When Mollie Weaver put her house on the market two weeks ago, she was bracing for the worst. She’d been here before, for two years in fact, when her house languished on the market from 2007 to 2009.
“Of course that was when things were rapidly changing,” Weaver said. “We learned from that.”
This time, the mom of three got serious.
“In the higher price ranges, there is stiff competition. There are brand new homes that haven’t sold, and if you can’t compete with that you have to slash down your price,” Weaver said.
So she did, and Weaver’s house in the Iron Duff area of Haywood County was under contract within a day.
She’s selling at a loss compared to where she bought it in 2006, but hopes to make up the difference when she finds a new house: “We sell at a bargain and we buy at bargain.”
Weaver’s story sounds familiar to anyone who’s tried to buy or sell and home in the mountains.
But now for the first, time there are hard-and-fast numbers painting a full picture of real estate values in Haywood County.
Every home, lot and tract of land in the county — all 50,000 of them — have been reappraised to reflect the current real estate market. New values were sent to property owners last week, and many learned their property was worth less than the last countywide appraisal five years ago.
In the past, you could count on values to go up with the exercise. But it’s a different ball game this time, and many anticipated a dramatic decline in property values.
Nationally, the recession has wreaked havoc on the real estate market. A glut of homes coupled with a dearth of buyers forced sellers to slash prices, and real estate values entered a downward spiral.
“To be competitive, to sell your house, you have to undersell the guy down the street and that’s what’s driving your market down,” said Randy Siske, a Realtor and president of the Haywood County Board of Realtors.
But the property reval carried rather pleasant surprise in Haywood County when it came out last week.
“Overall we did not have a total collapse here as some other markets did. You don’t see things crippled here,” said David Francis, director of the county tax department
The total value of property — if you add up every home, business and piece of land — essentially remained flat. Roughly half the property owners in Haywood County saw their values go up, and half saw them drop, Francis said.
Keith Gibson, a private property appraiser in Haywood County, said pegging property values has been extremely difficult lately — the most difficult he’s experienced in his 25 years in the business.
Appraisals are dictated by the selling price of similar property. During the boom years, Gibson followed suit with the high prices in the market place, but he often found himself shaking his head over his own appraisals.
“We were seeing things that were unbelievable,” Gibson said. “We made predictions that this cannot go on like this.”
And indeed it didn’t. Property values fell with the recession, and fast, making it hard to know whether last month’s sale was a still an accurate yardstick for today’s appraisal.
“I have never seen values go down in Haywood County until the last two years,” Gibson said.
Fearing the real estate market was still in too much flux to accurately peg property values, Francis last year urged commissioners to postpone the reval until 2012. They had already postponed it one year, from 2010 to 2011.
“We collectively agreed to postpone it for a year because we were afraid there might not be enough valid sales to do as meaningful and accurate a revaluation as possible,” Commissioner Mark Swanger said.
Tax Assessor Judy Ballard didn’t have to dig deep to illustrate the problem. She randomly picked Triple Creek subdivision from a stack of property assessments. In the reval five years ago, appraisers had a long list of lot sales to base their estimates on — 25 of the 40 parcels in the subdivision had sold in the prior two years.
But this time, there were only four recent sales in Triple Creek, and they all fell below their former values.
Francis thought it wouldn’t hurt to delay the reval yet another year, as several neighboring counties have chosen to do. Jackson, Macon and Buncombe counties postponed theirs until 2013, and Swain until 2012.
But commissioners decided to take the plunge in Haywood this year.
Doing so keeps the reval from falling in an election year — although Swanger said this wasn’t the reason. Revals can be contentious and politically charged since tinkering with the tax rate will usually follow on its heels. But Swanger said the county had already entered a contract with an appraisal firm and delaying it could have cost the county fees.
In the past, angry property owners flooded the county tax office after seeing their new values, outraged by the sharp increase — and fearing the higher property taxes that would follow.
But last week, a county appraiser stationed at the tax window to field inquiries was sitting idle. A basket labeled “property appeals here” was empty, and a jar of fresh pens on the window ledge was untouched.
The county hasn’t seen nearly as many appeals this time, Francis said. For starters, “sticker shock” of rising real estate that played such a large role in past revals is obviously absent this time. But the values are likely more accurate than they’ve ever been this time, thanks to a new, highly engineered formula (see related article.)
“The county had a huge job to do and I think they did a pretty darn good job overall,” said Realtor Phil Ferguson, the owner/broker of The Seller’s Agency.
Ferguson said the county’s new values for his property were in the “ballpark,” and that is actually impressive.
“When they have 50,000 properties to go out and evaluate, there is no way to do it perfectly,” Ferguson said.
The county’s team appraises homes from the curb, stopping at each one but not going in. There’s a lot they might miss inside, said Gibson.
“The counter tops, the doorknobs, whether it has 10-foot ceilings, hardwood floors,” Gibson rattled off a few. Even whether a house has stained oak woodwork instead of painted baseboards and door jambs.
This year, the county is actually seeing appeals from people who think their new values are too low. While it seems odd to lobby for a higher appraisal — since higher values mean higher taxes — that’s exactly what some people are doing, Francis said.
He spoke to one property owner who saw a tract of land — land took the biggest hit in values — fall from $550,000 to $100,000.
“She was very concerned,” Francis said.
Francis has also fielded calls from homeowners who owe more on their mortgages than it is now worth. They want to know whether the bank will come knocking, asking the upside-down mortgage holders to pony up the difference. Francis assured them that’s not the case.
The winners and losers
While generalizations don’t apply to every house in every neighborhood, there are some trends.
• Commercial went up, especially in downtown Waynesville (see chart).
• Tracts of land went down substantially. Land, once considered a mini-gold mine, is no longer in demand by developers. Plus, banks have balked at financing land.
• Lots in subdivisions went down, also due to old fashioned supply and demand. While there’s hundreds of lots for sale, the tanked economy halted the mountain migration of retiring baby boomers.
• Property closer to town held its value or went up compared to rural areas. On average, property values fell in Crabtree, Iron Duff, Jonathan Creek, Fines Creek and the like, while they went up in the towns of Waynesville and Canton and in areas closer to town.
• High-end homes went down, while lower priced homes went up. It’s no surprise, since expensive homes have been in less demand while affordable ones are highly sought.
“On a sliding scale, the higher you go the greater decrease you would find in price,” said Kirk Kirkpatrick, a county commissioner and attorney who has a bird’s eye view of the market through real estate closings.
Kirkpatrick’s own house in Laurel Ridge went from a value of $800,000 in 2006 to $650,000 in the recent reval.
But a small home he owns on the outskirts of Canton went up from $78,000 to $100,000 — a case in point that lower priced homes have gone up compared to expensive ones.
There’s a side effect come tax day, however. High-end property owners will no longer pick up as much of the county’s property tax tab as they once did. Median home owners will see their share of tax burden go up comparatively.
“That is an unfortunate outcome of what this economy has done,” Swanger said.
Of course, the county was lucky to lean on the higher-valued properties for the years that it did.
“I don’t think there is any question the real estate bubble artificially inflated the value of the upper-end homes. They are now back to where they should have been all along,” Swanger said.
Turn around coming
Realtor Randy Siske said it is important to take the long view. If you only look at how much your property went down since the last reval in 2006, you ignore the dramatic rise leading up to 2006. In the first half of the decade, property values rose by so much that even though they have taken a step back now, it’s more like one step back for two steps forward.
There has still be a net gain in value over the decade as a whole — although it’s hardly consolation to those who bought at the market’s peak.
Real estate watchers see an uptick on the horizon. After two years of decline, the number of homes sold last year leveled off (see graph).
“It has started to stir now. There have been several good closings in the last couple of months,” Gibson said.
Before prices can fully recover, however, the number of homes on the market needs to be thinned out.
“There is still a lot of inventory on the market. If people don’t absolutely have to sell right now they probably shouldn’t,” Ferguson said.
The converse is certainly true.
“Now is a great time to buy,” Ferguson said.
What went up, what went downMedian and lower-priced in-town homes held their value compared to tracts of land and mountainside subdivisions, which fell in value. Commercial went up nearly universally. Here’s a break down by geographic region of the county.
Town of Waynesville: +4.22%
Waynesville outskirts: -0.29%
Town of Canton: +1.85%
Beaverdam (Canton outskirts): +3.86%
Town of Maggie: -0.67%
Ivy Hill (Maggie outskirts): +2.76%
Town of Clyde: +6.75%
Clyde outskirts: -2.25%
Jonathan Creek: -0.43%
Iron Duff: -9.99%
Fines Creek: -11.95%
White Oak: -17.93%
Lake Logan: +1.49%
East Fork: -3.17%
Waynesville downtown commercial: +27.9%
Canton downtown commercial: +14.6%
Maggie Valley downtown commercial: +8.8%
Clyde downtown commercial: +3.8%