Fall 2024 Market Update
The real estate and housing market remains very competitive in the greater Asheville area. The combination of desirability of Western North Carolina, higher interest rates, and dramatic increases in home values over the last four years has created a complex market for both buyers and sellers. For buyers, when they sell their existing home, they have seen increased equity in their properties; in some cases by nearly 100% depending on where you’re coming from in the country. When they sell, it’s great, but getting into the next home is where the quandary is. Higher interest rates for the next home are decreasing buying power. In the luxury market, every percentage point increase in interest can lower buying power by $100-200,000. An equally sized and valued home, therefore will cost the buyer more because they are paying more in monthly carrying costs for interest rather than principal. So, unless buyers are willing to spend more, they may have to downsize.
For sellers, with attractive lower interest rates already locked in along with solid equity, many homeowners are deciding to stay put rather than to sell. In many instances, they’re putting new money, or equity, to work to renovate their current home rather than to move. This half of the trend has resulted in little inventory coming on the market. With classic supply and demand at work, when houses do come on the market, the per square foot price is at a premium both for updated homes and those requiring renovation. When the home requires more extensive renovation to meet client needs, the cost per square foot of home purchase + renovation may surpass the cost of new construction; therefore making building new a more attractive choice, financially.
Deciding to build, even when it’s a more attractive financial option, does require time and planning. Finding the right location is becoming more difficult. Popular areas with desirable amenities have fewer lots available. Building in more remote areas is complicated by accessibility and the additional structural considerations due to topography. Building new also continues to be impacted by cost of labor and materials. Labor costs are up, yet plateauing, and available skilled labor is already allocated, making wait times a factor. Material costs are impacted by inflation and availability. While some material costs are improving, overall building costs do not appear to be coming down, at least in our area.
Yet, given all this, the design and construction pipeline for new homes in the luxury market in Asheville is extremely robust. In fact, it is hard to believe that we are already in the first month of fall. Our firm has had a packed schedule since last year! The remainder of the year is set to be just as robust. The pipeline for next year is just as strong with a full complement of projects ready to get going as soon as our current projects transition into the construction phase. Deciding to purchase an existing home or to build new is a complex decision with many factors involved, only one of which is the price per square foot equation. At ACM Design, we’re the experts at counseling our clients to make the decision that’s best for them. It’s a trust we are honored to have.
