COVID-19 And The Asheville Metro Housing Market
August 21, 2020
Recent anecdotal information indicates that the COVID-19 pandemic is leading people in large urban areas to consider moving to smaller, less dense, communities. Residential home sales data should offer clues to help answer if the Asheville metro is beginning to experience this impact and how the housing market is positioned if this migration does unfold.
Monthly home sales data for the Asheville metro (Buncombe, Henderson, Haywood, and Madison counties) are available from the Canopy Realtor® Association, a broker cooperative used by area Realtors®.
Is the Asheville metro beginning to see increased sales activity due to COVID-19 driven interest? Home sales numbers are reported in two formats; pending sales which reflect when a purchase agreement is signed and closed sales which reflect when the sales are final and no longer active. A month or two may occur between a pending and closed sale. To capture the most current sales activity pending sales are examined. In the three most recent months (May, June, and July 2020) pending home sales are up significantly from a year earlier; up 12%, 29% and 42% respectively (see chart below). While the exact source of this jump in activity is not known, it is clearly well above the normal range and aligns with the timing of the pandemic.
Asheville Metro
Monthly Pending Home Sales
Source: Canopy Realtor® Association
So how is the Asheville metro housing market positioned if a COVID-19 driven migration unfolds? Examining the metro’s inventory of homes for sale indicates supply is severely constrained. Using a three-month-moving-average to limit monthly volatility shows a steep decline in the number of homes for sale in 2020 (see chart below). In the last six months the inventory is down an average of 30 percent from a year earlier-perhaps reflecting the unwillingness of homeowners to sale in a time of uncertainty.
Asheville Metro
Inventory of Homes for Sale
(3 Month Moving Average)
Source: Canopy Realtor® Association
Finally, have we seen home prices respond to this new situation? With increased demand and low supply, we should expect home sales prices to increase. Note that home sales prices are based on closed sales, thus they may lag behind for a month or two. As of July 2020, the median home sales price in the Asheville metro reached $310,000, up 8.2 percent from a year earlier, and, the average sales price was $358,995, an annual gain of 7.1 percent (see chart below). Although the gains were strong, they do not indicate significant increases, as the average annual home price in the Asheville metro has improved by about six percent over the last several years.
Asheville Metro
Home Sales Prices
Source: Canopy Realtor® Association
So, is the Asheville metro beginning to see increased sales activity due to COVID-19 driven interest? Recent pending homes sales data does show an acceleration in the number of homes sold, up 42 percent in July from a year earlier. At this time, the source and duration of this increase is unknown but may signal initial COVID-19 driven demand.
And how is the Asheville metro housing market positioned if a sustained COVID-19 driven migration unfolds? The significant decline in the number of homes for sale in 2020, down an average of 30 percent from a year earlier; should lead to notable price gains in reaction to increasing demand. So far, these gains have not fully appeared, although with a continuation of the current trend we can anticipate higher prices to follow.
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