Home prices are stable to climbing in the Smokies!??

[Collin Hays]

Boy, did I miss the call on this one! (at least for now) Even with a somewhat slower year than last in rental demand, even with interest rates returning to historical norms, overall home prices in the Gatlinburg market continue to remain stable, if not slightly climbing.  I predicted a 20 to 30 percent correction in prices this year, and I was dead wrong.

It appears that investors are continuing to come in for the long haul, with the knowledge that positive cash flow isn't realistic in the early years of ownership. While I am surprised at that, I also think it is the proper way to view real estate.

I always go back to my first vacation rental purchase as an example:  In 2005, I bought a beautiful, 2-acre creek-side cabin in Cosby (near Gatlinburg) for $240,000.  My neighbors thought I was nuts for giving that much. And for a period of time, they were right:  The financial crisis and Great Recession followed, and the market value of that property dropped almost in half on 5 years.  And I certainly didn't "cash flow", as rents were in the $18,000-20,000 range for the first few years.  

But as time went on, rents kept going up along with everything else in life.  Today, the cabin is mostly paid for and yields about $55,000 per year in rents.  I hope to never sell this cabin (nor likely any of my others), as they are providing a lifetime stream of income, a place to vacation, and will do the same for my kids and their kids one day.  

[Ken Boone]

Where did that data come from? From what I keep seeing on MLS and from what I know of friends trying to sell cabins it sure doesn't feel that way. Of course what I see is anecdotal.