Is it curtains for the 30-year mortgage?

If the government stops subsidizing mortgages
for the middle class, home loans could look a lot more like they do in other
countries. That could mean the nation’s favored mortgage could nearly
disappear.

By Marilyn Lewis of MSN
Real Estate

 

After more than
40 years of subsidizing and boosting homeownership, the federal government is
talking about backing away. The Obama administration wants to eliminate federal
guarantees for home loans for all but creditworthy buyers “with modest incomes”
who otherwise could not get a mortgage from a private lender, according to a report that the administration gave to Congress
in February (PDF).
Change like that could make buying a
mortgage more expensive. Americans’ favorite home loan, the 30-year, fixed-rate
mortgage,  would lose ground against other mortgage types.
There’s even talk that the popular 30-year
loan could become extinct, though that’s unlikely.
“There would
definitely be fewer 30-year mortgages, but they would not disappear,” says Dean Baker, co-director of the Center for Economic and
Policy Research in Washington, D.C. He wrote the books “Taking Economics Seriously” and “False Profits: Recovering from the Bubble
Economy.”
It’s all talk, at this point, about how to
shrink, change or eliminate Fannie Mae and Freddie Mac, the two huge,
government-run corporations that have kept costs low for middle-class homeowners
by guaranteeing home loans.

Massive defaults by homeowners, along with
management and accounting scandals at Fannie and Freddie, are costing taxpayers
hundreds of billions of dollars. Even political rivals agree it’s time for a new
approach.
The debate among regulators, economists,
politicians, consumer advocates and lobbyists could continue for years before
Congress passes a plan, experts say. After that, any changes would be phased in
slowly over many more years.
Read: Why Fannie and
Freddie may never die
Meanwhile, homeowners may wonder how this
change could affect mortgages today and in the long term.
What’s happening to 30-year mortgages?
Today, 80% of all mortgages are 30-year, fixed-rate,
“conventional” loans, Freddie Mac says. “Conventional” means Fannie and Freddie
can guarantee them, as long as they’re below a maximum amount, so they’re
cheaper. By spreading lower payments over decades, conventional loans more
expensive in the long run, but they’ve allowed many people to buy a home.

At the tail end of the housing boom in
2008, the conventional loan’s market share dropped as low as 67%. But at least
80% to 90% of all mortgages since 1990 have been conventional, Freddie Mac
says.
But if the government eliminates the
guarantee for conventional mortgages, buyers might look at other loan types.
“Without the
guarantee, I think long-term, fixed-rate mortgages will still exist, but they’ll
be higher priced, and there’d be less of them,” says Michael Lea, director of The Corky McMillin Center for Real
Estate at San Diego State University. “You wouldn’t see 90%, but you’d see maybe
30%.”

• MSN Money: 3 mortgage refinancing nightmares

Mortgages haven’t always been cheap and
easy. Look at the 1920s.
“It was a
prosperous period, but if you wanted a mortgage loan, you put 40% down and got
an interest-only loan for 10 years. And then you refinanced it,” says mortgage
expert Jack Guttentag, author of “Mortgage Encyclopedia: An Authoritative Guide to
Mortgage Programs, Practices, Prices and Pitfalls” and of the Mortgage
Professor educational website for consumers.
Read: 4 mortgage
alternatives
In most other countries — where governments
don’t subsidize mortgages or where they do it differently than we do here — the
30-year mortgage is a rare bird. In Denmark, the exception, it comprises about
half of all home loans.

“You don’t need 30-year mortgages to have
high rates of homeownership,” Baker says. In the U.S., homeownership is 66.5%,
down from a high of 69.2% in 2004, the Census Bureau says. But other countries
do as well or better with different financing systems and different loan types,
and many suffered less during the housing crash.
Lea cites these 2008 homeownership rates,
for example:

• Ireland: 74.5%
• Australia and the United Kingdom: 70%
• Canada: 68.4%
• Japan: 61%

Emerging markets often have even higher
rates of homeownership because they don’t have well-developed rental markets,
Lea says.

Mortgages around the world
Lea studies mortgages globally; for more, read his report “Alternative Forms of Mortgage Finance: What Can We Learn from Other Countries?” (PDF). In the U.S., he
says, the most-common mortgages are:

• Long-term, fixed-rate mortgages: These comprise about
  90% of all mortgages, Lea says. Some are 15-year loans, and most are 30-year
  mortgages.
• Hybrid adjustable-rate mortgages: These ARMs are
  roughly 5% to 8% of all loans. They have initial fixed-rate periods, followed by
  adjustable rates that reset regularly, usually annually. The most popular are
  5/1 ARMs — 5/1 means five years at a fixed rate followed by yearly interest-rate
  adjustments — then 3/1, 7/1 and 10/1 ARMs.
• Short-term ARMs: Roughly 1% to 2% of the market, these
  ARMs have no fixed-rate period and have one- to five-year terms.

But if conditions change, our mix could
change. For a few examples, look at these countries:
Canada, Germany and the Netherlands: In
these countries, rollover mortgages are popular. A rollover loan
essentially requires the borrower to renew the mortgage at market interest rates
at regular intervals, such as every five or 10 years. You can also refinance
using another lender, but prepayment penalties are the rule, at least during the
fixed-rate period. Throughout Europe, adjustable-rate loans are popular because
their interest rates are considerably lower than fixed-rate loans. Also, hybrid
mortgages play a larger role.
Many Dutch mortgages also are
interest-only, which means you only pay interest for the life of the loan, which
leaves the balance unchanged and ownership in the lender’s hands. If never
actually gaining an ownership share of your home sounds crazy, consider that
these products are popular because tax benefits encourage them.
Spain: Spanish mortgages often are part fixed-rate and
part variable-rate. You can take out two notes secured by one property. Unlike
our first and second mortgages, these are two pieces of a first mortgage. One is
at an adjustable rate and one a fixed rate.
Japan: About half of Japanese mortgages are
“convertible”: After a fixed period, the borrower chooses between an adjustable
interest rate and another fixed-rate period.
Most of these
loan products are available in the U.S., says Mark A. Calabria, director of financial-regulation studies
at the Cato Institute.
“We think about the 30-year fixed, but
there are a tremendous number of options,” he says.
You don’t hear much about these loan
options because they can’t compete in cost with government-subsidized,
long-term, fixed-rate mortgages. But if those disappeared, borrowers who need
low monthly payments might find the prices on five- or 10-year loans with
adjustable interest rates more appealing. Today’s borrower also is more mobile
and more financially astute than in the Great Depression, when the government
started supporting the home-loan market to help consumers, Calabria says.

Under the right circumstances,
Canadian-style rollovers and shorter-term ARMs and hybrids that convert from
fixed to variable might gain popularity.
“The typical amount of time people stay in
a house is about 10 years,” Calabria says. “The typical life of a mortgage is
five years. The question is, do rates have to be fixed for 30 years when the
average person keeps the loan only an average of five (years)? That makes no
sense in this day and age.”
Hybrid ARMs got a bad name because they
were coupled with some of the worst abuses and risky products that subprime
lenders pushed in the real-estate bubble. But no one’s predicting a return — at
least any time soon — of fraud-prone features such as exploding interest rates
and loans requiring no documents, no down payments and no proof of a borrower’s
assets.
Prices going up
Meanwhile,
Americans who still want the low-payment, predictable, 30-year-fixed mortgage
undoubtedly could get it even if government support dissolves. It’ll just cost
more.
How much more?
No one knows for sure. In Christian Science Monitor report, Bill
Gross, a bond-fund investor who co-founded PIMCO and is a critic of the Obama
plan, says that without government guarantees, homebuyers could pay 3 percentage
points more on interest rates. That means a 4.9% rate today would be 7.9%.
Others point to jumbo loans — mortgages
larger than the government will guarantee — which, because of higher interest
rates, are more expensive than conventional loans but by far less than 3%. It’s
not a perfect comparison because jumbo customers are typically wealthier and pay
a smaller premium for risk than a middle-class homeowner might. But Baker says
the example could comfort some buyers.
“We have long had jumbo mortgages, with
typically just a spread of 25 (to) 30 basis points with conformable mortgages,”
says Baker, who also says he thinks rates would increase by 30 to 40 basis
points if conventional mortgages disappear.
A basis point is 0.01 of 1%. Twenty basis
points would raise a 5% rate to 5.2%, increasing your monthly payment on a
$200,000 mortgage from about $1,073 to $1,098.
Calabria says he thinks rates could rise
between 20 basis points and a full percentage point if government pulled
out.
Adding a full
percentage point to your mortgage cost would raise the interest rate to 6%,
making the monthly payment nearly $1,200. (Do your own planning with MSN Real Estate’s home-affordability calculator.)
Not everyone expects substantial change,
however.
“I don’t think we’re going to see new
kinds of products,” Guttentag says. “There’s nothing abroad in the form of
mortgage products that is novel or attractive to us now.
“What’s going to happen is an extension of
what’s already happened: Down-payment requirements are up, credit restrictions
are up, appraisal requirements are tougher (and) documentation requirements have
increased enormously.”
If federal support for middle-class
mortgages dissolves, Guttentag says he expects two or more tiers of mortgages to
emerge. Cautious lenders may charge borrowers more for the degree of risk their
credit profiles suggest, so you’d see a wider range of prices for borrowers.
Short-term outlook
Regardless of
what policy-makers decide to do with Fannie and Freddie, expect no radical
changes in the near future.
For the next three to five years, getting
a mortgage will be much like today, experts say. The 30-year, fixed-rate
mortgage will continue as the nation’s favored home loan. Lenders will keep
demanding down payments of 20% or more, plus lots of documents and details about
every aspect of your financial life.
“Now the general philosophy and fear in
the market is that we’re going to get more declines in home prices,” Guttentag
says, “and the only way to protect yourself is to require more (for) down
payments and higher FICO scores.”
Borrowers and loans that don’t fit
lenders’ standards will face rejection. Home-equity loans and mortgages for
second homes and investment homes will continue to be scarce.
“This has particularly hurt self-employed
borrowers,” Guttentag says. “I get messages from people with 30% down, FICO
scores of 800 and income well in excess of guidelines who can’t get a loan
because their income can’t be adequately documented.”
The one big difference is that costs will
keep growing in the next few years. Lenders will pass along higher fees from
Fannie and Freddie, called “loan-level price adjustments,” based on your credit
score and loan-to-value ratio. Interest rates are going up — by a percentage
point or more, Calabria says —and are unlikely to drop. Many experts also expect
inflation to pick up.
Any withdrawal of government support for
middle-class mortgages, however, remains years away. But the chance is real that
change could come to the American mortgage market.

Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

A home under construction in Austin. The number of new homes in the pipeline nationwide is quite low.

From his wide-rimmed cowboy hat to his roper boots, Mike Castleman fits moviedom’s image of the lanky Texas rancher. On a recent March evening, Castleman is feeding cattle biscuits to his two pet longhorn steers, Big Buddy and Little Buddy, on his 460-acre Bar Ten Creek Ranch in Dripping Springs, a hamlet outside Austin in the Texas Hill Country. The spread is a medley of meandering streams, craggy cliffs, and centuries-old oaks. But even in this pastoral setting, his mind keeps returning to a subject he knows as well as any expert around: the housing market. “I’m a dirt-road economist who sees what’s happening on the ground, and in 35 years I’ve never seen a shortage of new construction like the one I’m seeing today,” declares Castleman, 70, now offering a biscuit to his miniature donkey Thumper. “The talking heads who are down on real estate will hate to hear this, but America needs to build a lot more houses. And in most markets the price of new homes is fixin’ to rise, not fall.”

Castleman is in a unique position to know. As the founder and CEO of a company called Metrostudy, he’s spent more than three decades tracking real-time data on the country’s inventory of new homes. Each quarter he dispatches 500 inspectors to literally drive through 45,000 subdivisions from Baltimore to Sacramento. The inspectors examine 5 million finished lots, one at a time, and record whether they contain a house that’s under construction, one that’s finished and for sale, or a home that’s sold. Metrostudy covers 19 states, or around 65% of the U.S. housing market, including all the ones hardest hit by the crash: Florida, California, Arizona, and Nevada. The company’s client list includes virtually every major homebuilder and bank — from Pulte (PHM) and KB Home (KBH) to Bank of America (BAC) and Wells Fargo (WFC).

The key figures that Metrostudy collects, and that those clients prize, are the number of homes that are vacant and for sale in each city, and the number of months it takes to sell all of them. Together those figures measure inventory — the key metric in determining whether a market has a surplus or a shortage of new housing.

Today Castleman is witnessing an extraordinary reversal of the new-home glut that helped sink prices just a few years ago. In the 41 cities Metrostudy covers, a total of 78,000 houses are now either vacant and for sale, or under construction. That’s less than one-fourth of the 343,000 units in those two categories at the peak of the frenzy in mid-2006, and well below the level of a decade ago. “If we had anything like normal levels of buying, those houses would sell in 2½ months,” says Castleman. “We’d see an incredible shortage. And that’s where we’re heading.”

If all the noise you’re hearing about housing has you totally confused, join the crowd. One day you’ll read that owning a home has never been more affordable. The next day you’ll see news that housing starts have plunged to nearly their lowest level in half a century, as headlines announced in March. After four years of falling prices and surging foreclosures, it’s hard to know what to think. Even Robert Shiller and Karl Case can’t agree. The two economists, who together created the widely followed S&P/Case-Shiller Home Price indices, are right now offering sharply contrasting views of housing’s future. Shiller recently warned that the chances were high for a further double-digit drop in U.S. home prices. But in an interview with Fortune, Case took a far brighter view: “The lack of new home building is a huge help that a lot of people are ignoring,” says Case. “People think I’m crazy to be optimistic, but housing is looking like the little engine that could.”

To see where real estate is truly headed, it’s critical to keep your eye firmly on the fundamentals that, over time, always determine the course of prices and construction. During the last decade’s historic run-up in prices, Fortune repeatedly warned that things were moving too fast. In a cover story titled “Is the Housing Boom Over?,” this writer’s analysis found that the basic forces that govern the market — the cost of owning vs. renting and the level of new construction — were in bubble territory. Eventually reality set in, and prices plummeted. Our current view focuses on those same fundamentals — only now they’re pointing in the opposite direction.

So let’s state it simply and forcibly: Housing is back.

Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction that so amazes Castleman. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.

Drumming up sales

Of course, home prices are low and home construction is weak for a reason: incredibly low demand. For our scenario to play out, America will need a decent economy, with job creation and consumer confidence continuing to claw their way back to normal.

One big fear is that today’s tight credit standards will chill the market. But we’re really returning to the standards that prevailed before the craze, and those requirements didn’t stop prices and homebuilding from rising in a good economy. “The credit standards are now at about historical levels, excluding the bubble period,” says Mark Zandi, chief economist for Moody’s Analytics. “We saw prices rising with fundamentals in those periods, and it will happen again.”

To see why, let’s examine the remarkable shift in home affordability. A new study by Deutsche Bank measures affordability in two ways: first, the share of income Americans are paying to own a home. And second, the cost of owning vs. renting. On the first metric, the analysis finds that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That’s down from 17.2% at the bubble’s peak in 2007, and by far the lowest number in the Deutsche Bank database, going back to 1999. The second measure, the cost of owning compared with renting, should also inspire potential buyers. In 28 out of 54 major markets, it’s now cheaper to pay a mortgage and other major costs than to rent the same house. What’s most compelling is that in all of the distressed markets, owning now wins by a wide margin — a stunning reversal from four years ago. It now costs 34% less than renting in Atlanta. In Miami the average rent is now $1,031 a month, vs. the $856 it costs to carry a ranch house or stucco cottage as an owner. (For more, see The top 10 cities for home buyers)

Not all markets will bounce back equally, of course. Housing resembles the weather: The exact conditions are different in every city. But in general the big U.S. markets fall into two different climate zones right now. We’ll call them the “nondistressed markets” and the “foreclosure markets.” A more detailed look shows why the forecast for both is favorable.

Nondistressed markets: Ready for launch

No cities went untouched by the collapse in prices over the past few years. But markets such as Northern Virginia, Indianapolis, Minneapolis, San Diego, the San Francisco suburbs, and virtually all of Texas held up reasonably well. In those areas prices spiked far less than in bubble cities — the foreclosure markets we’ll get to shortly — chiefly because they didn’t get nearly as many speculators who thought they could flip the homes or rent them to snowbirds.

The nondistressed markets will be able to get prices rising and construction growing far faster than the harder-hit areas for a simple reason: Although some of these markets are still suffering from foreclosures, they don’t need to work through the big overhang haunting a Las Vegas or a Phoenix. The number of new homes for sale or in the pipeline is extraordinarily low in nondistressed markets. San Diego is typical. It has just 921 freestanding homes for sale or under construction, compared with 4,425 in late 2005. The challenge for these cities is to generate enough demand to reduce inventories of existing, or resale, homes. In the entire country the resale supply stands at 3.5 million houses and condos. That’s a fairly high number, since it would take more than eight months to sell those properties; seven months or below is the threshold for a strong market.

But in the nondistressed cities, the existing home inventory is lower, closer to seven months on average. So a modest increase in demand will translate into strong gains in both prices and new construction. That should happen quickly, because most of those markets — including Silicon Valley, Northern Virginia, and Texas — are now showing good job growth.

Zandi of Moody’s Analytics expects that prices will rise three to four points faster than inflation for the next few years in virtually all of the nondistressed markets. His view is that prices will increase in line with rents, which are now growing briskly because apartments are in short supply. Those higher rents will encourage buyers to cross the street from an apartment to a home of their own.

In Northern Virginia, Chris Bratz, an engineer, and his wife, Amy DiElsi, a publicist, are planning to leave their rental apartment and become homeowners for the first time. The main reason? Buying has simply become a far better deal than renting. “The market got completely inflated, then it crashed, so prices are coming back to where they should be,” says Chris. As the couple have watched prices fall, they have also watched the rent on their apartment spiral upward, reaching $2,700 a month. They calculate that they should be able to purchase a townhouse for between $400,000 and $500,000 and pay less per month for a mortgage.

The nondistressed markets will also lead the way in construction. Zandi predicts that for the nation as a whole, single-family housing “starts” — measured when a builder pours a foundation for a new home — will rise from 470,000 in 2010 to as much as 700,000 this year. A large portion of that activity will happen in nondistressed markets where a tightening supply of resale houses will start making new homes look like a good deal. “Our main competition is from resales,” says Jeff Mezger, CEO of KB Home. “The prices of those homes have stayed so low, because of low demand, that it’s hampered the ability of builders to sell new houses.”

But many would-be buyers simply prefer a brand-new house. Eventually they’ll move from renters to buyers, and the trend will accelerate now that prices are no longer dropping. In Minneapolis, Yuan Qu and her husband, Xiang Chen, a researcher at the University of Minnesota, just moved from a two-bedroom rental to a new light-blue four-bedroom ranch with a chocolate-colored roof on a spacious corner lot. They paid $400,000, a bargain price compared with a few years ago. The couple, both in their early thirties, moved to Minnesota from China six years ago. “We wanted to buy a house, and we’ve been waiting and waiting and waiting,” says Qu. “The prices went down for so long, we finally thought they couldn’t keep falling.” For Qu the only choice was new construction. “We’re not very handy people,” she admits.

Foreclosure markets: The outlook is brightening

A home off the market in Mesa, Ariz.

The true disaster areas for housing since the bubble burst have been Sunbelt cities such as Las Vegas, Phoenix, andMiami — places that boasted great job and population growth in the mid-2000s, only to suffer a housing crash that swamped them with empty homes and condos and crushed their economies. But people always want to live in those sunny locales, and their job markets are starting to recover, albeit slowly. In foreclosure markets the inventory problem is far greater because it includes not just traditional resale homes but millions of distressed properties. Fortunately those houses are now such a screaming deal that investors, including lots of mom-and-pop buyers, are purchasing them at a rapid pace. To be sure, some foreclosure markets won’t rebound for years because they’re both vastly overbuilt and far from big job centers; a prime example is California’s Inland Empire, a real estate disaster zone 80 miles east of Los Angeles.

But the outlook is brightening for Phoenix, Las Vegas, Miami, and parts of Northern California. A big positive is the tiny supply of new homes entering the market. Phoenix, for example, has a total of just 8,100 new homes that are either for sale or under construction, down from 53,000 in mid-2006. The big test in these cities is absorbing the steady stream of distressed properties. The foreclosures put downward pressure on the market far out of proportion to their numbers because of markdown pricing. “We had levels of inventory even higher than this in 1990 and 1991,” says MIT economist William Wheaton. “But they were traditional listings, not foreclosures, so they didn’t create the big discounts you get with foreclosures.”

Wheaton reckons that we’ll see a flow of around 1 million foreclosures a year, at a fairly even pace, from now through 2013. That figure is frequently cited as evidence that the market is doomed for years in most foreclosure markets. Not so. The reason is that the vast bulk of those units, probably over 600,000, according to Gleb Nechayev, an economist with real estate firm CB Richard Ellis (CBG), are being converted to rentals either by investors or their current owners. Those properties are finding plenty of renters, since the rental market is still extremely strong across the country. Remember, the millions who lost their homes to foreclosure still need somewhere to live.

A typical investor is Alex Barbalat, a Russian immigrant who’s purchased seven homes east of San Francisco in the towns of Bay Point, Antioch, and Pittsburg. His average purchase price is around $100,000 for homes that once sold for between $300,000 and $500,000. But he has no trouble finding renters, since his tenants can commute to jobs in San Francisco on the BART transit system. Barbalat is pocketing rental yields on the prices he paid of around 12%, and he’s in no hurry to sell. “I’m holding them until prices drastically rise,” he says.

Investment funds are also entering the game. Dotan Y. Melech looks for bargains in Las Vegas for UnitedAMS, a firm he co-founded that manages apartments and other real estate investments. The firm has raised more than $20 million from outside investors to purchase distressed properties. So far, Melech has bought around 300 houses and plans to purchase another 200 this year. He has no trouble renting the houses he buys, since, he estimates, occupancy rates in Las Vegas are touching 95%. The “cap rate,” or return on investment after all expenses, is between 8% and 10% — twice the rate on 10-year Treasuries. Melech rents to people who lost their homes but are reliable renters. “A lot of people can’t be buyers because their credit got hurt,” he says.

Even with investors jumping in, buying activity in foreclosure markets hasn’t yet increased enough to bring inventories down. It will soon. Zandi thinks prices will fall a couple of percentage points lower in the distressed markets in the short run. “But that will be overshooting,” he says. “It’s like an elastic band. If prices do drop this year, they will need to bounce back because they’ll be far too low compared with rents and replacement cost.” Renters will come off the sidelines to purchase homes in the years ahead, precisely the opposite trend of the past few years.

Consider the example of Michael Dynda, a retired Air Force avionics technician who now works for a government contractor in Las Vegas. Dynda, 49, is a first-time buyer who put off purchasing for years, in part because prices were falling so rapidly in Las Vegas, with no bottom in sight. But last year the combination of bargain prices and low mortgage rates became too good to resist. He ended up purchasing a 2,300-square-foot stucco home for $240,000, or about half what it would have fetched in 2007. Dynda got a 4.38% home loan, and pays the same amount on his mortgage as on the rent on the house he left to become a homeowner. “The timing was about as good as it could get,” says Dynda.

Mike Castleman’s company tracks the inventory of new homes in 19 states across the country. He sees supply getting tight. “Home prices are fixin’ to rise,” he says.

Back on the ranch, Mike Castleman is lounging in his creek-front mansion, built from “a hundred tons of fine central Texas limestone.” As he shows off his collection of custom-made guitars, including one crafted to resemble the skin of a rattlesnake, the homespun housing guru once again returns to his favorite topic.

Castleman claims that this recovery will look like all the others: It will bring a severe shortage of housing. He invokes the livestock business to explain. “It takes three years between the time a bull mates with a cow and when you get a calf ready for market,” he says. “That’s how it is in housing too. We’ll get a big surge in demand and the drywall companies will take a long time to ramp up, and it will take years to get new lots approved. Buyers will show up looking for a house in a subdivision, and all the houses will be sold. The builders will tell them it will take six months to deliver a house.” But those folks, says Castleman, will be set on buying a place. “And they’ll want it so bad they’ll bid the prices up!” In other words: Beat the crowd.

It’s a Great Time to Buy a House
Mike Castleman, the Texan with the best realtime view of housing in the U.S., tells editor-atlarge Shawn Tully that the naysayers are about to get a big surprise: rising prices for new homes.

We can only hope that this translates into more home construction in Asheville, NC and surrounding area.