Dave Farrell was new to town. He and his wife, Shelley, had just settled into a West Asheville rental after moving from Connecticut in early April. The couple planned to use their temporary digs as a home base for house shopping. They expected a competitive market.

What they experienced, Dave Farrell says, was extraordinary.

“It was crazy. Things would come on the market, and had maybe been available for an hour, and we would learn they had already been sold. That happened to us five or six times. We would never even get a chance to look at the place, and it was already gone,” Farrell explains.

The Farrells are just two of the many out-of-town buyers who have sought to relocate to the Western North Carolina mountains over the past year. That demand has supercharged an already hot real estate market: According to Redfin, a nationwide real estate brokerage, Asheville home prices were up 22% year over year in June, selling for a median price of $411,000. Area homes now sell after a median of 42 days on the market, compared with 63 days at the same time last year.

While the market may be challenging for outside buyers, it’s even harder for locals searching for homes. The latest available data from searches by Redfin users shows that the average real estate budget for an outsider moving to Asheville was $615,500 as of April, 31% higher than the average local budget of $469,000. That disparity between outside and local buyers was greater than in either Charlotte (21.1%) or Raleigh (25.2%); those cities also had lower average out-of-town buyer budgets at about $554,000 and $543,000, respectively.

Alexandra Schrank, an Asheville-based real estate agent with the Mountain Star Team of RE/MAX Executive, says the Redfin numbers square with her on-the-ground experience. And for locals with lower budgets, she continues, options in the Asheville market are severely limited.

“If your budget is $300,000 or lower, it is almost impossible to find anything,” Schrank says. “We are seeing double-wide trailers selling for $250,000.”

Driving factors

Schrank calls the COVID-19 pandemic “the biggest game changer for real estate.” Low inventory due to slower building activity and low interest rates set to stimulate the economy, she says, have generated high demand both in Asheville and across the country. The national median home sale price in May 2021 was over $377,000, up 26.3% year over year, according to the most recently available Redfin data, and the median home sold in 16 days, down from 38 in May 2020.

Increased adoption of technology driven by the pandemic, she adds, has also increased the ability for real estate agents to market properties to potential out-of-state buyers. In-person real estate showings were not considered essential business during the first month of COVID-19 emergency orders, leading both agents and clients to become more comfortable with virtual home visits. “We continued to work through the pandemic, and people were buying houses sight unseen,” Schrank says.

Those recent changes to the market have intersected with longer-term trends. Justin Purnell of eXp Realty says roughly 80% of his buyers are coming from out of town, up from about 50% 15 years ago — and many of them are driven by climate change. As previously reported by Xpress (see “Head for the Hills,” Aug. 26, 2020; avl.mx/9xp), sea level rise alone could drive a 5% increase in the Asheville metropolitan area’s population by 2100.

These buyers, says Purnell, “want to get out of the California fires, coastal hurricanes and high temperatures. Climate is a big reason they are coming, and for the mountains, and all there is to offer here. They all want that lifestyle.”

And the greater acceptance of remote employment, Schrank says, is allowing people from all parts of the country to relocate. “[Out-of-town buyers] make better money than someone from here. Having more income means they can get prequalified to offer more money, or many will have cash,” she says. “Out-of-towners are beating out the locals.”

Seller’s market

Schrank primarily works with local sellers, many of whom are benefiting from the high demand and low supply of homes in the area. Some of those locals, she continues, “feel like Asheville is getting unaffordable. Many are moving to South Carolina and Tennessee just to get out. They are cashing out.”

Sellers receiving upward of seven offers in 72 hours, often for $30,000 to $40,000 over their asking price, is not uncommon, according to Schrank. “I’ve never seen it like this. I put stuff on the market and think I am overpricing, then end up getting over asking price,” Schrank says.

For many out-of-town buyers, those prices may not seem unreasonable. Despite the recent surge, Asheville’s median home price is only 9% higher than the national figure. Many large urban markets, including Los Angeles ($935,000), Seattle ($800,000) and Boston ($750,000), had much higher median prices as of June, according to Redfin.

Asheville residents since 1977, Marsha Browning and her husband, Joseph, are reaping the benefits of the current market as sellers while simultaneously struggling as buyers. The two say they wanted to downsize while capitalizing on the high prices for local real estate.

“We sold our house in two days,” Browning says. “We listed on a Friday night at 6 p.m. and had a contract Monday morning. They offered way above,” she adds of the Florida-based buyers, who paid $481,000 for a house the Brownings bought in 2019 for $340,000 and listed at just under $460,000.

As buyers, the Brownings are unwilling to leave Asheville and the doctors they have built relationships with over the years. But for now, they’ve decided to wait out the market by moving into a Weaverville rental apartment.

“We don’t want to purchase right now,” Browning says. “It is really hard. Out-of-staters come here and have the money. We have a $350,000-$400,000 budget, but most of the houses are way over $400,000. The $300,000s or less usually need a lot of work.”

Ripples and bubbles

Despite the crowded market, examples do exist of buyers able to find something within their budget. The Farrells, with a budget between $300,000 and $500,000, were the sole bidders on the third home they targeted in their search, located in Woodfin and priced inside their range. “It’s only a year old,” Dave Farrell says, “and everything is still brand-new. It’s great.”

But local nonprofits seeking to promote and develop affordable housing options argue that individual successes don’t address the structural issues in Asheville’s market. For Scott Dedman, executive director of Asheville-based Mountain Housing Opportunities, lack of supply is a primary obstacle, and the result is higher rents and homeowner prices.

“In Buncombe County, more than 8,500 renter households are paying more than half of their income for rent. That’s about 21% of [Buncombe’s] renter households,” Dedman says, referencing 2019 census data. “At the same time, more than 5,000 Buncombe households are paying more than half of their income for homeowner costs, about 8% of Buncombe homeowners.”

Increasing supply, Dedman feels, would help. He shares some frustration with residents who protest against new residential development, especially in downtown or other areas with easy access to jobs and services, and encourages them to think about the affordability implications of restricting construction.

“We live in a popular place,” Dedman continues, “and many of us are here for the same reasons that newcomers are here. So there is high demand for land and homes. The question should be, are we working hard enough to meet the increasing demand with new housing supply?”

Like Schrank, Purnell suggests that the Asheville market may soon reach its own limits. He’s seeing an increase in buyers simply choosing to bypass the city and look at other parts of WNC, such as Jackson and Macon counties, or even outside the state altogether.

“Some buyers have sticker shock,” Purnell says of the current Asheville market. “They can’t believe how much it costs to live here. If they want mountains, they can go to South Carolina or Tennessee and find much better prices.”

And while Schrank says she has witnessed steady increases in home prices during her six years as a real estate agent, she is bracing for an eventual correction to the market. As COVID-19 emergency measures come to an end, she predicts an increase in foreclosures this fall and potential increases in inventory by spring 2022, which may cause prices to drop. “Everything that goes up has to come back down,” she says.