Real estate down-turn affects almost all areas of Cherokee County economy
By Dwight Otwell Editor

With the three slowest economic months of the year looming, the real estate industry is still in a funk.

The slow down in real estate sales reaches out into other segments of the local economy, from those who operate backhoes and bulldozers, to carpet sales to the hardware business and eventually even to the hair dresser and the flower shop.

It is estimated that the real estate business has a trickle down effect that affects 68 to 75 percent of the businesses and money that flows through Cherokee County.

Three top Cherokee County real estate agents were interviewed by the Sentinel about the economy and especially the downturn in real estate sales. They all expect the stagnation to last another year or so but then, they think it will flourish again and even boom.

Lawrence McNabb, broker/ owner of McNabb Properties, said there was a drastic 120 to 150 percent increase in property prices in a short period of time.

David Ritz, owner/broker with ReMax Mountain Properties, said the slowdown in Cherokee County started with the backlog in septic permits but then there was a nationwide downturn.

"Prices couldn't keep going up that fast. It couldn't hold that pace forever. Part of this is an adjustment," Ritz said. "We see some good days and some bad days. It isn't real predictable."

Ritz said his company is closing about one sale every other day when they were previously closing one or two every day.

"I think it is probably going to last another year or so but our area is still just as good as it ever was."

Randy Dockery, possibly the top selling real estate agent in the county and an agent for Appalachian Land Company, said there are over 3,000 lots for sale in Cherokee County.

"A problem in Cherokee County is that the inventory of lots for sale is so large and they are just sitting there," Dockery said. "Those people running backhoes and dump trucks are going to be hurt. You are going to see real estate agents getting more part-time jobs so they can feed their families,"

Ritz believes we must overcome some of the negative media coverage of the area.

"A lot of folks from down south think our taxes are extremely high and that our government is corrupt," Ritz said. "That's not so. Someone told my clients that they should get away from town as fast as possible because this is a crack (cocaine) town. This is a good place. Our taxes aren't higher than any other place. Our health department has made great strides lately in getting caught up (on septic permits)."

Dockery noted that several sales have fallen through for different reasons. There are many foreclosures nationwide because of loose lending practices. Also, everything was so good for so long in real estate that everyone wanted to get on the bandwagon and the market was flooded.

"The biggest problem is that our primary buyers are second home buyers from Florida and the market in Florida is terrible. They don't have the money to come here. I read that of the top 27 places for foreclosures, five were in Florida."

Many builders jumped on the bandwagon and built spec houses, which are just sitting there, Dockery said.

Ritz pointed out that Cherokee County is perfectly situated from several large cities so that people want this as their getaway. McNabb noted that we are two hours from Atlanta and Asheville and an hour and a half from Chattanooga.

This area is primed for a boom in development when the economy turns for the better. Dockery said that once the Presidential election is over, the economy usually turns for the better.

In the meantime, the county needs to continue to improve the septic permit situation, and more positive publicity about the area would help. Also, being progressive with infrastructure such as water and sewer lines would help. A water line has been extended between Murphy and Andrews. Sewer needs to follow, Dockery said.

"But when you add amenities, taxes go up," he said. "We have about the cheapest property taxes in the world."

McNabb believes we need the county to begin to manage growth properly.

"We have to decide if we are going to be a tourism based industry or a manufacturing industry," he said.

Failure to manage growth "has been our biggest downfall", McNabb said. He suggested that another economic development committee be formed, possibly starting with the real estate board. They could pool statistics and determine how many businesses are affected by the real estate sector and then determine how to work with the county and Murphy and Andrews governments.

"I have had three very large acquisition deals pulled off the table because they don't feel that Murphy is ready for that type client," McNabb said.

But the large development groups are still interested in the area. One group wanted to see downtown Murphy before looking at the proposed land. They said that Murphy is similar to a town in Colorado that became the new Aspen. It was an appealing, charming town that had a boutique feel to it, McNabb said. These groups are proposing developments with lots starting at about $300,000 and with amenities such as a golf course.

"That type of buyer wants good restaurants. They want a sexy, little town," McNabb said.

"If we don't start to do something now, we will squander a huge opportunity," McNabb said of the need to begin controlling growth.

A discussion about implementing zoning should begin, he said. While many natives of Cherokee County oppose zoning, the people on Wingate Road who saw an electrical substation come in would say they wish they had zoning, McNabb said.

"Most locals are upset over how some of the developers are butchering these mountains," McNabb said. "Zoning would help. I feel that a lot of locals would embrace zoning if it were explained to them. There should be ridgeline regulations that would prevent you from cutting all the trees off the tops of mountains. That is why people come here - because of the beauty of the mountains. The county government needs to strongly consider zoning in an effort to manage the development that will go on here."

McNabb said he doesn't want the government telling him what to do either. but a balance needs to be struck. It is time to begin an honest public discussion about managed growth and zoning, he said.

"Our area has always had reactionary growth," he said.

We react instead of being proactive and planning for growth. If this (growth) had been more properly managed, I believe we would have been hit (by the economic downturn) but not as hard."

McNabb believes that the primary real estate market in Cherokee County will turn from secondary homes to primary homes. Chalets have been overbuilt and he believes the old world, English style homes will be favored.

There are a number of developers who don't damage the land. "Those type developers let the land develop the community and that is the type of land folks are looking for, with trees left intact and streams left pristine. That is the type of community I would like to see here and I think that is the type of community that we will see come here when we decide that we want to grow up," McNabb said.

McNabb noted that 75 million Baby Boomers will retire in the next few years and if we get a small proportion of them coming here, it will cause the economy of the area to flourish.

Through the economic slow down, employment has remained strong. McNabb said it is estimated that $1.76 trillion that has typically been spent in real estate has not been spent and is just sitting there because consumer confidence is "terrible" right now.

Ritz said we need to let people, including people from Florida, know that we want them to retire here or have summer or vacation homes here.

"The local economy, without the influence of money from outside, isn't very strong," Ritz said.

Dockery said that the real estate down turn hasn't bottomed out yet and many people are waiting for that to happen before they buy.

"We have hit a dip in the economy," Dockery said. "We just have to ride it out."

"The biggest thing is to get everybody talking and to get government groups talking," McNabb said. "I feel we have a really great county, a beautiful area. We don't need to squander our opportunity for our kids and their children. If we don't properly plan while the market is in (bad shape), it is going to hurt quite a few generations after us."