Let’s be brutally honest here: 2020 was a year for the wastebasket — or maybe a certain flushable device.
The global pandemic shut down entire industries, caused millions of jobs to vanish and killed 2 million people worldwide.
Locally, tourism dried up, causing hotel and restaurant shutdowns that translated to a 17.5% unemployment rate in Buncombe County in April. The Asheville Metropolitan Statistical Area (Buncombe, Haywood, Henderson and Madison counties) lost an astounding 36,400 jobs that month.
While tourism and the local economy slowly rebounded, 2020 still wrapped up as a tough year. So it’s natural to ask: what’s 2021 going to look like, and when are we going to get out of this economic funk?
Economist James F. Smith, who has over 30 years experience as an economic forecaster, offered an answer a lot of folks will be glad to hear. Smith spoke during the 2020 Metro Economy Outlook in December, hosted by the Asheville Area Chamber of Commerce.
“For the United States, the answer is we’re probably already there,” Smith said. “If we’re not already there, we’ll be there in the first quarter of 2021.”
While this pandemic has been devastating, Smith noted that the Spanish influenza of 1918-19 killed 5 million people worldwide and caused a 23.9% economic decline worldwide. The recovery took nine months.
The U.S. economy took a beating early this year, declining by 31.4% (in Gross Domestic Product) by the end of the third quarter. But we also saw a subsequent “enormous spike” in growth, Smith said.
“In the (fourth quarter of 2020), if we achieve a growth rate of 15.6% or more, we will have earned back all of the losses that we had from the first two quarters of 2020,” Smith said.
In short, the economy “fell off a cliff in March,” dropping dramatically, but then it also rebounded dramatically. Ironically, in January and February, the economic indicators were looking better than they had in a half century in America, with national unemployment at 3.5%.
“So, we hit a peak in February and a trough in April — that’s two months,” Smith said. “That’s by far the shortest recession ever recorded, not only in the United States but pretty much anywhere in the world.”
While “2020 is definitely a year to forget,” as Smith says, he predicts strong growth in 2021 and even for the next decade.
With that in mind, the Citizen Times asked leaders in various sectors what’s on the horizon for 2021:
COVID in 2021
The pandemic drove everything in 2020, and it truly was the year of COVID-19. But with vaccines already rolling out to frontline healthcare workers and first responders, the beginning of 2021 should also be the beginning of the end of the COVID-19 pandemic.
That might be slowed down, though, by an expected jump in new cases following the holiday season, similar to the jump in cases the country and state saw in the weeks following Thanksgiving.
After frontline healthcare workers are vaccinated, officials will move on to adults with multiple chronic conditions and other adults at high risk of exposure, then other essential workers and people over 65, then students and critical workers at lower risk and finally anyone who wants one.
Local health officials have estimated late spring or early summer for when the vaccine should be available to the general public, and they have repeatedly referred to the vaccine as “a light at the end of the tunnel.”
A lot of travel planners are pushing events into the second quarter of 2021 or later, banking on widespread COVID-19 vaccine distribution by then allowing people to congregate and travel more freely, according to the Buncombe County Tourism Development Authority. Projections from the research firms STR and Tourism Economics show hotel demand in 2021 will reach 81% of what it was in 2019 but won’t return to normal until 2023.
Those firms estimate hotel room revenue will slowly rebound in 2021, to about $113 billion and continue climbing, but it won’t get back to 2019 levels — %168 billion — until 2024.
Still, local tourism picked up significantly in the fall of 2020, and officials expect that trend to continue into 2021.
“In April 2020, total lodging sales — a leading indicator for overall visitor spending in a community — were down 93% from the previous year,” Victoria “Vic” Isley, president and CEO of Explore Asheville Convention & Visitors Bureau, said via email in late December. “By October, typically the month that Asheville sees the most value from visitors, total lodging sales were down by 10 percent. It’s a bright spot to see local residents with short-term vacation rentals benefitting from the return of visitors to the community.”
That October rebound was “largely driven by a 75% increase in short-term vacation rentals in 2020 compared to 2019, while hotel sales still lagged year over year,” Isley said, noting that November “dipped back down again.”
The Biltmore Estate, which typically draws 1.4 million visitors a year, took a hit in 2020, with its first closure since World War II, reduced hours and then restrictions on total guests numbers. The estate also had to lay off 400 workers, although employment levels stabilized late in the year.
But estate spokeswoman LeeAnn Donnelly said in late November the operation was “in a period of strong recovery” and they were optimistic about 2021.
“We believe Biltmore and the entire Western North Carolina tourism sector is positioned well, with significant pent-up demand for travel,” Donnelly said.
Winter is typically the slowest season for tourism, and it’s going to be especially tough this year. But Isley remains upbeat overall.
“While the tourism community is bracing for some lean winter months, we believe Asheville’s entrepreneurs, outfitters and creatives are positioned to help lead the way for our region’s recovery and bring back more jobs for area residents,” Isley said, touting Asheville’s reputation for outdoors activities and health and wellness that should give the region a leg up on more urban destinations.
“We anticipate conference and business travel will continue to lag through the first half of 2021 and will be closely monitoring safe and responsible leisure travel,” Isley continued. “Research indicates that people are dreaming of a return to traveling. We are developing plans for the second quarter of 2021 to inspire people to visit here when they are ready.”
Last year was particularly brutal on local restaurants, which had to endure state-mandated closures and then reduced capacities. Since the pandemic hit the mountains in March 2020, more than 30 local restaurants have closed.
Restaurateurs got creative, though, scrambling to boost take-out capacity, buy outdoor heaters and install protective Plexiglass between booths.
The city of Asheville helped out by extending into 2021 its popular “Shared Spaces” initiative, which allows restaurants and other business owners to operate on sidewalks, parking lots and, in some cases, streets.
Outdoor dining has been a relief for restaurant owners who can provide open-air space to customers wary of dining indoors. Still, many restaurateurs can’t imagine diners availing themselves of that particular perk in the coldest months of winter.
That’s one of many reasons small restaurant owners feel nervous as they head into a traditionally slow season, this time with capacity at a state-mandated 50%, a curfew in place and a raging pandemic that’s exacerbated already existing staffing problems.
Meanwhile, as much-needed federal relief for small businesses has repeatedly stalled, restaurant owners and workers will need to find innovative solutions to recover in the new year.
“We’re all trying to keep our heads down and butts in seats,” said William Dissen, who took over The Market Place in 2009. “I’m expecting this to be the worst winter in a decade.”
At the Asheville Independent Restaurants Association, Executive Director Jane Anderson said in November their more than 100 local restaurant members were under tremendous stress. The local food and beverage industry survives with support from about an even 50/50 split between tourists and local loyal customers, although some are heavier in either direction, Anderson said.
Winter will be worrisome at best, with continued capacity restrictions and the extra expense of outdoor heating systems and more take-out capacity.
“Frankly, January and February, which (were) the usual slowest months in pre-COVID times, are the months to worry about,” Anderson said. “The restaurants were just emerging from those slow months last year when COVID hit.”
Believe it or not, this region has about 10,000 job openings on any given day.
That’s according to Nathan Ramsey, the executive director of the Land of Sky Regional Council and director of the Mountain Area Workforce Development Board. Ramsey is tuned in to the local job market, so he well knows the hit the area took in 2020.
But he also believes the region is well-poised for a recovery in 2021.
“Long-term, I am bullish on our region’s economy and for workforce opportunities,” Ramsey said via email. “Even during these trying times, we have seen some of the largest economic development announcements in WNC history, including Pratt & Whitney in Buncombe County and Jabil Healthcare in Henderson County.”
Pratt & Whitney plans to invest $650 million in a new plant in southern Buncombe County, eventually employing 800 people. Jabil Healthcare will bring 150 jobs to East Flat Rock, investing $38 million in the project.
Ramsey said several trends the pandemic has highlighted, including teleworking and more people leaving population center for more rural areas, should help the mountain region.
“The rise of teleworking is a potential boon to WNC, as many want to enjoy the lifestyle available in the mountains, and if they can bring their job with them, they will relocate to Western North Carolina,” Ramsey said. “Businesses may also reconsider their location site plans to include midsize metros like the Asheville MSA with a population of around 500,000.”
The Asheville Metropolitan Statistical Area — Buncombe, Haywood, Henderson and Madison counties — is poised to hit 500,000 residents as early as 2025. More people continue to move here, for work or retirement.
Ramsey said population estimates project the mountain region will add about 170,000 people over the next 25 years, and the telework and relocation trends “could accelerate those numbers.
“Generally, businesses tend to expand or locate in areas with increasing numbers of population so employers can more effectively source their talent needs,” Ramsey said.
In the short-term, unemployment rates have greatly declined after that 17.5% spike last April. As of October 2020, Ramsey noted, “our region’s unemployment rate of 5.8% is below the state average of 6.1% and the number 5 lowest in North Carolina.”
Vaccine distribution, and a waning pandemic, will naturally play a key role in job growth.
“After COVID-19 is no longer a significant hurdle to public health and our economy, I expect our region’s unemployment rate will once again continue to be the lowest, if not the lowest, unemployment rate in North Carolina,” Ramsey said. “That may happen by fall 2021, if the current projections about the vaccine happen as anticipated.”
Before April 2020, our region had the lowest unemployment rate of any North Carolina metro area for 61 consecutive months, Ramsey noted.
Still, Ramsey knows the job market has taken a hit.
“Despite an improving unemployment rate, our region is still down about 21,000 jobs compared to October 2019,” Ramsey said. “In April 2020, we were down 36,400 jobs compared to the prior year.”
North Carolina’s official Employment Projections for 2018-2028 show our region should gain 60,000 jobs from our current number. Ramsey points out “this will regain the lost jobs from the pandemic and add 40,000 jobs on top of that.”
The highest growth will come in two categories, Professional & Business Services and Construction.
“Education, and Health Services and Manufacturing will continue to be our region’s largest employment sectors,” Ramsey said.
Jobs are out there for qualified candidates, he stressed.
“Right now we are seeing increased hiring across most sectors, and employers indicate they are struggling in many cases to meet their workforce needs,” Ramsey said. “We have around 10,000 job openings on any given day.”
The market is not as hot as it was before the pandemic, but career opportunities are out there. Ramsey encourages job-seekers to reach out to their local NCWorks Career Center, so staff can connect them with resources to help in the job search, including education and training resources.
“The recession brought on by the pandemic is different from traditional recessions, so we are in uncharted territory to some extent,” Ramsey said. “If anything, the pandemic has probably accelerated trends that we were seeing prior to March, including needs for increased levels of skills and education to respond to the job market changes.”
Residential real estate
Pandemic? What pandemic?
While home sales took a brief dip in the spring, mainly because in-person visits got curtailed, the sector remained remarkably strong in 2020.
Neal Hanks, president of Beverly-Hanks Realtors, which services nine mountain counties, said in his year-end report that nothing describes 2020 better than “an old-fashioned roller coaster ride.”
Early on, 2020 looked incredibly strong, but that confidence dwindled as the pandemic set in and the accompanying recession destabilized the market’s early momentum, Hanks said. But the market continued to climb through the summer, transitioning into “a dizzying acceleration as record-low mortgage rates, and an influx of relocations pushed sales to new records every month.”
High-end home sales were particularly strong from January-Dec. 20, 2020. Beverly-Hanks data for all home sales shows sales of homes over $1 million totaled 285 in the nine-county region (Buncombe, Haywood, Henderson, Madison, Mitchell, Polk, Rutherford, Transylvania, Yancey). That’s way up from 135 sales the year before in that range.
Hanks expects sales to remain strong in 2021.
“On the whole, the market will remain advantageous to sellers in 2021,” Hanks said in the report. “Demand will be fueled by the seismic shift of Millennials as they approach their peak household formation, enter the move-up market, and join Generation Z’s vanguard who are entering home buying for the first time.”
Areas that promote a “wellness lifestyle,” like Asheville, benefitted from relocations during the pandemic, and that will continue.
“Resort and second home communities, like those found throughout our region, have enjoyed a renewed popularity with luxury homebuyers that hasn’t been seen since the early 2000s,” Hanks said. “The difference this time is that many of the second homes may serve as primary residences for extended periods of time.”
In short, remote work capabilities, a strong stock market and Asheville’s attractiveness to buyers means “affluent buyers are snapping up homes around Western North Carolina at a record breaking pace,” Hanks writes.
Last year, the Asheville area continued to set records for home prices, according to Mosaic Realty, which also tracks industry information.
In the third quarter last year, Asheville’s median home sales price hit $355,000, “the highest quarterly median home sale price on record; 4.6% higher than the previous quarter,” Mosaic President Mike Figura wrote in his analysis. “In Buncombe County, the median sale price was at its highest on record at $335,0000, slightly above the $319,500 record that was set in the second quarter of 2019.”
The most significant problem real estate agents had last year, and one likely to linger into 2021, is inventory — having enough homes to sell. That’s not great for potential buyers hoping to land more affordable homes.
Hanks said the market “will continue to struggle with an imbalance between supply and demand,” partly because not enough new homes are being built and partly because more buyers likely will enter the market.
In short, it will continue to be a seller’s market.
“With little meaningful supply infusions, we expect homebuyers to continue to struggle with affordability and a lack of choice,” Hanks said in the report. “With the basic market fundamentals unchanged, home prices are expected to continue rising at a steeper rate than the region’s historical average, as reported by the Federal Housing Finance Agency.”
As the Citizen Times has previously reported, locals continue to move in higher numbers to outlying areas, where homes are more affordable. Hanks says the pandemic “opened many homebuyers’ eyes wide to the improved affordability in our outlying communities.”
“The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther out,” Hanks said. “We expected the sales pace for places like Madison, Yancey/Mitchell, and Polk counties to continue at a brisk pace.”