Real Estate Markets Are Not All The Same

I had an interesting conversation with a Florida real estate broker who stopped by one of our furnished model homes in Stonefly this past weekend. He asked me if I knew of any real estate bargains in the Cashiers Highlands area. It was amazing to me that this real estate professional, who is quite aware of the depressed real estate market in Florida, would expect to find a similar depressed real estate market here in the mountains.  I thought it was apparent to most people, especially those in the trade, that real estate prices and values are much different depending upon where you live in the co

Here are some of the reasons prices remain high in the mountains of the Cashiers Highlands Plateau while they have dropped in areas such as Florida:

SUPPLY AND DEMAND

In Florida, areas of the state experienced building at an accelerated pace over the last number of years. Houses were going up as fast as the builders could build them. Prices were skyrocketing and, because buyers could easily get a mortgage with little or no money down, sales were soaring. Builders were not only building homes that were pre-sold, they were also building speculative houses. The market was also flooded with a vast number of real estate investors and speculators who were buying houses and planning to cash in as the market climbed. When the real estate bubble burst builders could not sell these spec houses. Many speculators and investors either did not close on houses they planned to buy or they let those they had purchased at high prices go back to the bank.  Houses that were sold for small down payments went into foreclosure when the market dropped and owners could not make the payments. This has caused the market to be flooded with an oversupply of houses and so the prices have dropped dramatically.

In the Cashiers Highlands Plateau there was no overbuilding. Building continued at a steady pace but there were few spec houses on the market at any given time because the majority of builders already had their homes sold before construction was started. In addition, most of the homes were purchased by people who would be living in their homes and who paid cash for the property. Few buyers in this area are speculators.  Most people purchasing homes in Cashiers or Highlands are full or part-time residents.

BUILDING COSTS

Building costs in Florida are considerably lower than the cost of construction in the mountains. A foundation for a home on a flat lot in Florida costs much less than a foundation for a similarly sized home in the mountains. The engineering of a foundation that rests on the side of a mountain and must often be built on solid rock can be very costly. The costs of materials are greater in the mountains too. For instance, a concrete truck is only able to haul half a load up the mountain roads because the concrete would run out the back of the mixer if they were to go up the mountains with a full load. This requires twice as many trips to deliver the same amount of concrete so the cost of this one item alone is much greater in the mountains. Often it takes weeks to get the needed building materials up the mountain because delivery trucks don’t take loads daily. Sometimes access to a building site is so difficult that only a few trucks can get to the site on any given day.

LABOR COSTS AND AVAILABLILITY

In Florida it is fairly easy to get reliable carpenters, roofers, stone masons, tile setters, electricians and plumbers. There are a large number of companies to choose from and bidding can be very competitive. In the mountains there are not as many skilled workmen available. Many must travel from larger cities such as Clayton, GA, Greenville, SC, Asheville, Franklin and Brevard, NC.  They need to charge more for their travel time, fuel and sometimes even overnight accommodations. This adds more to the cost of a home. It also adds to the time it will take to build a home since workmen will not spend as long on the job due to the time they must spend on the road to and from the job.

FEWER GOOD BUILDING SITES

Florida has an almost inexhaustible supply of home sites. When one golf course is sold out another is developed just down the road. In the mountains it is not so easy to find good building sites. The Cashiers Highlands Plateau has a very large area of land that is devoted to the National Forest System. This makes for a pristine environment but it also makes it harder to find a good place to build a home. Many times home sites are far from the town center and are quite remote with winding unpaved roads. Stonefly is one of only a few developments with paved roadways and all underground utilities. We are fortunate to be only 1.2 miles from the Cashiers crossroads. Sometimes first time home buyers in the mountains make the mistake of looking for a home site at the top of a mountain. A nice view but this can mean a drive of 20 or 30 minutes to get to the grocery or hardware store for necessities.

These are just a few of the many reasons a home in the Cashiers Highlands Plateau is not as likely to be affected by outside influences causing other real estate markets in the country to decline.

11 August 2008  by Larry Nellans

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