than $100,000. However, 13 houses sold for more than $1 million, a slight increase over 2009.
In 2007, 30 million-dollar homes sold, including three costing more than $3 million. The median sale price that year was $330,000, nearly 25 percent higher than last year's median price of $261,000.
The bulk of recent activity is in homes costing between $200,000 and $400,000, although those homes aren't necessarily the fastest selling. While working family homes and luxury homes still have a strong market, a gap exists in the regular second-home or vacation market.
"I call it the 'black hole,'" Sommer-Isquith said of the homes priced between $400,000 and $800,000. "Above that, people in that category have the money and are happy to use it. People below are really transitional new families or looking for seasonal weekend runaways and looking for down-the-road investment. They want to buy it, use it and then have an investment."
Land is a great bargain in the current market, Sommer-Isquith said, and although real estate agents face challenging times, there are still opportunities for agents who pay attention to the local market instead of worrying about national trends. Realtors are stuck in middle of helping sellers understand how foreclosures and distress sales are creating a buyers' market.
"I'm optimistic," Sommer-Isquith said. "Real estate is always a good investment because you get to enjoy it. It does appreciate with time, but there has to be leveling out. The 'flip' days are over for a long time, but I think it's a great use of money and a great use of product that's out there."
High Country
Association of Realtors
(Watauga and Avery counties)
YEAR/UNITS/SALES VALUE/
NUMBER OF LOANS
2010: 830 $216 million 414
2009: 886 $240 million 481
2008: 968 $302 million 530
2007: 1,341 $442 million 813
2006: 1,501 $433 million 982
Source: National Association of Realtors
Last year, 830 residential units were sold in Watauga and Avery counties, totaling $216 million in real estate transactions. That was down from 2009's total of 886 units worth $240 million and less than half the total sales value of four years ago. However, as prices fell, cheaper homes generally sold more quickly, as cash buyers entered the market to take advantage of unprecedented bargaining power.
Carol Sommer-Isquith, agent with Advanced Realty and a board member of the High Country Association of Realtors, said property is selling well around Boone but the higher-end houses might be sitting empty for a while. Of the units sold last year, 527 were on the market for more than four months. Houses and condominiums that sold were on the market an average of six days longer than in 2009.
"Boone is always in transition because of the (Appalachian State) university and the hospital and medical providers," Sommer-Isquith said. "Outside Boone are resort sales and disposable-income issues. The outlying resort areas are suffering on two levels, because there are different regulations on bank requirements and large lenders are now going to require 30 percent down instead of 20 percent. Raising the bar will seriously cut into our production."
Although overall sales were down, more of those buyers paid cash for their homes last year, comprising more than a third of all home buyers. Conventional financing declined about 15 percent and median sales price dropped by $10,000.
"We had a lot of cash buyers last year," Sommer-Isquith said. "A lot had to do with people saying, 'You know what? I am taking my money out of the bank. Now is the time for me to move my money into something that will grow over time and, more importantly, that we can enjoy as a family.'"
Foreclosures have offered buyers the opportunity to be selective about spending their money and negotiating from a position of strength. Lenders are sometimes selling properties at values lower than the amount remaining on a mortgage, a process known as "short sales," because lenders would rather face a moderate loss than a risk of extended foreclosure.
"The numbers are skewed by foreclosures, which makes for unhappy sellers," Sommer-Isquith said. "Good properties are sitting there either overpriced, or in an area where you had several foreclosures bringing down price. There's a huge glut on the market, coupled with sellers still locked into thinking it's better than it really is."
Sommer-Isquith said people don't like the idea their home or property may be worth less than they paid for it. Appraisers must take foreclosures into account when coming up with a value, and buyers are happy to disregard an owner's expectation and issue a "Take or leave it" offer.
Sommer-Isquith believes the days of "flipping," or buying a house and selling at a fast profit in a year or two, are in the past.
"I think there's a completely different dynamic now, with people looking at the long-term investment and so much uncertainty in the lending industry and interest rates still very low," she said.
Of the residential sales last year, six were for less than $30,000 and 11 were for less than $100,000. However, 13 houses sold for more than $1 million, a slight increase over 2009.
In 2007, 30 million-dollar homes sold, including three costing more than $3 million. The median sale price that year was $330,000, nearly 25 percent higher than last year's median price of $261,000.
The bulk of recent activity is in homes costing between $200,000 and $400,000, although those homes aren't necessarily the fastest selling. While working family homes and luxury homes still have a strong market, a gap exists in the regular second-home or vacation market.
"I call it the 'black hole,'" Sommer-Isquith said of the homes priced between $400,000 and $800,000. "Above that, people in that category have the money and are happy to use it. People below are really transitional new families or looking for seasonal weekend runaways and looking for down-the-road investment. They want to buy it, use it and then have an investment."
Land is a great bargain in the current market, Sommer-Isquith said, and although real estate agents face challenging times, there are still opportunities for agents who pay attention to the local market instead of worrying about national trends. Realtors are stuck in middle of helping sellers understand how foreclosures and distress sales are creating a buyers' market.
"I'm optimistic," Sommer-Isquith said. "Real estate is always a good investment because you get to enjoy it. It does appreciate with time, but there has to be leveling out. The 'flip' days are over for a long time, but I think it's a great use of money and a great use of product that's out there."
High Country
Association of Realtors
(Watauga and Avery counties)
YEAR/UNITS/SALES VALUE/
NUMBER OF LOANS
2010: 830 $216 million 414
2009: 886 $240 million 481
2008: 968 $302 million 530
2007: 1,341 $442 million 813
2006: 1,501 $433 million 982
Source: National Association of Realtors