COVID-19 & the OBX Real Estate Market

The real estate market is adapting quite well to the current restrictions and Stay at Home order that is in place for North Carolina. While we are doing some things the same, since our market is largely based on out of town property owners, many things have changed to keep things going smoothly.

Here’s what’s new:
1. Virtual Showings – While my listings always feature high end professional photography, this week I’m also getting them all set up with 3D Virtual Tours. This will give prospective buyers the feeling of actually being in the room. We are doing FaceTime and Zoom showings for buyers as well.

2. Virtual Open House – Our local MLS is implementing a new feature to promote and hold and Open House virtually. The details of this feature are still being released. This is an exciting update to a market like ours. I can see this being a great new tool used on the regular after this event is over. I’ll be setting up a few of these in the next week. Contact me if you’d like to participate.

3. Appraisals – Local lenders have assured me that when it makes sense, underwriters are giving appraisers the green light to perform desktop appraisals. This way, properties with high risk inhabitants don’t have to be exposed, yet we can still make progress on the sale of the home.

4. Lenders – With the IRS unable to process any transcript requests before closing, our local lenders have been authorized to skip that requirement for the time being. It will no longer be needed to receive a clear to close. This is showing great versatility and willingness to keep transactions moving.

5. Virtual Closings – While NC does not currently support virtual notaries, you may be in a state that does. We have been doing out of town closings as long as I’ve been in the business, so that part of it is nothing new. Virtual notaries are approved in 35 states. So if you have a closing coming up and need documents notarized check and see if they can do it online instead.

6. COVID-19 Addendum – NC Realtors did quickly create and distribute a special addendum regarding this pandemic that allows buyers and sellers to have a little more time to close if delays occur related to the shutdowns. It also allows the buyer to cancel if they get laid off and become unable to close due to not obtaining loan approval. Lenders will still be verifying employment 5 days before closing.

7. Some not so welcome news – minimum credit scores have been raised to 640 or 680, depending on lender. This is up from 580 minimum. We are also seeing some lenders no longer locking in Jumbo rates. So we may see Jumbo loan guidelines get an overhaul and be much stricter (anything over $510,400), and some no longer doing these loans at all for a while.

Overall, it’s all about adapting. Which we are doing. If you are thinking about buying or selling, we can still make that happen for you.

In fact, of the 112 properties that have gone under contract in the last 30 days, more than 50% of them were also just listed in the same 30 days. Some will be more comfortable moving forward at this time, and some won’t. Either way, please let me know how I can help.

Vendor List

It’s that time of year again!  Time to start planning those spring cleans and updates to get the house ready for the season.  Below is a list of vendors I can personally verify to do a good job, show up and charge a reasonable fee. Be sure to give them my name!!!

If you need a vendor not listed below, let me know!

Small Construction & Repair:

Daniel A. Lee
252-599-3904

Landscaping:

Chase Patterson
Albemarle Landscapes
252-256-1883
[email protected]

Jason Woodard
Green Gator Lawn Care
252-204-1537
[email protected]

Carpet Care/Upholstery Cleaning:

Steve Howard
Howards Flooring & Upholstery
252-305-2293

Painting:

John Lifsey 
Kitty Hawk Painting
252-261-1146 office, 252-207-3366 cell

Roofing:

Marion Gee
252-267-5110

Redecorating/Organizing/Staging:

Amy Hilliker Klebitz
Certified Interior Design
910-297-8566
[email protected]
www.amyklebitz.com

Shearl Bell
252-202-3200

Mortgage/Refinance:

Drew Wright
Citizens One
252-256-2018                                                                                                                [email protected]

Kelly Bergenstock
252-619-9037
Shane Cook
Guaranteed Rate
252-207-2665

February 2020 OBX Market Update

For 2020, it looks like good news for the OBX market finally!  Some spots are really on fire right now.  My prediction is we should see some pretty steady growth in the area for the next 3 to more likely 5 years.  This is right in line with the 20 year cycle I’ve mentioned before.  If you remember 2000, we had the big building boom, we started seeing inventory levels drop and noticed a feeling of something big happening.

This is the same feeling we have right now.  Inventory levels are low, interest rates are super low and activity is on the rise.  Here are the specifics:

  • January residential sales were up 22% over January 2019
  • January 2020 had the highest January sales numbers since 2005
  • Under contract numbers for January are up 18% from Jan 2019 and are even up 17% just compared to December 2019
  • Residential inventory is down 11%

Let’s now look at how each area is performing:

Corolla

306 Active Listings      36 Under Contract      10.5% of inventory selling

Duck

68 Active Listings        21 Under Contract      24% of inventory selling

Southern Shores

47 Active Listings           9 Under Contract      17% of inventory selling

Kitty Hawk

35 Active Listings        18 Under Contract      35% of inventory selling

Kill Devil Hills

101 Active Listings      44 Under Contract      31% of inventory selling

Nags Head

121 Active Listings      44 Under Contract      27% of inventory selling

While Corolla is still behind the curve, I do feel like this may be the last year it’s struggling.  It’s about time for a turn around.

If you are thinking of selling now, or in the next year or two, please give me a call so we can discuss what needs to be done to get your home ready for the market.  Buyers needs have changed quite a bit.  To ensure a fast sale for the most money, you’ll need to put your home through my proven checklist of readiness.

2019 OBX Market Report

Being a Listing Specialist requires a certain level of understanding of the local market statistics. Taking an in depth look at the trends causing homes to sell is critical to knowing the big picture.

In the chart presented below, I’ve broken down the relationship between the following:

  • The number of days a home took to sell – which means receive a ratified contract
  • The percentage of final sales price to the original listing price
  • The percentage of final sales price to the listing price at the time of sale

Each of these figures on its own tells a lot, and when combined into a complete picture, tells us many more things. Here are the basic takeaways from this particular data:

  • Out of 2,142 total sales, 32% sold in 30 days or less
  • The homes selling in the fastest amount of time receive the highest percentage of asking price as the final selling price – 97%
  • Properties sold in 31 to 60 days make up 15% of all sold
  • Yet, it seems even these quick sales a small adjustment in price was needed
  • 47% of all properties sold last year did so in 60 days or less

With nearly half of all sales taking place in 2 months time, it presents a clear picture that buyers are ready and willing to take action when they find the right property. Selling at 97% and 95 of asking price, this tells us that price is the main attraction to their fast action. They see value and move quickly.

What does overpricing your home actually cost? Notice the bottom 20% of properties sold, took 6 months to over 1 year to sell.

  • Final sales price was 12% to 17% lower than the original asking price
  • Continue paying monthly for a home they no longer want to own
  • Any repair issues that may have popped up
  • Additional repairs requested from buyer during the sale from inspections
  • Missed opportunity cost from waiting it out

Overall what we can take away from this kind of detailed analysis is, pricing your home to fit the current market conditions will actually net you more in the end. This is why as a highly skilled agent, I’ve learned to always ask you the question – Is it more important to get your price, or to get the home sold?

I’ve studied the data and know, you’ll net more by approaching the market with a value-based price than by “leaving room to negotiate.” That is an outdated strategy that just doesn’t work anymore.

December 2019 OBX Market Report

This month I want to take some time out to go over from a linear perspective, why the Outer Banks market is still experiencing some challenges.  Below you’ll find a snapshot review from 2005 in three year increments to show how things have transitioned during this particular market cycle.

Year                Units sold      Average Price sold

2005                   2104               $555,973

2008                   1045               $427,718

2011                     1333               $370,569

2014                     1611               $370,351

2017                     1995               $385,774

2019                     1959               $401,186

Here’s what this tells us:

  • 2005 was considered the peak
  • 2008 was the beginning of the decline, starting with a 50% drop in units sold
  • 2011 – 2014 was the lowest point for price, showing a 32% drop for the overall OBX market (some areas it was a higher percentage)
  • Units sold has made an incredible rebound from the peak in 2005 with only a 7% difference in the number of homes sold from then to 2019
  • Average price has only recovered by 5% since 2011
  • Average price is still 28% less than the peak in 2005
  • In 8 years, the pricing has changed by only 5% for the entire market

You can see here that while we are selling almost as many homes as before, the appreciation has been extremely slow.  Thus, expecting the price of your home to change drastically in a short period of time on the Outer Banks has proven to be non-existent.

This can also explain why if you purchased a home on the Outer Banks between 2009 and 2017, there may not be much, if any change to the market value of your home.  This is more amplified on the Northern Beaches (Corolla, Duck, 4 Wheel Area) as those pockets of our market are still experiencing an excess of 14 months of inventory.

Without strategic timing, real estate still remains a long-term investment for maximum return.  If you have been thinking about selling your home, consider the following:  If this cycle mimics the last century of recorded history, we are right about year 11 of a 20 year cycle.  Based on that, we should start to see prices really making changes around 2023 – 2025.

Keep in mind though, buyers’ demands have changed.  They no longer want to put in sweat equity, they want homes move-in ready with updates already done.  If you want to wait out the market for the next up cycle, now is the time to start planning any maintenance and upgrades to make your home more valuable and saleable.  If you would like a list of where to best spend your remodeling dollars, send me an email and I will get that to you.  Construction costs have changed drastically since I first began my career in 1997.  Most projects have nearly doubled in cost.  It is prudent to get a trained professional to give you some guidance on how to get the most out of your home projects.

Mid-Year OBX Market Update

Here are the mid-year fun facts about the Outer Banks market:
– Inventory is up 12% – this is a little alarming since it was only up 7% last month
– Residential Sales are up 4% – this could be due to the smokin’ hot interest rates!!
– Distressed sales continue to decline, making nearly zero impact to the market
– There have been 75 new building permits issued so far in Dare County
– In 2018 there were a total of 131 for the year

Town specific notes of interest
– Corolla total number of sales YTD is pretty flat, up only 2%
– Duck total number of sales YTD is up 30%!!!
– Southern Shores is also flat at a rise of only 2%
– Kitty Hawk is similar at a rise of 3%
– Kill Devil Hills is going the opposite direction and is down 4%
– Nags Head is also an anomaly being down 19% in total number of sales YTD

While it looked to be a flat year through June, the sudden increase in properties under contract
looks to make for an interesting fall. Across the board rents seem to be down and traffic
doesn’t feel as thick this year. It’s not uncommon to see sales go up in a down rental year. I’ve
been selling since 1997 and I’ve seen this trend happen every 5 to 7 years.

A lot of people think it’s due to Air BnB or VRBO. I personally think it’s just one of those years
that people are taking more expensive, overseas trips. Doing something a little different this
year.

March 2019 OBX Market Report

Let’s take a quick look at the highlights of the market activity so far this year.

  • First Quarter residential sales are up by 4% from last year
  • Actual March sales are down from last March by 9%
  • Under contract homes are up 9% from last March
  • Inventory is on the rise. Up 9% from last March and the highest number of homes for
    sale since June 2017
  • Land sales are down 33% and average price went from $100,000 down 50% to $50,000
  • Distressed sales continue to fall with only 18 active listings in the entire area
  • New building permits last year total were 49, we are already at 33 for this calendar year
  • Overall rental companies are reporting a decline in the number of homes booked this
    year over last year

Summary: We had a slow start to the year for rentals because of the government shutdown.
Most of our visitors come from the VA/MD/DC area and with no income in January, fewer
vacations were booked. It does seem to be picking up some.

As predicted earlier this year, I am not surprised to see this activity report. We have solid
activity, but are not expecting a banner year, which is normal after coming off a few hot and heavy
years of activity. Nothing to worry about long term, just keep watching.If you feel like this might be the year to sell, but just aren’t sure, click here to read “What to do if you don’t HAVE to sell your home.”

January 2019 OBX Market Report

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.

December 2018 Outer Banks Market Snapshot

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!

November 2018 Outer Banks Market Snapshot

What’s interesting about this time of year, is that we can really see the major trends going on in
the marketplace for the calendar year. I’m highlighting 3 specific points for this analysis.

Inventory
Inventory levels on the Outer Banks, specifically northern beaches, have been particularly
challenging for our market. The fact is, in Duck and Corolla, there are little to no primary sales
taking place. That is, no one is physically moving into or out of that area. Those kinds of sales
are crucial to market health because those people “HAVE” to buy and sell. The truth is, 100% of
the sales that take place in those areas are discretionary.

Nearly every seller we meet says the same thing…”We don’t have to sell.” Which is very true.
You don’t have to sell because you’re not making a physical move, nor are you in financial
distress. It’s important to recognize that 99.9% of sellers we work with, don’t HAVE to sell.
There’s a common misconception that pricing your home to sell in today’s market is the same
as discounting it to force it to sell. That’s simply not true. Today’s market in Duck and Corolla
simply has an oversupply of inventory and an under-supply of buyers. That’s the bottom line.
It’s a resort market where all sales are discretionary. Period. I encourage you to ask the
following question. Just because I don’t have to sell, does that mean keeping the home is in
the best financial interests of myself/family/long term plan? That’s what it really boils down
to. I know it’s difficult to swallow the prices today’s market requires, but consider the whole
picture before making a final decision.

The price in these kinds of markets are 100% dependent on the principle of supply and demand, because buyers don’t HAVE to buy until they find the home that ticks all the boxes for them.
Consider this in Corolla:
– Corolla has 294 homes currently for sale.
– 189 homes have sold so far this year; that’s 19 sales a month
– 19 buyers will buy each month and they have 294 to choose from
– 26 Oceanfront homes sold this year in Corolla
– That’s 2.6 buyers a month
– There are currently 53 oceanfront homes for sale in Corolla

Consider this in Duck:
– Duck has 128 homes currently for sale
– 104 homes have sold so far this year; that’s 10 sales a month
– 10 buyers will buy each month and they have 128 to choose from
– From $400,000 to $800,000 there are 52 homes currently for sale
– 47 have sold this year in that range; 4.7 buyers a month
– 4.7 buyers will buy each month and they have 52 to choose from

This is why inventory is the biggest indicator of value in the market right now. We have seen
major improvement in inventory levels over the last few years. This year, we are seeing that
inventory move back up, even just slightly. What does this mean? It means that appreciation is
not happening any time soon, and, that depreciation is still a very real possibility. I don’t report
this to be negative, just to be realistic. Waiting out the market is not a short term endeavor.
Bottom line…inventory is the single biggest challenge in the northern Outer Banks market.
Until that changes, your price won’t either.

Days on Market
The shining point of our market has been the amount of time it takes to get a home that is
priced right, sold. Priced right mostly means priced for its condition. Condition has become the
single greatest factor in a buyer’s decision. They will bypass location for an updated home
almost every time. For more information on the impacts of condition, click here.

The days on market number has gone DOWN again this year by another 20%. This is the third
year in a row this number has dropped by 20% or more.
What does this mean?
– Buyers are watching and waiting for the best value. They study the market for 18
months or more before making a decision to buy. When they see a home that is a good
value, they act quickly and with near full price.
– If your home is on the market for more than 118 days, buyers don’t consider it to be a
good value.

The real estate market is fluid. Pricing your home on one day based on the competition is only
as good as that competition stays the same. As homes sell and adjust their price, you have to
flow with it. In this kind of market, you can either lead with an aggressive price and sell, or,
follow the price others set for you as they sell. Why leave your pricing up to someone else’s
motivation?

Total Sales
Not only did the number of homes going under contract drop by 19% for October, the total
number of sales year over year is down by 10%. Blame the hurricane, the election, whatever
you like. It doesn’t change the facts.

Here’s the deal…interest rates are up, inventory is slightly up, sales are down by double digits.
I’m not telling you this to create panic. My job is to sell homes regardless of the market
conditions, which I have done for over 22 years. My job is also to keep you informed on the
trends, as they are happening. We don’t have a crystal ball, so statistics are the next best thing.