The final numbers are in and as predicted, sales on the Outer Banks went a little flat. I wasn’t
expecting the rise in inventory to come along with it.

Reprinted with permission from OBAR is the following Director’s Report:
MLS Director Report – 2018 was a good year; however, they are some trends that bear
watching. Sales are flat (less than a 1% change) while listings in an Under Contract
status have declined sharply (9%). Inventory, on the other hand, is up (5%). Median
sale price, depending on area, is also flat.

Also worth noting is that specifically Residential Inventory (not including commercial properties
or vacant land) was actually up by 6% for the year.

If you didn’t read last month’s article, you can read it here. It’s a reminder that these real estate
cycles typically take 20 years to complete, at least according to 100 years of recorded history.
Since the cycle started in 2008/2009, we are only half way through. Holding on to a home in
this market, expecting it to improve in 12 to 24 months is probably not realistic. Looking for
change in 7 to 10 years is much more realistic.

If you are considering a long term investment here, prices are still low and rents are doing very
well! Interest rates are still around 5% and very reasonable. The outlook for 10 to 15 year
investors is strong.

As far as what we can expect for 2019? I would say more of the same. With rising insurance
costs, rising interest rates, stock market fluctuations, we will likely see the same amount of
activity for this year. Let’s just hope the inventory stays where it is.

If you’d like to see what the market value of your home is, contact me for a free evaluation.

The big story for the Outer Banks Market as we inch closer to the end of the year is the decline in the number of homes selling, and the slight rise in inventory.  Here’s what we have:

• Year over year November sales are down 25%
• Annual sales are down 5%
• Year over year November under contract is down 12%
• Inventory is up by 5%
• Sales in Corolla are down 12% overall this year

This is a dangerous combination.  With sales going down and inventory rising, it could certainly lead to another pricing correction for the market overall.

I get a lot of people asking why the Outer Banks market, specifically Duck and Corolla, has not recovered.  The primary reason is inventory.  Prices simply cannot rise when the market is carrying nearly 2 years of inventory.

I also want to offer a quick reminder of what typically happens in these cycles.  When we look at recorded history, it shows that these kinds of market cycles take 20 years from start to finish.  If we consider the main effects of the 2005 market crash started here in 2008.  That puts us only half way through.  There is nothing abnormal about this when nearly 100 years of history shows the same time frame through each experience.

I’ll tell you a quick story.  In 1988, a client bought a home in Sanderling for $345,000.  This was the top of the market for that time.  There had been a correction in 1986, yet didn’t affect the Outer Banks until 1988.  Shortly after his purchase, the market sharply corrected.  Ten years later, in 1998, I sold his home for the exact same price he paid.  Minus his selling expenses and various repairs, he did not come out ahead.  Fast forward to 2004, and that same home was offered nearly $600,000.  That’s how quickly things changed.

The point is, we are only half way through this cycle.  We are not experiencing the comeback of prices just yet.  It will happen again, as it always does, but it’s not likely to take place in less than 5 to 7 years from now.  That’s just how long these cycles take, and this one is particularly challenging due to the continued high inventory levels.

If you are thinking of selling, either have patience for another decade to pass, or go ahead and sell it now for what the market will allow.  Just remember, in another 10 years the home will be that much older and that much more maintenance required.

Nearly every day I speak to a seller who says, “We don’t HAVE to sell it.”  And yes, that’s true.  99% of the clients I work with are not in financial distress and truly don’t HAVE to sell it.  I encourage you to also ask this next question.  Just because you don’t HAVE to sell it, doesn’t mean that IT ISN’T the best financial move for you.  Really consider the big picture of keeping the home another 10 years, versus the disappointment of the price the market mandates at this time.  In the end, if you don’t HAVE to sell and don’t want to participate in today’s pricing, the truly best thing you can do is take the home OFF the market, which will help inventory levels go down.  That will help everyone in the long term.

As always, if I can be of further assistance to you, please reach out!

Figures show that residential home sales for the Outer Banks are down 17% for February.  There were only 83 home sales, making that the weakest month of sales since November 2011.  So today I want to address the proverbial “elephant in the room” and what I consider the primary reason for the drop in sales.

First factor I addressed last month.  We were expecting this year to be flat, no substantial growth.  This is because markets are cyclical and historically speaking we have a flat year every 3 to 4 years.  This year just happens to be the time for it.

The second contributing factor continues to be the inventory level.  While we are moving in the right direction regarding inventory, we still have more homes for sale than buyers.

The interesting conundrum we experience, here on the Outer Banks, is the discretionary nature of buying and selling.  Most sellers I talk to say they don’t HAVE to sell.  It makes sense, as they aren’t physically moving OUT of the home.  Similarly, buyers are not physically moving INTO the home so, they too, don’t HAVE to buy and they are willing to wait for the right house.  There is no push for buyers to make a decision on a home that is not “turn key”.

So, what exactly does “turn-key” mean to a buyer?

• Zero to minimal maintenance work required. This means the main systems of the home are in good repair and working order – ie.  the roof, windows, doors, siding, decking, paint, HVAC etc.
• Upgraded, clean interior with the latest finishings (flooring, appliances, furniture etc.)
• Well equipped for rental/summer season. This means well furnished, stocked and equipped for use by guests and owner with the best possible amenities.

Why do buyers want a home that is turn key?

• They don’t want to manage a maintenance or renovation project from afar
• Many don’t have the willingness to do any remodeling and upgrading
• There are a lot of other choices available (remember the inventory) that are turn key
• They want to be more than compensated for the “what if” scenarios that come up if handling maintenance issues
• Financing is more challenging making it difficult to get the funding for repairs and/or upgrades
• Cash after a large down payment to purchase is not as readily available
• Probably the biggest reason is buyers are starting an exciting and new adventure with a beach house – they don’t want to feel they are starting out, already behind (ie. Having to do work to something they just paid a lot of money for)!

Why aren’t more Outer Banks homes turn key?  There are a lot of homes on the Outer Banks that have deferred maintenance and/or are outdated and this can be for a wide range of reasons.

• Since this isn’t the primary home, owners aren’t seeing it every day and often aren’t aware of what needs to be done
• No one else is telling them about things that need to be addressed
• Most homes are owned for several decades and owners get to an age where it’s more difficult to do the work themselves
• Finding and managing good contractors from a distance is a challenge, especially as owners age
• Sellers have disengaged from the property – this happens for many, many reasons.

How can we best leverage this information? The key is understanding what makes a home more ATTRACTIVE versus more VALUABLE to a buyer.  This is where we see the connection between wants versus needs.

Basically, if the NEEDS of the house are updated and in good working order (aka, not original to an older home) the home is more ATTRACTIVE and will sell faster.

• Needs are the things the house is already supposed to have – think the mechanical systems, building envelope, main components of what makes it a house
• Buyers are already paying for these things and will not likely pay more for something the home is supposed to have in good working order. This is related to the maintenance work I mentioned above.
• When you have these items in good shape this makes the home more ATTRACTIVE to a buyer, not necessarily more valuable.

The WANTS of the buyer in a house are the flashy upgrades a buyer is willing to pay more for.  Doing upgrades that make sense can potentially make the home more VALUABLE and help it sell faster.

• Wants are the latest, greatest finishings and materials – think, granite counters in kitchen and bath, tile showers, hardwood or laminate flooring, composite/synthetic decking, fashionable décor
• Upgrading doesn’t always make sense! It’s important to check with a professional agent for where best to spend money before selling.  Depending on the home, sometimes the money is better spent in adjusting the price over investing more into the home.

Bottom line…as I look through the list of homes sold this year, there is a common theme.  The majority of the homes that sold quickly and for the best pricing share some of the same words in the description:

• New in 2017/2018
• Updated recently
• Completely remodeled
• Upgrades galore!

Although this is the common theme, that doesn’t mean your home won’t sell without dumping a ton of money into it.  As I said before, it does not make sense to upgrade and update in every situation.  What I think it does identify is the need for proper pricing based on the condition of your home in relationship to the expectations of the buyers looking in today’s market.  These buying trends are not likely to go away, so if you’ve been thinking about selling, call a professional for advice on what, if anything, you can do before listing.  And keep in mind condition is a major factor in today’s market.  I hope this information has been helpful.  If I can answer any questions for you please reach out.