New Construction and Home Sales Boom in Transylvania. For Now.

Available statistics show that continued demand boosted housing prices and home building in 2022. But there are also signs of the passing of a "unicorn" market.

Construction site on Rosenwald Lane in Brevard photographed this week

BREVARD — The housing market kept on booming in 2022.

As in 2021, Transylvania County recorded a recent high in the number of construction permits issued for single-family homes last year. The time homes lasted on the market continued to shrink and the median home price rose a whopping 18.2 percent.

Both realtors and home builders reported strong demand fueled by an abundance of cash buyers.

What’s different?

It may not last much longer, said Billy Harris, a residential broker associate with Allen Tate/Beverly-Hanks, Realtors, who like several others in the industry predicted not a bust in 2023, but a “normalization” of the market.

He’s already seen the signs: An end to the stream of buyers who felt an immediate need to flee cities consumed by the Covid-19 pandemic, a reduction in once-common bidding wars for properties, and sellers adjusting prices downward from what he called “the unicorn year of selling real estate.”

With rates of 30-year mortgages now about 7 percent, local homeowners already locked into far lower rates will be less likely to look for an upgrade, he said. “We’re not going to see a slew of people living in a house for two or three years and selling for a profit.”

The softening of Transylvania’s “feeder markets” such as Atlanta and Florida will inevitably be felt locally. And though some builders pushed back on this view, Harris said new home construction will eventually run up against a long-standing obstacle to development in the county — a shortage of available lots.

“I think the general consensus in our world is that we’re not headed back to (the recession year of) 2008,” said Will Heintish, broker-in-charge of the Lake Toxaway Company.

Though he said he is “encouraged” about his firm’s prospects for 2023, he added, “we are bracing for some sort of slowdown.”

The Numbers

A detailed quarter-by-quarter analysis of 2022 sales won’t be available until later this year, Harris said, but a report run by his company in mid-December showed the median home price in Transylvania had climbed from $385,000 for the first 11-plus months of 2021 to $455,000 during the same period last year.

That’s about $1,000 higher than in Buncombe County, traditionally the priciest home market in the region, and the Redfin.com website reported an even higher median price for Transylvania homes as of November — $470,000.

The Allen Tate/Beverly-Hanks report found that the average stay on the market in Transylvania fell from 47 days in 2021 to 43 and tracked signs of falling inventory for both land and homes for most of last year. The number of sales in both categories fell significantly this year compared to 2021.

Despite this reduced supply, competition for available properties seems to have slipped, Harris said. None of his listings, for example, have received multiple offers in about three months and he expects the more detailed report will show that homes lingered longer on the market toward the end of the year.

“I think prices have adjusted downward which may be a good thing, because I think prices were a little too high,” said Nancy Kern, a veteran agent at the Looking Glass Realty Office in Connestee Falls, who said the rising mortgage rates can add several hundred dollars to a monthly house payment.

“Some buyers have definitely been knocked out of the game,” she said.

It was big news last year when the number of permits pulled for new homes in the county climbed sharply to 177, the highest figure since the early 2000s, said Mike Owen, Transylvania’s Code Enforcement Administrator.

This year it was 193, according to the county’s year-end report, which also tallied an increase in permits issued for manufactured homes, from 41 to 51. Permits for new commercial construction jumped even more sharply in 2022, to 22 from 12 the year before, helping to boost the total value of permitted construction to nearly $176 million.

Large multifamily projects that have been announced but not yet received their needed commercial permits could help bolster that number in 2023, as could upcoming work on renovating schools, Owen said.

“We haven’t permitted some of the bigger projects . . . that (are) supposedly coming in 2023.”

The Builders’ View

Three builders who work in different parts of the county. Three similar perspectives on continued strong demand and activity.

David Parks, president of Triad Building Company of Lake Toxaway, has recently built about a dozen homes per year in Jackson and Transylvania counties, and expects to match that pace in 2023.

“Our building company is as busy as we’ve been in my 23 years in the business,” he said, and “as I look at my pipeline of business, where people are asking for pricing, that is very strong despite the fact that you have higher inflation rates and mortgage rates.”

Ted Futrelle’s MountainSide Homebuilders is the exclusive builder for the GlenLaurel Preserve development west of Brevard. Last year, he predicted strong demand there partly because the subdivision — unlike most others outside the city of Brevard — offers utility connections.

His expectations came to pass, he said, and his company is just as busy outside of GlenLaurel. George Lenze, who builds primarily in Brevard, currently has only two homes available for sale, he said, but has embarked on a multi-use project in the city’s downtown, the first phase of which entails the construction of 10 townhouses on E. Jordan Street.

A big reason new construction hasn’t been slowed by higher mortgage rates, Parks said: “Most buyers are either paying cash or leveraging a stock portfolio to get a lower rate.”

Other factors for the continued strong demand in the local market, some builders and Realtors said, is the large cohort of Baby Boomers reaching retirement age.

And while the immediate impact of the Covid-19 pandemic has passed, it permanently raised Transylvania’s profile as a second-home and retirement destination, Harris said.

“There’s not the (Covid-19-driven) fear factor. There is not the ‘I have to get out of the city now’ mentality,” he said. “Covid created a false bubble, but it also shone the spotlight on Transylvania County and all the great things we have here.”

Including a climate less impacted by global warming than, for example, South Florida or California.

“The forest fires and floods and droughts and hurricanes that go on in the rest of the nation are going to continue to elevate North Carolina as the place to be,” Harris said.

Harris sold fewer lots in 2022 than the year before, a trend that will likely limit future growth, he said.

Parks offered a different perspective. He’s a partner in a planned 92-acre development, Longcliff Village near Lake Toxaway, that would add capacity for about 160 residential units.

He also pointed to available lots in existing subdivisions in western Transylvania, including Burlingame and Lake Toxaway Estates. Lenze, meanwhile, expects to be able to continue his company’s pattern of building dense, infill projects in the city. For this approach, there is an ample availability of older homes in need of repair on relatively large lots.

“You can take a house and tear it down and build multiple houses,” he said.

Like other builders, he said few of his out-of-town buyers are directly dependent on sales of existing homes to cover purchase prices. But these builders all said the slowing demand in feeder markets will eventually hit home.

In Transylvania, both the onset of larger market downturns and the recovery from them tend to lag “behind primarily markets such as Atlanta or Fort Lauderdale,” Parks said. “I am nervous about that.”

“We haven’t felt it yet,” Futrelle said, But “it would be foolish for all of us to assume that this market slowdown is not going to affect the (local) market substantially.”

What about the Workers?

Some builders interviewed listed the benefits of the boom: full employment for workers; added value to the tax base: an influx of well-heeled residents who will continue to support the economy and contribute to the community.

The downside? More and more homes priced further out of reach of working residents.

The new homes Parks is building range in price from $800,000 to $2.5 million, he said. Futrelle’s list from between $650,000 to nearly $1.5 million. Lenze said he hasn’t priced his planned townhomes, but considering he spent $1 million on the property for his project, he doubts they will be affordable for most workers.

There was some progress on the effort to build more accessible housing in Transylvania last year, including the approval of federal backing for the 60-unit FairHaven Meadows affordable housing project in Brevard, and the forming of a consortium of local non-profits exploring the creation of a community land trust. This trust would assemble a collection of properties and maintain their long-term affordability.

But the current lack of affordable housing adds to the ongoing struggle to find workers, Parks said. He’s managed this challenge so far by maintaining a roster of subcontractors, he said.

“We have some very good subs and we keep them very busy,” he said.

But “labor is definitely a problem. The people don’t have a place to live . . . you’ve got a lot of demand and you’re fighting for a limited number of subcontractors.”

As this problem becomes more acute, he said, employers may be forced to take action such as subsidizing rents for workers. He is also looking at two parcels as potential sites for building workforce housing.

“It’s a major point of emphasis for us and we think about it every day,” he said.

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