How COVID changed the Highlands and Cashiers real estate market

What a year for Abby Braswell, MC Tax Administrator to be handed the reins after decades-long Tax Administrator Richard Lightner retired.

As all the Realtors® in Highlands have attested, 2020 has been a year like never before and that has affected everyone in the field: tax appraisers, home appraisers, the service industry, closing attorneys and more.

“Many Realtors®, as well as people working in real estate related professions, have been working anywhere from 10- to 16-hour days, seven days a week, with no breaks,” said Highlands-Cashiers MLS president Julie Osborn with Pat Allen Realty Group. “The small number of closing attorneys we have on the plateau have been overwhelmed trying to run title searches and process the 900+ real estate transactions sent to them by the plateau’s Realtors®. Appraisers have been doing double time as they have been faced with the challenge of processing traditional home purchase-based appraisals along with bank-based refinancing appraisals because interest rates have been hovering under 3.0%.  Then there are the inspectors, contractors, subs — everyone attached to the real estate industry has been busy.”

Osborn said the workload is due to the fact that everything is selling — homes and land — and inventory has shrunk to under three months’ worth.

“I don’t know of any Realtor® on the plateau who would have predicted what we’ve seen here in 2020,” she said. “Our market typically carries around 10-12 months of inventory but since the onset of COVID, our inventory has shrunk to under three months — six months of inventory is considered a balanced market; anything under six months is a seller’s market and anything above six months is a buyer’s market.” 

Stats at the tax office illustrate the point.

According to Braswell, property sales in Macon County have increased by more than 30% from 2019. Highlands has had an increase of over 60% from 2019.  

“As of Dec. 9, there were 620 sales in Highlands. I am counting only sales that have an excise tax of greater than $0.  If you count all deeds including the $0 there are 843 deeds recorded for property in Highlands,” said Braswell. “There has also been an increase in $1,000,000 plus sales for 2020 — an increase of over 150% for sales over a $1,000,000.” 

The two largest sales in Highlands to date are a $10,500,000 sale and a $6,410,000 sale that were handled by Highlands Sotheby’s International Realty.  

Osborn said MLS stats at the end of November showed that, year over year, the number of Highlands and Cashiers single-family homes increased by 56.83%. Condo units increased by 42.74% and land units increased by 68.28%.  

“With housing inventory so low, consumers are now considering building, so land sales, which have essentially been stagnant in the past, are now up-ticking,” she said.

With properties selling for more than the 2019 appraised value, and bidding wars a reality in Highlands and Cashiers, the next question is, how will this affect house values and therefore taxes during the next revaluation cycle?

Macon County is on a 4-year revaluation cycle. The last revaluation was in 2019.  What that means is that every four years the tax office revaluates properties based on sales and brings the value of them to what is market value. North Carolina is a 100% Market Value state. The next revaluation will be in 2023.    

Braswell said properties will remain at the assessment set in 2019 unless a change is made to that property.  

“We track changes through the building permit office, and we look at sales to see how our value is different from the sales price to see if we are missing anything, or if we think we need to look at the property based on the value being different from what the sales price is,” she said. “We can’t change the 2019 assessment unless we find something different such as an addition or some physical change that we did not assess before, so we do not change the assessment based on the sales price – only some physical change that we missed.”   

However, sale prices will be looked at when the next revaluation is done 2023.    

The sales ratio indicates how the county’s assessment compares to what the market is doing, said Braswell.

“In 2019 our sales ratio was 100% after our revaluation.  At the beginning of 2020, our ratio dropped to 96.58% and now it is around 90%.  This means that the assessed values are 10% lower on average than what they are selling for,” she said. “In basic terms, the sales price is higher than tax value and that gap seems to continue to widen with sales prices continuing to rise while the tax assessment remain the same.”   

Permitting information is where the county gets information about what is being built or changed and altered in some way.  

County wide Braswell said there has been an increase in commercial permits of 30% from 2019. Single-family homes are the same as last year and there has been an increase in alterations or additions to existing structures of around 20%.      

“The tax office goes out twice a year for new construction/or to reevaluate permits that have been pulled. We just finished what we called new construction process and we had over 600 sites to visit to either pick up new construction or to check on previous new construction. That figure is at a slight increase from last year,” she said.     

Since many homeowners don’t get permits to do alterations to their dwellings and therefore don’t list those changes at the county office, when those changes are discovered inspectors visit the property to reassess its value.

“At that point, we do send them a change of value letter and they have a chance to discuss these changes with us,” she said.

With developed properties selling, the new construction process added less than 1% to the tax base for the upcoming year – 2021.

According to Braswell, the real property values at this time are approximately $7,630,000,000 with a tax collection rate in Macon County that is 3% higher than at this time in 2019.        

Overall Macon County looks to be growing in the number of new residents, but Braswell said the tax office doesn’t know the percentage of those who will become full-time residents.  

Full-time or not, COVID has likely changed the face of Highlands and Cashiers forever.

“Our plateau is an escape where people can easily isolate but be outdoors in nature,” said Osborn.  “We don’t have the traffic, noise, pollution or crime that big cities have.  We don’t live in a community where people live in elevator-access, high-rise buildings with thousands of other people who they don’t know hovering around them.  We are drivable from just about any state in the southeast U.S., so airplanes are not needed to travel to our plateau for the most part.  Driving versus flying affords the option of being in control of who we are exposed to when travelling.” 

Braswell said though 2020 is coming to an end the tax office still has much work to do.

“For us at the tax office, 2020 has been a much busier year.  We didn’t shut down in March and we have stayed open the entire year.  We have taken precautions and we do not allow anyone in our individual offices but because of the increase in permits, sales, transfers of all kinds we have much work to do and we are trying to get that done so that we can serve the taxpayers and make sure that all of this new information is processed as quickly and as correctly as possible.”

Photo at the top of the article courtesy of Chambers Realty & Vacation Rentals

By Kim Lewicki, Highlands Newspaper 

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