West Asheville real estate not only booming, it's considered a steal

When discussing the West Asheville real estate market, one highly technical term surfaces repeatedly.

"Oh yeah, it's insane — it is," Delias Thompson said with a laugh, standing in front of the home she recently built with her partner, Lowell Parris. "We’re lucky, because when we bought, I think we probably totaled $225,000 (for the land and house)."

Thompson, 41, noted that several nearby homes, which are about the same size as their 1,100-square-foot home fronting State Street, sold for prices much higher.

For years, West Asheville has been known as the hottest housing market in Asheville, and that's true. What is also true is that, believe it or not, it also remains about the most affordable.

For 2017, the 28806 ZIP code, which comprises much of the Haywood Road corridor and surrounding neighborhoods, ranked first in Buncombe County for number of homes sold, at 690.

But it ranked 10 out of 11 ZIP codes for average price, at $264,808, according to RealSearch, a real estate research firm founded by Don Davies. That means it's the second most affordable ZIP code.

Only the Leicester/Sandy Mush area had a lower average selling price, at $240,107; 173 homes sold in that area in 2017. West Asheville was also well below the average selling price for Asheville ($364,264) and Buncombe County ($338,463).

Overall, the county set real estate sales records in 2017, including for average selling price and average asking price of all homes, a whopping $637,313.

West Asheville, known as a walkable community with Haywood Road's thriving commercial district on its north end and Carrier Park bordering the river on its southern edge, is a melange of older cottages built for the city's working class nearly a century ago and dozens of new homes squeezed onto the few remaining open lots.

Davies' numbers also show that price per square foot in West Asheville is relatively high, at $184.16, and that 98 percent of buyers paid the asking price. The average square footage was just under 1,500.

In South Asheville, which ranked second in homes sold and third by price, that average per square foot in 2017 was $183.75. The average home size was just over 2,100 square feet.

What do all the numbers mean when it comes to selling homes in West Asheville?

"They’re selling smaller houses for a higher price per square foot — and they're getting closer to the asking price, too," Davies said.

A microcosm on State Street

A trip up and down State Street, a connecting thoroughfare between Amboy Road near Carrier Park and Haywood Road, offered a good insight into the neighborhood's real estate market.

Within a mile of Thompson's home, a new neighborhood of smaller homes priced in the $280,000 range is going up not far from where an Asheville native in his 50s hopes to sell the family home built in the early 1960s.

Thompson and Parris feel they got a good deal, paying $45,000 for the lot their house occupies and buying the one next door for $65,000. They plan to build two small rental houses on that lot, which should generate enough income to cover the cost of their own home.

Their home was finished in 2016. Thompson, an artist, moved here from Atlanta, living in a South Asheville rental house for a year before moving into their new home. Parris is from Los Angeles.

“We have a 2-year-old daughter, and we wanted to be able to walk to restaurants and parks and feel safe, 'cause there’s not a lot of sidewalks in Asheville,” Thompson said. “We wanted a sense of community.”

They looked at a lot of existing homes but found they needed so much work it would likely be cheaper to build new.

“The reason we built is (the existing home) we could afford to buy was going to be $225,000, and it was going to be 50 years old and have problems, and not be exactly what we wanted,” Thompson said. “So it’s cheaper to build in West Asheville than it is to buy, I think.”

That's debatable, mainly because it depends on what you want in a new house, and how extensive a renovation you would plan for an existing home.

Davies' numbers show 447 new homes were sold in Buncombe County last year, and on average cost $201 per square foot, with 100 percent getting the average asking price of $386,931. For existing homes, sales totaled 3,714, with a price per square foot of about $172 and an average selling price $332,630.

Small homes, big prices

The partners in Ground Floor Properties NC are banking on new construction.

Kyle Henry, Aaron Palmer and Tyler San Souci have a duplex nearly finished on State Street, on a small lot that cost $80,000, with each 1,100-square-foot unit selling for $279,000. If they hadn't divided the lot for two homes, they would've had to build a house at least in the $450,000 range to recoup the land investment, Palmer said.

The plan is to add an additional eight homes on about 2 acres behind the duplex, all of them on the small side, ranging from 800 to 1,200 square feet.

"Nothing will be above $300,000," said Henry, who heads up the construction company that will build the homes, Slick Rock Builders. "We feel pretty comfortable being below that number, because that's where the majority of the buyers are."

Palmer, who moved to Asheville from Gainesville, Florida, about a year and a half ago, sees a "hole" in the market when it comes to price.

"There’s a big need for that mid-$250,000 price range," Palmer said. "It’s affordable for Asheville. It may not be affordable for Gainesville, where I came from, but in Asheville, the mid-$250s up to $300,000 is. There’s not a lot of inventory there, especially for new construction."

The homes they're building come with nicer amenities, such as hardwood floors and upgraded cabinets, which helps with sales, said Palmer, who is also a real estate broker. They're building the duplexes on spec, hoping to find buyers, but they believe they'll have buyers lined up for the remaining homes, probably preconstruction.

They also expect prices to continue to rise in West Asheville, partly because of the dearth of available land for new building.

Slick Rock has been building mostly in the Bryson City area, but they've wanted to tap into the West Asheville market for a while.

"When they said we were going to build nine houses in West Asheville, I was like, 'Where?'" said Andrew Wilmot, a project manager with Slick Rock.

Inventory is key

Palmer said you've got to have a keen eye and a good imagination to find buildable land. Even though the land market is extremely tight in West Asheville, he thinks some buildable lots remain, as well as opportunities to rehab and sell existing older homes.

That all adds up to prices continuing to rise.

“People always talk about a bubble and how everything is going to get softer, but I’m under the belief that as long as you have supply and demand, as long as there’s less inventory and there’s more people who want to be in this area, there’s always going to be that demand that’s pushing and driving the market up," Palmer said. "So I don’t see it slowing down over the next year or two.”

More: Real estate sales breaking more records, but inventory at record lows

Mike Figura, a broker and owner of Mosaic Community Lifestyle Realty, agrees West Asheville will continue to boom. Besides the sense of community, the restaurants and the parks, the area does remain relatively affordable, he said. Some people refer to West Asheville as our area's Brooklyn, a nod to New York's trending borough popular with younger buyers.

"Part of it is the trend toward urban areas, and West Asheville offers something that no other part of Asheville has: it’s walkability combined with homes that are in a price range that more people can afford than the homes in Montford or Kenilworth," Figura said.

He also produces real estate reports, and in his annual summary he notes, "Inventory levels are some of the best indicators of the health of a housing market."

"Inventory" refers to how long it would take all the homes on the market to sell.

When inventory levels are greater than six months, it's a buyer’s market, resulting in downward pressure on prices. When inventory levels are less than six months, it is a seller’s market, meaning prices go up.

Inventory levels in Asheville were slightly higher in 2017 than 2016, but not significantly. For the fourth quarter of 2017, the city had 66 homes for sale in the $200,000-$300,000 range. The inventory was rated at just over 1.5 months, meaning demand was way higher than supply.

Because of the tight supply, bidding wars have ensued in West Asheville, said Figura, who lives there. He recalled one instance, a three-bedroom, 1.5-bath home with about 1,500 square feet, that was listed for $379,000.

"It got into a bidding war," Figura said. "It was on the market for a day."

More: As housing inventory gets even tighter, prices spike

Selling the family home

A bidding war would be just fine by another State Street resident, Johnny Harrin, 57. Harrin grew up in the house his father built in the early 1960s, moved away when he got married and then moved back in 2002.

Now it's got a for sale sign out front. He bought the two adjacent lots after moving back, and they're included, although he's having problems with the city wanting him to not build within 30 feet of a creek on the empty lots.

"We're going to see what we can get out of it," Harrin said, adding that a real estate agent told him to put it on the market at $499,000. "I really love it here. Everybody knows where I'm at, and it's close to everything."

He's torn about selling, in part because the house, now three bedrooms and two baths on two levels, was paid for more than 30 years ago. His dad paid about $3,500 for it when it was built as a two-bedroom, one-bath.

But Harrin also laments how much his taxes have gone up and that the city's land use rules restrict his ability to use an on-site garage. When Asheville Motor Speedway closed in 2001, transitioning into a park and a bicycling velodrome, that did not sell well with Harrin, either.

If he can sell and make a nice profit, it would give him some money to leave for his kids.

"It's like everything is closing in on me here," Harrin said. "I"m thinking about moving out into the county."

Top 5 markets for home sales in Buncombe, by ZIP code, 2017

1. 28806, West Asheville — Homes sold: 690. Average selling price: $264,808 (No. 10 by price, out of 11 ZIP codes).

2. 28803, South Asheville/Biltmore Forest — Homes sold: 604. Average selling price: $401,134 (No. 3 by price)

3. 28715, Enka/Candler — Homes sold: 406. Average selling price: $282,241 (No. 9 by price).

4. 28804, North Asheville/Woodfin/Weaverville — Homes sold: 383. Average selling price: $500,872 (No. 1 by price).

5. 28704, Avery Creek, Arden — Homes sold: 369. Average selling price: $339,211 (No. 5 by price).

Total sales, Buncombe County: 4,160 homes. Average selling price: $338,463 (record high).

Source: RealSearch/Don Davies