With the rental restrictions, many Realtors reported that homebuyers looking for second homes were often deterred by the rental restrictions.  It is not unusual for people planning to retire in Buncombe County to buy a home prior to retirement and put it into the rental market until they are ready to relocate to the area permanently.  The restrictions meant that was no longer a legal option.

Rental Restrictions for Buncombe County revized.

With the commissioners’ action which allows rentals countywide, homeowners will now have that option restored.  In addition, visitors to the Asheville area will have more rental properties from which to choose.  Many tourists prefer to stay in a home and have a more authentic mountain cabin experience than a hotel room may provide.

For more information about Asheville area homes and rental properties, please contact Greybeard Realty.

Peaceful Greenways Benefit Asheville Real Estate Market

Greenways are trails of open space preserved for recreation and conservation.  In many instances, the paths connect common areas and provide safe passage through communities with limited exposure to vehicular traffic.  Greenways often offer protection for native plant life and can help in flood protection as well.

National studies indicate that greenways have a positive effect on real estate sales.  In several studies, days on the market (dom) are reduced when the property is adjacent to a greenway. One particular study indicates that houses adjacent to the greenway sold in just over half the time properties further away from the pathways stayed on the market.  In addition, home values increase on those cites adjacent to the pathways, and sales prices were significantly closer to asking price for those homes as well.

So while Asheville and Black Mountain residents can take advantage of safe, beautiful areas for recreation, the Asheville real estate market can also expect to see some benefits in terms of prices and fewer days on the market for homes in proximity to the greenways.  For more information, please contact Greybeard Realty.

It’s interesting to note, however, that these numbers were influenced by a spike in home sales in the West which economists feel have skewed the numbers toward the positive.  Also, it’s important to note that while there was in increase, it was still down significantly from its peak of 1.283 million-units in 2005.

What do the numbers mean?

With the surge in the West leading the way, the supply of new homes declined to its lowest level since last April.  In addition, the median home price for the period of $241,500 showed an increased to the highest mark since April of 2008. 

Closer to home, Buncombe County Realtors sold $49 million worth of homes during December which was the highest sales volume for homes in the last five months. 

These numbers alone are not enough to indicate a increasing trend, but coupled with the recent stock market rise and the decision by the Federal Reserve to maintain the low interest rates available, it may be seen as a small sign of hope for the new home sales market. For assistance in the Asheville real estate market, please contact us.

Mountain Views

If you have considered buying a second home, this may be the time to really start your search.  Before entering the buyers’ market, however, there are some simple steps which can alleviate future issues during the buying process.  First of all, do your homework.  What purpose would the home serve?  Will you be renting it out when you aren’t there?  Will you retire there in a few years? How much room do you need? Will you need a management company to keep the home in good condition and keep it rented regularly?

Another important step is to assess your own financial situation.  Will you need a second home mortgage which requires more stringent financials?  How much can you afford to spend?  It makes no sense searching through $1 million homes if you have a budget of $350,000.  Do you have a stellar credit rating?  If not, clean it up prior to applying for that second mortgage.

In the article, financial experts indicated that mortgage lenders were requiring as much as 25% down on second homes and clean credit reports.  Further, they indicated that the best prices on homes were found by buyers able to pay full cash for the home price.  The markets studied were Barnstable County, Cape Cod, MA, Mercer Island, WA, Hilton Head, SC, and Palm Beach, FL, and the increase of the number of homes sold ranged from 9% to 181%.

National numbers for 2010 second home sales will not be available until March 2011, but if these specific markets are any indication, it may be time to consider looking around for that second home. For more information, contact Greybeard Realty.

Andie MacDowell, Asheville Neighbor

The most recent top ten listing comes from Barron’s, the weekly business publication, and highlights the top ten places for second homes in the U.S. The article cites one real estate expert as noting that in addition to a good R&R site, investors are now on the prowl for solid investments as well.  The article points out that the decline in prices of luxury homes, in these second home markets, seems to have bottomed out.

Asheville came in at #9 on the list, trailing Maui, Kiawah Island, SC, and The Hamptons which finished 1,2,3 respectively.   Barron used as its criteria “gorgeous homes, spectacular views, world-class fishing and skiing, fine dining and great shopping.”  It also cautions that the rankings are somewhat subjective as are house styles, and that a return on investment in buying one of these homes may take a while. For Asheville, they list the median luxury home at $700,000, representing a 38% decline from peak pricing.   As a bonus, the article also notes the most famous movie star who could be your potential neighbor.  In the instance of Asheville, it is actress Andie MacDowell.  If you are a Barron’s subscriber, you can read the full article.  If you want to look for your own luxury home in a top ten setting, please contact Greybeard Realty.

By studying the rate of homes sold in the past 15 months, it is apparent that while the number of homes sold has been decreasing, the last two months show a slight up tick in volume.

An analysis of the absorption rate indicates that the number of months a home is on the market has risen over the last year.  It’s interesting to note, however, that there has been a very slight drop in that number of months in the last 60 days.

The amount of inventory available has increased as well, but that statistic is a difficult one to analyze because of the seasonal nature of our market.  In addition, it is quite possible that the increase in inventory is due to more people who were waiting for a positive market turn finally putting their homes on the market.

It is also encouraging to study the numbers of Black Mountain homes sales from January through September for the last three years.  Yes, there has been a dramatic drop in number of homes sold as well as an increase in the number of days those homes that sold were on the market.  But I find it very positive to look at the median price.  Despite that drop in sales volume, the home prices are staying solid.  There was only a 2% drop in median price for the time period from 2007 to 2009.  From 2008 to 2009, the median price dropped only 1%.  I find it very encouraging that home prices have remained so solid during this difficult stretch.

In conclusion I would say that I am cautiously optimistic that the decline in the Black Mountain real estate market seems to have leveled off and might even be trending upward.  If you recall at the beginning of this article I noted that 25 homes are presently under contract.  Remember that homes sales lag about 45 days from contract date.  With these early signs of potential recovery, I expect to be writing more articles soon with even more good news to share.

For the first time since March 2008, home sales (# of units) in Black Mountain have exceeded the sales from the same month in the previous year, and currently, 22 homes are under contract. And while the average cost of homes significantly dropped from last year, we are finally seeing an upswing — the median price of homes in Black Mountain has increased by 2% year-to-date.

The good news continues for August.  In August 2008, there were 3 homes sold in Black Mountain.  As of the date of this posting (August 29, 2009), there have been 7 closed sales this month.

The American Recovery and Reinvestment Act of 2009 has helped many people– this year– purchase their first home, and The National Association of Realtors estimates that 350,000 first-time buyers will own homes thanks to the tax credit. Additionally, North Carolina homebuyers, who meet income requirements, may be eligible for a Mortgage Credit Certificate (MCC). An MCC allows you to claim 20% of the interest you pay on your mortgage as a federal income tax credit and has the potential to save you up to $2,000 a year on your federal taxes. An MCC can be combined with the $8,000 federal tax credit, but qualified buyers need to move quickly to take advantage of this opportunity because the November 30th deadline quickly approaches.

The knowledgeable staff at GreyBeard Realty wants to help you take advantage of this first-time buyers’ market. Let us help you find your new home. Buyers are advised to consult with a tax professional regarding tax credits and mortgage credit certificates.

The Act does specify that this incentive is for first-time buyers, but it is important to understand how the law defines first-time buyers.  In this case, a first-time homebuyer is someone who had no interest in a principal residence in the prior 3 years.  Clearly, this opens up the tax credit to more than just true first-timers.

The actual amount of the credit is based on the sales price, with the credit equal to 10% of the sales price up to $8,000.  That would mean a home over $80,000 would qualify for the full $8,000.  This new incentive is actually a modified version of the $7,500 tax credit offered as part of the Housing Assistance Tax Act of 2008.  That version required re-payment of the credit, in essence making it an interest-free loan.  However, the new version is not a loan, and it does not requirement re-payment as long as the buyer remains a principal residence for a minimum of 3 years.

For information about claiming the first-time homebuyer tax credit on your tax return, visit the IRS website.  Also, the National Association of Realtors has a good list of frequently asked questions.

This article is a brief summary of this exciting homebuying incentive, but anyone looking to take advantage of it should consult a tax adviser.

In Buncombe County we have a large number of vacation rental homes, although it is difficult to track specific numbers.  While concrete numbers are not available county-wide, as an example, there are 650 homes in Montreat, and I would guess there are about 150 vacation rentals in Montreat alone.  That makes the rental market, particularly short term rentals (i.e. vacation rentals), very important to our community as a whole.

Nationally, statistics indicate close to 46% of investment homes (homes bought for long and short term rentals) are purchased as a means to diversify an individual’s investment portfolio while 12% of investment homes are purchased for use as a future primary residence.  Anecdotally, I find the percent of investors buying for their own future use to be higher in our area.

Buying a short term rental home requires more than just considering the numbers, however. Anyone considering an investment home purchase needs to consider the intangibles as well. For example, location can be a huge determinant in the success of an investment home as a vacation rental property.

There are numerous times I have faced clients who have come to me ready to put their newly purchased home into the rental pool, and I have to tell them that their home is not really a good candidate for a short term vacation rental in our area.  Vacationers have very specific needs they are trying to fill when they rent a vacation home.

“Only certain types of homes work well as vacation rentals in our market,” explains Rachael Lee, rental manager for Greybeard Realty.  “Around here, they must feel like the mountains.  The best ones have long distance views.” Other prime locations that draw vacationers include secluded properties, homes close to streams and lakes, and houses in close proximity to town. We have also found that our renters’ expectations are high and they are expecting luxury and more upscale amenities. The best rental homes have cable, provide high speed internet, offer a hot tub and allow pets. We often joke that the best vacation rental house would be a pet-friendly, wi-fi log cabin with a stream and waterfall that is close to the town center, in a private setting, with a hot tub, on a flat lot and of course an incredible view.

Properties can be rented for short term or long term purposes, with varying factors within each type of rental market.  Lee notes that in terms of rental returns on property in our area, the rule of thumb is that a weekly rental rate is about 80% of the monthly rate of a long term rental.  For Greybeard Realty, a good short term rental rents approximately 15 weeks a year with the best rental unit in the company going for 31 weeks in 2006.

“There are more expenses associated with short term vacation rentals,” Lee notes.  “There are cleaning costs, commissions if the property is managed, and utilities expenses which are different from long term rentals when the tenant pays the utilities.”

As with making all investments, home buyers need to do their homework on the benefits for their own portfolios and know their market where they are investing.  In addition, they need to make sure there are no restrictive ordinances and zoning limitations on using the properties as short term rentals if that is their preference.  Also, they need to be prepared to be patient with their investment and realize that vacation rentals do not usually create a positive cash-flow but are more a long-term capital appreciation investment.

If a vacation rental property is carefully chosen in a beautiful location with the expected amenities such as the internet and perhaps some extras such as a hot tub, then property owners will have more success when renting their properties out and eliminate many of the disappointments.

Paula Heimowitz convinced her husband to purchase a short term rental home in BlackMountain rather than putting more money into the stock market.  For her, the pluses of making their first investment home purchase for use as a vacation rental have outweighed the minuses.

“The hardest part of renting is worrying about what might go wrong or get broken”, she says.  “The biggest surprise has been how well it has been received and mostly how much we enjoy visiting the area and staying in our own house.  The bears visiting our yard have been a big surprise for us as well.”

Renters and short term rental properties play a vital role in our community.  In addition to the obvious revenue generated by these rental properties through property taxes, use tax and the like, renters themselves contribute to our regional economy through their travels and their purchases.  Also, the support system for these rental properties, the cleaning services for example, benefit from the rental market.  It is important not to underestimate the importance of these rental properties to our area economy.

Bill Munn, Owner of Black Mountain Bakery states, “I would estimate that 30-40% of our business is from tourists so obviously vacation rentals play an important role in our local economy.”

Quality rental properties owned by knowledgeable investors are an asset to the area that generate income for a wide variety of area businesses and enhance the economic picture for our area.