People often ask me if buying land is a good investment. And in terms of Black Mountain, I would have to say yes.
According to Multiple Listing Service (MLS), there are a lot of people who agree with me on that. Through October 31, sales volume in 2006 for lots and unimproved property is $11.2 million, compared to $7.7 for the same period in 2005, representing an increase of 45%. The median price per acre in 2006 was $28,497, an increase of 5% over the $27, 100 price recorded for the same period in 2005.
As a specific example, in Laurel Ridge, whose statistics are included in the MLS report, sixteen lots have sold in 2006 through October 31 compared with 6 lots over the same period last year. "Laurel Ridge is a community 'on the move'," notes Sharon Came realtor and residence of Laurel Ridge. Our community receives "high interest because of the currently reasonable lot prices, excellent roads, and city water."
In fact, lot sales are even hotter than those figures indicate. MLS figures do not even include the sales of unimproved property in the Settings, a Black Mountain development. According to Michael Kalb, sales manager for the Settings of Black Mountain, the Settings has sold 70 home sites year to date, ranging in price from $120s to $600s.
What would create such an increase in interest in Black Mountain in general and in lot sales specifically? First of all, there has been a tremendous amount of publicity generated by numerous favorable articles in national publications in the last few years. Money Advisor pointed to the area in 2005 as One of the 5 Best Places to Retire, and AARP chose the Asheville area last year as one of its top 15 Dream Towns. All of this national attention increases the interest in the area.
In addition, investors are recognizing the area's potential. Lee Kissell, from Tallahassee, FL., had been vacationing in the area with his family for almost a decade and began looking for land without any real plans to buy. "We started out looking just as a curiosity," he explains. "After looking around and getting initial pricing, we became seriously interested in purchasing property."
The Kissell Family also represents another segment of people who are increasing the land-sales volume by buying lots as they look ahead for their retirement.
"We decided to purchase as an investment and as a place to build a retirement home," Mr. Kissell says. "We didn't want the expense and hassle of a second home, but we did want to buy a lot while the prices were still within our range. This also gives us the opportunity to pay off the land before retirement, which will reduce our costs when we build."
Clearly sales volume has increased, but what about land values? Buncombe County's 2006 tax reassessment which is done every four years, demonstrates that land values have increased with the increase in sales volume. According to R. Keith Miller, chief real estate appraiser, Buncombe county tax department, Black Mountain township land value increased from $129 million to $281 million during the latest reassessment, an increase of 118%. That rate outpaces the county increase of 78% as well as the towns of Woodfin (87%), Weaverville (74%), and Montreat (25%).
What has produced the dramatic price increase in Black Mountain? Basic law of supply and demand dictates that with fixed supply prices will only increase with increasing demand. And we know that buildable land in our area is very limited.
According to Wendell Begley, president of Black Mountain Savings and Loan and well known Black Mountain historian, there are 36,011 acres that comprise the Black Mountain Township, and of this land, 53% is owned by local and state governments or religious conference centers. While these large landholders will most likely protect some of our "view sheds", it does limit the supply of buildable land.
Statistics indicate the population has increased steadily over the last five years in the area. With that information, it is safe to assume that more people equal more interest in land, which produces higher prices, and there is no foreseeable change in that trend. It is safe to assume that now is the time to purchase land as land supplies are limited and prices will only continue to increase.