The Klopp Report

When I wrote about the quarterly numbers I stated that October was shaping up to be an odd month, and that was indeed the case. Fortunately our dear friend who prognosticated that: “October “is going to be a disastrous month” for local sales”, was wrong and October beat the odds.

The activity in the stock market and many people’s concerns about what a change in the administration might mean for their tax burden seemed to spur a burst in activity. This was evidenced in two different aspects. First, the market saw an increase in the number of homes that were sold in the $500,000.00 and more range. This segment as I have mentioned before has been stagnant all year. Each month from January 1^st to September 30^th about 10% of the homes sold each month were sold for over $500,000.00. In October this segment made up 17% of the homes sold. The other aspect of the market that was noteworthy was the amount of buyers that paid cash in October. In the six months previous to October an average of 16% of the homes sold were paid for with cash. In October 25% of all transactions were paid with cash. My feeling is that those with investments or money to invest decided that the local market was a good place to put their cash. The numbers back this theory up. How so? As the stock market got worse the number of cash deals began to trend upwards. Each month since June 2008 has seen an increase in the number of houses paid for with cash.

The actual numbers for the month continue to display the same trends as the rest up year. The median sales price for October was $225,000.00 which is even with last October. This number also matches what the average sales price is so far this year. As mentioned above, what made October interesting was what sold and how it sold. The number of homes sold was 149 down from 207 in October of last year, and down from 155 last month. The average days on the market was 129 up from 107 in September 2008 and up from 82 October 2007.

The Buncombe County market continues to be a Buyer’s Market. As I peruse the MLS each day, I am beginning to see more and more houses that appear to be more reasonably priced these days then I have seen in the past 18 months or so. I believe that there are currently deals to be had for those who can get financing or who intend to pay cash. What the future holds is hard to say, but I believe that the Asheville area real estate market continues to be a solid investment and a wonderful place to call home.

**Statistics in this blog come from the Western North Carolina Regional Multiple Listing Service and are based on single family residential homes in Buncombe County. Active numbers were compiled on November 20^th, 2008. Although they are considered complete and accurate, they are not guaranteed flawless.

Here are a couple un-related, but informative news items that affect home owners and buyers.

Starting today and running through the weekend (Friday, November 07^th, 2008 through Sunday, November 9^th, 2008) the State of North Carolina is offering a Sales Tax Holiday for purchases of qualified Energy Star appliances. The tax holiday applies to purchases of personal, non-commercial Energy Star qualified appliances for individual usage. You can get more information on the specific products that qualify by going to: http://www.energystar.gov/ . Most retailers within North Carolina that sell appliances carry a selection of Energy Star qualified appliances. Some of the various appliances that you may be able to purchase and receive the tax-break are: ceiling fans, washers, dryers, dehumidifiers, heat pumps, programmable thermostats, refrigerators, and air conditioners. So think about what you may need for next summer, or that appliance purchase that you have been putting off and take advantage of this Tax Holiday. (For more details visit: www.dornc.com/taxes/sales )

And now here is something that is home buying related. The Federal Housing Finance Agency (FHFA) today announced the conforming loan limit will remain $417,000 for 2009 for most areas in the U.S. but specified higher limits in certain cities and counties. The conforming loan limit is the maximum size of loans that Fannie Mae and Freddie Mac can purchase in 2009. This announcement reflects the downward pressure on home prices that our market in Buncombe County is experiencing and that is also being experienced throughout the US. For more information visit: http://www.fhfa.gov .

As promised a few blogs ago, I finally have been able to take the time to look in depth at what has happened here in the Buncombe County/Asheville, NC real estate market in the past three quarters of 2008. Much of what we see from the numbers is repetition of what we have seen throughout the year thus far. It can be summed up in one word – FLAT.

Here is how the numbers shake out from quarter-to-quarter this year:

Days on Market: Up from 2007 by 15 days

First Quarter – 102

Second Quarter – 104

Third Quarter – 106

Median Sales Price: Down from $235,000.00 in 2007

First Quarter – $219,900.00

Second Quarter – $229,900.00

Third Quarter – $229,000.00

Units Closed: Down 29% from 2007 (Jan. – Sept. 30. – 1682 in 2008, 2359 in 2007)

First Quarter – 500

Second Quarter – 621

Third Quarter – 561

 These numbers are really no surprise. In fact, it may be good news, in that things have not gotten worse, but there are a couple of caveats. First, it is interesting to note that the total number of pending contracts has continued to trend downward. This is of note, because of the second point, which is that the total inventory on the market has continued to rise here in Buncombe County. Things will not get better until our supply and our demand are more in synch. As long as there is a huge gap between the two, there will be the necessary downward pressure on prices. A bright spot in relation to that is that the number of building permits for new homes in the 10-county area of Western North Carolina dropped even more steeply for the third quarter, falling 46.1 percent from permits issued for the same period last year, according to Knoxville, Tenn., firm The Market Edge. This is good news when you realize that we already have too many houses on the market, and so if there are fewer new homes being built then perhaps existing home sales will recover.

In the above article a local realtor went down the slippery slope of prognostication and said: “October “is going to be a disastrous month” for local sales”. Well, we shall see…. I have been tracking things fairly closely, and I am not so sure. The numbers are shaping up for a rather odd month, but more about that later.

**Statistics in this blog come from the Western North Carolina Regional Multiple Listing Service and are based on single family residential homes in Buncombe County. Active numbers were compiled on October 29^th, 2008. Although they are considered complete and accurate, they are not guaranteed flawless.

I read an interesting article this morning. The article detailed the “paradigm shift” of traditional realtors throughout the nation. Faced with a “buyer’s market”, the inventory that they have is no longer the driving force of the business. I was struck by the following quote made by Marki Lemons: “We have to now counsel them. Before, we were just salespeople. You bring it, we sell it. Now we’re going back to the fiduciary responsibility we have.”

“Going back to the fiduciary responsibility we have”? What does that mean? Does that mean that as a whole, traditional realtors have been ignoring their fiduciary responsibilities? I would prefer to think not. But it did make me realize how lucky I am and how proud I should be to work for the firm that I do.

Our goal has always been to help our buyers make informed decisions. We have built our company on not telling buyers what they want to hear, but what they need to hear. I would venture to say that every agent in our office has spent time in every transaction talking to their clients about why they shouldn’t buy that house. Now if that article was painting an accurate picture of the real estate industry in general, then this may be somewhat unique. But the reality of the matter is, it is our job. It is our fiduciary responsibility.

Perhaps that is what makes exclusive buyer agency unique. In fact, that is probably the reason why dual agency is such a disservice to the public. Real estate agents are allowed to make money with-out actually being “agents”. You can’t represent two people/parties at the same time and truly be an agent, it is impossible. The public has no idea that the way they have been buying and selling houses for decades is really the wrong way. No wonder we find ourselves in the financial mess that we do. The system is broken and real estate agents are partially to blame. They are to blame because they have been ignoring their fiduciary responsibilities.

Last night marked the beginning of my favorite part of the year. A magical season – a time of anticipation, counting the last few seconds, and talking of what could have been. A season of chasing after a dream and a giant cup that represents being the best in the world. Yes, hockey season has started, and I am a kid again, out on a cold winter day in Minnesota skating up and down the rough ice shooting my only puck against the board, pretending to play for the North Stars until my feet were numb.

HOCKEY IS THE GREATEST SPORT IN THE WORLD. There, I said it.

Detractors can say what they may, but I will never agree, and nor will the millions of fanatics who follow the NHL, college hockey, and the various minor leagues and international leagues. I would like to see A-Rod, Tiger Woods, Terrell Owens, or Tom Brady try to stand on 1/8” inch strips of steel on ice, let alone skate on it. I can just imagine Terrell complaining about how bad the skates hurt his feet. Now hockey players may not be in as good of shape as Lance Armstrong, but many are pretty close, take Rod Brind’amour for instance. They don’t call him “Rod the Bod” for nothing. But what makes hockey players different than most athletes is that they have to be strong, agile, and fast all at the same time, on ice.

I personally enjoy watching hockey almost as much as I enjoy playing it, but really nothing compares to tightening up your skates and stepping out onto the ice. There is something special about playing hockey that is hard to describe, and it is incredible exercise. There is nothing like an hour on the ice to make you feel like a kid again and an old man all at the same time.

So as this special season begins, why not give the world’s greatest sport a chance. Admittedly, watching hockey on TV and enjoying it is something that requires a certain amount of knowledge of the game, but if you ask someone who is a fan to watch with you and explain the intricacies of the game you will probably enjoy it. Better yet, go see a game live. I bet that you will be hooked when you understand the skill involved, the rules, and start to develop a favorite team.