August Market Update 2023

August on the Outer Banks

We are closely watching the main stats on supply (up 33% since January) and demand (down 44% since January).  Part of that is watching more specific pockets of activity to glean a closer insight into future trends.  One of those trends I’ve noticed in my near 30 year career is that of high-end home sales.

Take a look at the numbers for Duck and Corolla.

Homes sold $2M and over:

2019 –              6

2020 –              26

2021 –              64

2022 –              51

2023 –              17 YTD  (Likely on track for 27 total)

    • Even if we end up at 27 sold, that will be a decline of 47% year over year.
    • Number of price reductions to get homes sold is going up; 60% of properties sold are under list price, compared to 51% last year.
    • Median days on market for the high-end sales has gone from 21 days to 93 days year over year.
    • There are currently 30 homes for sale in Duck and Corolla $2M and over. With basically 2.4 buyers a month this is over a year worth of inventory.

With interest rates rising, insurance costs rising, rents stabilizing to pre-pandemic times, it’s really clear that a shift in pricing has to take place.  The timing of this is what’s left to be seen.  This strange anomaly of still very low inventory (although is starting to slowly climb) is keeping us stuck in limbo.

If you’re thinking about selling, let’s talk about what your home’s value may look like in this market.

July Market Update

Happy 4th of July on the Outer BanksMid-year is upon us and not much has changed since the last report.  I did notice an interesting trend regarding CASH in our marketplace.  Here’s the deal.  There have been 136 home sales in Duck and Corolla since January.

Of those 136 home sales:

  • 32 Cash
  • 13 Jumbo Loans
  • 91 Conventional Loans

A conventional loan amount is $726,200.  With the typical 20% down, that means a purchase price of around $875,000.

  • Only 53 of the 136 homes sold were under $900,000
  • 83 homes sold over $900,000 up to $6,300,000
  • 13 were jumbo loans
  • 22 were cash
  • The average price is $1,251,000
  • The median sales price is $992,500

A jumbo loan amount is anything over the $726,200.  There were only 13 of those reported.  There were 48 Conventional loans in the $900,000 and up price range.  This means that 48 buyers out of 83 brought enough cash to the table to get their mortgage at or under $726,200.

To paint a clear picture – 32 cash buyers, 48 mostly cash buyers.  That’s 80 buyers (60%) who brought a ton of cash to the closing table to buy a home on the Outer Banks.  Including the highest sale of the year so far – $6,300,000 ALL CASH!!!!  This just seems amazing to me. (Here’s a link Click Here to View Listings to that home if you want to see what $6.3M gets you)

This is a clear indication that buyers have no problem parking cash in a beach home right now.  I mean, why not?  Let’s look at the 3 main reasons this could be a good idea.

  1. Rental income – If you choose to rent, the income will at the very least cover your mortgage. That means, future equity you reap, all paid by SOMEONE ELSE.
  2. Bank Failures – With banks failing across the country, and the Dodd-Frank Bill legalizing, if not mandating, “bail-ins” a lot of people don’t feel safe keeping their cash susceptible. Rather, they are investing in a tangible asset, and one they can enjoy themselves and have others pay for!
  3. Inflationary Fiat Dollar – Let’s get real, the price of real estate will NEVER go to zero. As inflation spikes even more and more out of control, the dollar is tumbling closer and closer to zero.  It seems buyers are hedging their bets on the tangible asset of real estate versus the tumbling value of the dollar.

We haven’t even begun to see the effects of the commercial real estate crisis looming.  This is widely affecting regional banks who are holding the notes on these buildings that are sitting empty in record numbers across major cities.

Don’t get me wrong, my message is not of doom and gloom.  What’s going to happen is going to happen.  My point is, what is your best move?

If you are considering selling, there are cash buyers waiting for your home.  We do have investment vehicles where you can put your money and AVOID capital gains tax in the meantime.  Contact me for more information.

If you are thinking about buying, get off the fence and don’t let the interest rates deter you.  You won’t have much competition buying right now and there are some great opportunities out there!

Outer Banks Market Update – March 2023

As of right now, the Outer Banks is experiencing what is considered to be a “normal market”.  That means we are not seeing prices change in any significant way up or down.  While prices are still at what is considered to be somewhat inflated, there’s not been real measurable changes so far.  Secondly, we still have a balanced level of inventory.  A normal market is considered to be a demand level of 4 to 6 months of inventory.  We are sitting right in the middle at 5 months of inventory.  This means the demand is steady and supply is still rather low.  In comparison at the peak times in 2021 and 2022, we had just a 2-month inventory.

This begs the question, where are we headed?  There are 3 factors I’m watching to help determine that.  What’s great about Beach Realty is we watch the statistics every single week.  It’s just as good as having a crystal ball. The numbers change in a gradual way that you can actually see the shifts coming if you’re paying attention, which we are!

Factor 1 – Mortgage Applications

Year over year nationwide mortgage applications to buy a home has fallen 41%.  In just a YEAR!  It’s currently at the lowest level in 28 years right now.  That’s even worse than the mortgage crash that happened in 2008.  Coupled with data from NAR, only 29% of recent home purchases are cash.  The most obvious cause is rising interest rates and still inflated home prices.  As a second home market, over 70% of our home sales are a discretionary purchase.  It’s a decision buyers can wait on, especially if they think changes are coming soon.

Factor 2 – FNMA and Second Homes

About a year ago Fannie Mae basically got out of the second home business.  Wanting to pull support from second homes and focus more on first time home buyer programs they negotiated a deal with the Mortgage Bankers Association to drastically increase rates on second homes.  Which at the time didn’t seem too objectionable on conforming loans because the conforming loan limit was $548,250.  With the average second home here being near $700,000, most buyers wouldn’t be affected.  Now the limit is $726,200 for a conforming loan, coupled with the most attractive rates being a now 75% LTV, the rates shot up over 7% with one point.  Making it even more expensive than ever to buy a home on the Outer Banks with a conforming limit mortgage. I don’t know the exact percentage of second home mortgages that are sold to Fannie Mae, but I think an educated guess would be MOST of them.  The only solution is for mortgage brokers to keep the loans on their books and try to offer more attractive rates.  Who knows how long that will last and how many lenders will participate.  I only know of one broker with that program right now.

Factor 3 – Rising Inventory

As buyer demand continues to soften due to rates and prices, inventory will start to creep up this spring and summer.  That could lead us directly into an inventory level over 6 or 7 months by fall.  That pushes us back into a buyer’s market.  If rental receipts drop this year, as expected, this fall we could see prices take a very noticeable hit.  How much is yet to be determined.  However, with as high as prices rose over the last few years, even a 10% drop would likely still put the home higher than pricing was in 2019.  So all is not lost, for this year at least.

If you’re thinking about selling, NOW is your window.  Give me a call to discuss further.

March 2022 Market Update

Let’s talk about INVENTORY.  Most people don’t realize that inventory level is the key determining factor for real estate prices.  If I had a dollar for every time someone asked about the bridge in relationship to values, I would have a whole lot of dollars!  And yes, there are a lot of factors that play into value.

For example:

  • Condition – buyers today don’t want to fix old problems
  • Location – location has always been top of the list
  • Rentability – Not every buyer in our market cares about this, but it does help
  • Financing – Being able to get good terms
  • Insurance – Getting the best premiums makes the home more saleable

However, inventory levels trump all other factors when determining value.  Just 3 short years ago the inventory levels in Corolla were over 2 years.  Now, it’s barely one month.  The old faithful supply and demand is king when it comes to prices going up or down.

Let’s also realize these cycles historically (nearly 100 years worth of data) last for 20 years.  The last cycle began in 2000.  So regardless of COVID, we were due for an up market.  I do believe that COVID accelerated what should have taken 3 years to get where we are into 2 years.  That being said, the last up cycle lasted for 5 or 6 years.  It’s not clear how long this one will last.  Especially with everything going on, who knows.

What we do know is that watching the stats is the same as having a crystal ball.  Nothing can change until inventory levels change.  That doesn’t look to move any time soon.  We are just beginning the spring market where our inventory usually increases by 30%.

Here’s the number of homes currently for sale and under contract for each area.

Area                For Sale           Under Contract

Corolla –           22                    86

4 Wheel –         8                      8

Duck –              13                    23

Southern Sh     10                    16

Kitty Hawk      9                      8

KDH                 12                    53

Nags Head       12                    26

These numbers still blow my mind!  We all want to know what’s going to happen.  Here’s what we can count on, what goes up, must come down.  The big question is WHEN?  My answer, watch the inventory and you’ll know.  When we get back to 4 to 6 months, that’s when it will start.

Meanwhile, if you have any questions about buying or selling in this crazy market, give me a call!

Currituck County’s PRELIMINARY Updated Flood Maps

The following information is copied with permission from the Outer Banks Association of REALTORS(R) .

Currituck County’s PRELIMINARY updated flood maps have been released. Information pdf on how to access the site. The link will take you to the flood map FRIS page, click on ok and then select the County (Currituck).In the upper right corner you will see “effective”. Go there and select “preliminary”. You will be able to look at the new proposed maps that will hopefully be adopted within the next year.

If you zoom in, you will start to see aerial views. By clicking on the map in a particular area you will get the information on the right side of the screen or you can search by using magnifying glass on menu at top left. Most of our county is seeing a significant change to elevations being lowered and many homes will come out of the flood zones or be classified into a lower zone (VE to AE for an example According to the NC Floodplain Mapping Office, the preliminary maps show that Currituck County has 11.5 square miles of V Zone (89.5% decrease from current maps) and 249.5 square miles of A Zone (24.75% increase):

  • ‪Under current mapping, there are 1,097 buildings in the V Zone; new maps show 126 buildings in the V Zone;
  • ‪Current maps show 7,020 buildings in the A Zone; new maps show 2,767 buildings the A Zone.

There are oceanfront V Zone properties that are coming completely out of the special flood hazard area – being changed to an X Zone!

Please keep in mind that these are only preliminary maps. They will have to undergo a 90-day appeal process, a public meeting process and final FEMA approval. This entire process could take up to 18 months. In the meantime –  good news overall for homeowners in the special flood hazard area!

Best Buys for July 2015

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New Price!! Spend your Lazy Summer Days on Your Sun Deck in Corolla!

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June Market Update

This month let’s take a look at what’s happening in each specific location for a closer, more in depth view understanding.

Corolla

Corolla Stats  
Total # of Homes for Sale 377
Total # Selling per month 17
Months of remaining Inventory 22
# of New listings each month 45

Corolla has a 22 month supply of inventory.  It’s the weakest market on the Outer Banks right now in terms of supply and demand.  Constant price reductions are needed to get homes sold.  When a home comes on the market priced well, it will sell quickly.

Duck

Duck Stats  
Total # of Homes for Sale 154
Total # Selling per month 8
Months of remaining Inventory 19
# of New listings each month 18

One great trend in Duck is that the supply of homes under $300,000 is very diminished.  While the inventory issue is still a problem for Duck, homes will sell very fast when priced for the market.

Southern Shores

Southern Shores Stats  
Total # of Homes for Sale 93
Total # Selling per month 7
Months of remaining Inventory 13
# of New listings each month 20

The Southern Shores market is doing quite well.  It has one of the lowest inventory levels of all the towns.  Land sales are fantastic in Southern Shores right now.

Kitty Hawk

Kitty Hawk Stats  
Total # of Homes for Sale 77
Total # Selling per month 13
Months of remaining Inventory 22
# of New listings each month 19

Kitty Hawk between the highways is a fast seller right now.  Those homes are a fantastic value and buyers are recognizing that.

Kill Devil Hills

Kill Devil Hills Stats  
Total # of Homes for Sale 182
Total # Selling per month 19
Months of remaining Inventory 9.5
# of New listings each month 40

By far the most stable market on the Outer Banks right now is Kill Devil Hills.  Keep in mind the majority of homes selling here are under $300,000.  This area has the best supply and demand situation of all the towns.

Nags Head

Nags Head Stats  
Total # of Homes for Sale 190
Total # Selling per month 14
Months of remaining Inventory 13.5
# of New listings each month 25

Nags Head is holding it’s own right now.  The average price there is $350,000 which makes it super affordable for such a great location.

So as you can see, right now selling a home on the Outer Banks comes solely down to price and condition.  Buyers still have too many choices for prices to change any time soon.  The good news is we have steady activity in the marketplace right now and it doesn’t seem to be slowing down.

If you’d like more information about buying
or selling a home on the Outer Banks, just let me know how I can help you.

Best Buys for April 2015

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Best Buys for March 2015

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