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The 2014 Outer Banks Fall Market Forecast
September 4, 2014 By Ilona
There are 5 separate aspects to this market analysis/forecast.
- Land Sales Data
- Home Sales Data
- Rental Report
- Home Starts Data
- Finance Market Data
The purpose of this report is to provide an accurate accounting of what is currently happening in our local market and based on factual statistics, what is most likely to happen for the remainder of the 2014 calendar year. While we don’t have a crystal ball with markets, we do have trends. Those trends can give a fair gauge of what decisions need to be made and when. Let’s get started!
*The data below analyzes the difference between January 1, 2013 to August 1, 2013 and the same time frame for 2014.
Part 1 – Land Sales Data
Corolla
2013 2014
Total Sold – 69 22 (68% drop)
Avg Days on Mkt – 273 266
Avg List Price – $300,000 $258,000 (14% drop)
Avg Sold Price – $272,000 $250,000 (8% drop)
Currently Available – 84 (28 month supply)
Average Price – $223,000
Duck
2013 2014
Total Sold – 4 4
Avg Days on Mkt – 267 1010
Avg List Price – $370,000 $349,000 (6% drop)
Avg Sold Price – $320,000 $311,000 (3% drop)
Currently Available – 27 (47 month supply)
Average Price $296,000
Southern Shores
2013 2014
Total Sold – 10 21 (52% increase)
Avg Days on Mkt – 454 384
Avg List Price – $185,000 $249,000 (26% increase)
Avg Sold Price – $171,000 $193,000 (11% increase)
Currently Available – 31 (10 month supply)
Average Price $181,000
Southern Beaches (KH, KDH, NH)
2013 2014
Total Sold – 50 49
Avg Days on Mkt – 266 304
Avg List Price – $130,000 $161,000 (19% increase)
Avg Sold Price – $113,000 $143,000 (21% increase)
Currently Available – 147 (21 month supply)
Average Price $290,000 (This includes 7 oceanfront lots for sale over $1,000,000)
Final Analysis
- Land is a better value in Corolla
- Southern Shores has the lowest supply of inventory relative to the number of buyers
- Duck is the most expensive location with the most supply available
- Unless your price is super aggressive, you can expect it to take almost a year to sell a vacant lot
Top Prediction – Land sales will continue to stay low due to the greater availability of larger homes at lower prices (higher end properties cannot be rebuilt new for the same price as an existing home at today’s lower prices).
Part 2 – Homes Sales Data
Corolla
2013 2014
Total Sold – 107 91 (15% drop)
Avg Days on Mkt – 261 254
Avg List Price – $672,000 $741,000 (9% increase)
Avg Sold Price – $627,000 $698,000 (10% increase)
List to Sale % – 93% 94%
Currently Available – 360 (28 month supply)
Average Price – $750,000
Breakdown of Sold by Price
Under $350,000 18 (17%) 14 (15%)
$351,000 – $500 42 (39%) 29 (32%)
$501,000 – $700 21 (20%) 21 (23%)
$700,000 – $1M 13 (12%) 14 (15%)
$1M – up 13 (12%) 13 (15%)
While it may look like the prices in Corolla are going up, looking at the break down of price you can see that fewer homes sold in the under $350,000 range as well as 30% of homes sold were over $700,000 in 2014. That was only 24% in 2013. So more of the higher end homes are selling.
Duck
2013 2014
Total Sold – 60 59
Avg Days on Mkt – 247 288
Avg List Price – $723,000 $674,000 (7% drop)
Avg Sold Price – $665,000 $628,000 (6% drop)
List to Sale % – 92% 93%
Currently Available – 150 (19 month supply)
Average Price – $706,000
Breakdown of Sold by Price
Under $350,000 12 (20%) 19 (32%)
$351,000 – $500 17 (28%) 8 (14%)
$501,000 – $700 15 (25%) 11 (19%)
$700,000 – $1M 9 (15%) 16 (27%)
$1M – up 7 (12%) 5 (8%)
While it may look like the prices in Duck are going down, looking at the break down of price you can see that while more homes sold in the under $350,000 range, 3 of them in 2013 were co-ownership (avg price $30,000) and in 2014 there have been 7 co-ownership sales thus far. This is creating a small skew in the numbers. There was a noticeable jump in sales of the $700,000 to $1M price range.
Southern Shores
2013 2014
Total Sold – 42 59 (29% increase)
Avg Days on Mkt – 210 194
Avg List Price – $577,000 $555,000 (4% drop)
Avg Sold Price – $545,000 $520,000 (5% drop)
List to Sale % – 94% 94%
Currently Available – 96 (12 month supply)
Average Price – $599,000
Breakdown of Sold by Price
Under $350,000 12 (29%) 14 (24%)
$351,000 – $500 14 (32%) 24 (41%)
$501,000 – $700 5 (12%) 12 (20%)
$700,000 – $1M 7 (17%) 6 (10%)
$1M – up 4 (10%) 3 (5%)
The best news for Southern Shores is that activity has taken a sharp turn upward. Notice the months of supply is a year or less and the average price is under $600,000. This time last year, $599,000 was only 12% of the price range selling there. Today it’s 20%. This is a location to watch!
Southern Beaches
2013 2014
Total Sold – 322 289 (10% drop)
Avg Days on Mkt – 211 184
Avg List Price – $322,000 $363,000 (11% increase)
Avg Sold Price – $302,000 $348,000 (13% increase)
List to Sale% – 94% 96%
Currently Available – 538 (13 month supply)
Average Price – $451,000
Breakdown of Sold by Price
Under $350,000 241 (75%) 208 (72%)
$351,000 – $500 51 (16%) 31 (11%)
$501,000 – $700 16 (5%) 26 (9%)
$700,000 – $1M 7 (2%) 15 (5%)
$1M – up 7 (2%) 9 (3%)
Same story in the Southern Beaches. Fewer homes selling under $350,000 and more expensive homes selling.
Final Analysis –
- Good news for those higher end sellers. While your price may still be lower than you want, we have more buyers willing to spend in that price range.
- All areas have at least a year of inventory going up to as much as over 2 years.
- Corolla still seems to be the market with the biggest struggles
- You can expect to sell within 93% to 97% of your asking price, ONCE THE HOME IS PRICED CORRECTLY
- Average days on market is on average over 200 days which indicates the home goes through multiple price reductions before selling
- The best strategy is to price the home aggressively from the start to avoid further losses
Top prediction – inventory levels being so high will continue to stifle prices. There is still another 3 to 5 years minimum before a rise in prices of any substance can be expected.
Part 3 – Rental Report
The following data comes from a consensus of interviews with multiple property management firms. I have no hard data to support this information. It’s based on several interviews conducted.
- More weeks are 100% sold out this year than last
- More guests are booking “pre-reservations” for the same home next year upon their departure
- More guests are waiting until the last minute to book reservations in order to obtain a lower rental rate
- There is a higher percentage of weeks booked at a discounted rate than in years prior
- More damage reports are being filed
- More complaints and overall “difficult people” were mentioned
Top Prediction – As the population of sites like hotels.com, priceline.com, etc. grows, the trend of seeing more last minute bookings and requests for a discount will rise as well. Be prepared with your property manager to do an advertised rate and a secondary, discount rate in advance so you don’t loose a booking while the agency is trying to track you down for a decision.
Part 4 – Home Starts Data
This data is for Dare County only.
2013 January to May
68 new starts
$17,900,000 volume
$263,000 average price
2014 January to May
78 new starts
$22,800,000 volume
$292,000 average price
It seems that the spike in sales of vacant lots in 2013 is parallel to the spike in new home starts for the first part of this year. With lot sales being down drastically in 2014 it will be interesting to see the impact on new home starts for the remainder of this year.
Top Prediction – A number of spec homes were sold in the last 6 months in Kill Devil Hills Westside. I think we will see more specs built in the lower end price range (under $350,000) as long as builders can continue to buy land under $100,000. With fewer homes for sale under $350,000, this could be a real winner for investors.
Part 5 – Financial Market Data
The following report is from a local lender, Drew Wright with OnQ Financial. He can be reached at [email protected] or 252-562.0194. He is happy to provide info on prequalification to buy or refinancing an existing loan.
Here on the Outer Banks we defy the rest of the country that typically see sales grow through the spring and into the summer. As is typical, our market slows down in the peak tourist visiting summer season. The reason is pretty simple- it is hard to show a house full of guests who want a week of uninterrupted vacation. Most rental companies and sellers are adamant about not showing a home that is occupied by guests.
I am optimistic about what we see for our upcoming fall buying season and the biggest time for new construction. Inquiries and prequalification for both purchases and new construction are steady and higher than a year ago. So what can we expect for rates over the next three to four months taking us into 2015?
First, just one year ago before the Federal Reserve announced they would begin scaling back mortgage backed bond purchases, rates were well below 4%. Closer to 3.50% to 3.75% for 30 year fixed rates. Rates quickly rose to about 4.50% and have pretty much quietly stayed in this range, until recently as they trended lower- closer to 4.25%.
Most of the experts thought rates would continue to rise for all of 2014 and by most accounts should be higher than 4.50%. By all accounts rates probably should be headed higher but there are many head winds to rising rates. Yes, the economy disappointed for the first few months but other factors outside of the Federal Reserve control also contributed. Other parts of the world even those with growing economies are scared to death of deflation and as a result are exporting their deflation to us, therefore keeping inflation as measured by the Federal Reserve in check.
While I do believe the world economy is not as well off as ours, I do think our growth in the second half looks to be impressive with job creation above 200,000 for the next few months. Also, unemployment claims just last week were below 300,000 for the first time in several years. This will lead to higher rates by the Federal Reserve in 2015. Credit markets that determine interest rates will not sit idly by waiting for the Federal Reserve to act the and as a result we could be seeing the last rally in rates before they turn upwards closer to 4.50% in the next few months and closer to 5.00% in 2015.
If you read Fortune Magazine (and the editor’s opinion) Andy Sewer thinks we are in a sweet spot of low inflation and increasing unemployment that will translate into a stronger US economy. He is a fan of the current administration, so personally I think he has an agenda, but his case of a growing economy is not totally unrealistic. Yes if you read the other popular financial magazine, Forbes, things do not looks so rosy. I sit more in their camp and somewhere in the middle they are both right, which means a better growing economy. I do think we will hit better employment numbers and to most this means a rising Feds Fund Rate.
Rates if they do rise, and I think they will, generally rise very gradually. We may have a week of headline news of impending higher rates but it is just to gain attention mostly. Rising rates will make Adjustable Rate options more attractive. Right now the spread between 30 year fixed and ARM rates make the fixed rates for most buyers the better choice. If you are borrowing 750k or more the long term ARM’s are a better play but again you have to be in that loan amount category for me to really suggest it is the better option.
Top Prediction – Rates will eventually go up. This year is a pretty safe bet. In order to offset just a 1% rise in rates a buyer has to spend MORE than 10% less just to keep the same principal and interest monthly payment.
Example:
$500,000 Loan – 4% interest – 30 years = $2387 payment
$450,000 Loan – 5% interest – 30 years = $2,415 payment
Final Analysis
- The fall market usually results in an 18% rise in inventory and similarly a 20% rise in buyer sales. (versus spring, which is much higher for both)
- Threat of interest rate hikes will likely cause some buyers to get off the fence and buy this fall
- Multiple offers on the best priced homes will rise
- Short sale and foreclosure home inventory will continue to drop
- Prices will stay the same or slightly drop (less than 5%) due to inventory levels for most areas of the Outer Banks
- Price reductions will continue to be the main tool used to get most homes sold, keeping the average days on market high
- To beat the curve, price your home 5% to 10% below market value to entice multiple offers (driving up the price) and to sell quickly, avoiding the price reduction method of selling as well as further out of pocket costs
- Rental income will continue to be strong and will support roughly 75% of the expenses of owning (for most homes)
My goal is to always provide unbiased information to every prospective buyer and seller. I want you to have the FULL PICTURE of the market today so that the best decision for you and your family can be made. I hope you got a lot out of this report. I know I learned a lot in putting it together.
If you have questions about buying or selling on the Outer Banks, I hope you’ll contact me to assist you in that endeavor.
You can’t go wrong with this 4th row deal!
July 29, 2014 By Ilona
936 Whalehead Drive
Corolla, NC
MLS# 84585
What a house! This home has it all. HUGE game room on the ground floor with wet bar and refrigerator. Nice sitting area, 2 bedrooms and full bath on the ground floor. Large outdoor pool with all day sun. The second floor has 4 more bedrooms and a tv room. Top floor master bedroom with very large and OPEN living room with dining area, countertop bar and full kitchen. Enjoy a screened porch on the back of the home and volleyball area. Wide open sun decks with lots of seating and very nice ocean view. Solid rental history. A lot of house for the money. You can’t go wrong with this 4th row deal!
Contact me for more details
July Update for the Outer Banks
July 25, 2014 By Ilona
We are half way through the season and the traffic is an unkind reminder. Saturdays have been a bear for sure. The weather has been quite pleasant for the most part. With the exception of good old Arthur swinging through over the 4th! The beaches north of Oregon Inlet were spared from any major damage. Not even an evacuation! That was odd for sure.
There are a few noteworthy topics this month.
Mid-Currituck Bridge – After months and months of silence on this topic there’s been a few rumblings. Not good news at all, even though two local Reps are staying positive, it’s an unlikely project to be revived any time soon.
You be the judge – Article 1 and Article 2:
Insurance for NC – Unless you act today, thousands of NC property owners could continue to face sharp increases in their insurance rates, as much as 35% for barrier islands and 25% statewide. The North Carolina General Assembly is considering a bill right now that would protect them. It would create transparency, accuracy, and fairness in the insurance rate-setting process. The House passed the bill unanimously, and now it’s time for the Senate to take action. Please contact NC State Senator immediately and request a vote on HB 519, Property Insurance Rate-Making Reform.
Click here for more info.
Market Update – Not much has changed since last month. Activity is strong, while prices continue to be affected by the large inventory numbers. Average days on the market is still over 200 days for most areas. The month’s supply of inventory for most locations is at least 12 months with Duck showing 18 and Corolla at a whopping 30 months. What does this mean? It means we are still recovering. This is not a short term process.
I’m putting together a special email with a full Fall Forecast for the Outer Banks Market. If you want to receive the Fall Forecast, email me at [email protected] with the words “Fall Forecast”.
June Outer Banks Market Update
June 27, 2014 By Ilona
Activity has definitely improved in the 2nd quarter over the poor performance of the 1st quarter.
Here are the main highlights:
- While it seems that the median sales price is rising, a closer look into the numbers reveals that instead there are simply fewer homes available in the under $300,000 range. With more homes selling in the half million range, it’s pushing the average sale price up. However, that’s NOT the same as prices are rising.
- There is still over 20 months of inventory on the market for our local area. A normal market is 4 to 6 months. We have 3248 properties for sale. Typically in a normal market we carry an inventory of about 1500. With double the inventory we normally have, you can see appreciation for our market is just not feasible at this time.
- Distressed sales have become such a small portion of our market, they are almost inconsequential. The real strain on prices is over supply of inventory with unmotivated sellers. Keep in mind, we CAN sell your home…you just have to be willing to accept the current market conditions. If you’re not serious about actually selling, taking your property off the market is the most beneficial thing you can do for everyone.
- Activity for May was way up from April, however year to date our number of sales is still down 5% for total units sold. Again, we suspect we will make this up over the summer and have a busier than normal summer selling season. There’s no financial gain to wait until the fall to list your home.
If you’d like more information on buying or selling, simply click through to send your inquiry.
May Outer Banks Market Report
May 21, 2014 By Ilona
Overall, April was strong with monthly unit sales up 24% over March sales. However, overall unit sales are still down by 12% for 2014. To break it down even further, Residential unit sales are down by 7% and land sales are down by 30%.
Some good news is the number of listings placed in an Under Contract status continues to climb in 2014 yet are not at the levels we experienced in 2013 – down 26% from 2012.
Distressed unit property sales continue to crawl upwards for 2014 but they are down by 44% from 2013. Additionally, the average sales price for a potential short sale is down 13% but for bank owned properties the average sale price is up 25%. Distressed property sales have been on a steady decline. Still, distressed sales only make up 6% of all sales.
Foreclosures – For many months it has been reported that the number of Dare County foreclosures has been declining. In April, the number of foreclosures took a dramatic turn – up by 133% over March. It will be important to continue to monitor the foreclosure filings to determine if this is a trend.
In summary, the activity has increased, but is still slower than last year. Prices remain steady in most markets, reporting a slight increase for year to date so far. Does that mean prices are going up? Sadly, no…it’s nearly impossible with the amount of inventory on the market right now. It does mean, however, we are selling MORE high end homes which is fantastic news all around! It also means the majority of homes for sale under the $300,000 mark is greatly diminishing. That’s great news for those looking at signs of recovery.
Do you still need a LIVE real estate agent?
May 21, 2014 By Ilona
As the article I read recently proclaims, America’s favorite springtime sport does not involve a stadium, peanuts or cracker jacks. It is browsing the real-estate market.
Zillow is a great tool if you’re a novice to the market and just want to look around an area, city, or use a zip code to look at property. However from my recent experiences with several clients there is nothing that beats a good agent.
Buying a house is really hard work these days. Between flood insurance issues, the never ending and increasingly more difficult lending process, navigating the 11 plus addenda page legal contract, and the home inspection issues that arise…going this process without a proven professional will ONLY result in frustration and a deal not closed.
The fact is, YOU already have a full time job. So do I…dealing with all of these issues. It used to be that we would advertise, find a buyer, negotiate the terms and then turn it over to the attorney to close in 30 days. Boy those were the days! Not today. I’m finding that I’m more needed in the transaction at day 20 to 45 than even before negotiation.
Sadly most of the lending problems don’t show up until the last minute. The flood insurance issues don’t pop up until the appraisal is done and elevation certificate is issued or turned over. It’s not the same to buy a house today, as it was when I started my career nearly 18 years ago. We had a simple 2 page contract then!
Zillow is not in a position to assist with any of these issues. Only a full time, professional real estate agent with lots of experience is going to be able to successfully navigate the way from contract to closing. Finding the buyer is the easy part…getting the deal closed is where the blood, sweat and tears come in.
Financially Zillow looks even less attractive, at least to me. They are expected to lose 27 million this year. A loss that is double of last year. Wall Street loves the stock and it has done well for many but a company losing double of last year’s earnings is not for me.
In my humble opinion, you cannot beat the real life experience of a live real estate agent.
Beach Realty Statistics Worksheet – History and Current YTD
April 8, 2014 By Ilona
Statistics provided for years 2010 through 2013 represent the December year-end figures
Rev. – April 8, 2014
Basically this chart shows us that inventory is up, number of sales are down as is the median sales price. While it’s pretty early to get too concerned, it’s definitely something to keep an eye on. In most cycles, being at the “bottom of the market” doesn’t mean we shoot straight up right away. While I still think recovery is on the horizon, it’s not uncommon to have a blip or two along the way. Be prepared for a sluggish year. This is not to say we can’t get homes sold, we just have to be very proactive with our strategy.
Also be aware if you are buying this year, you may see a temporary dip in value. In long term ownership this is nothing to be concerned about.
Vendor List
April 8, 2014 By Ilona
Please feel free to say you work with Ilona Matteson or Beach Realty with each of these vendors for the highest level of accountability. I highly recommend each of these guys and have had good experiences. I hope they do the same for you!
| Carpet or Flooring Installation | Professional Floors in Kitty Hawk 252-255-2882 |
| Small construction/carpentry repairs | Jim Tamosaitis 252-599-0256 |
| Lee Clark 252-305-5017 | |
| Painting | Carl Newton cfnewtonpainting.com 252-441-6447 |
| Landscaping/Tree Removal | Paul Watson 252-202-4568 |
| Power Washing | Hines Pressure Washing 757-323-8990 |
| Spring Clean | Pat Ley 252-255-0113 |
| Roof Repairs | Marion Gee 252-267-5110 |
FLOOD INSURANCE UPDATE
March 6, 2014 By Ilona
A vote is expected this week on a newly revised version of H.R. 3370 – Homeowner Flood Insurance Affordability Act. Please continue making calls this week to other NC House members and ask that they VOTE YES on the bill:
District Name Party Phone
1 Butterfield, G.K. D 202-225-3101
2 Ellmers, Renee R 202-225-4531
3 Jones, Walter B. R 202-225-3415
4 Price, David D 202-225-1784
5 Foxx, Virginia R 202-225-2071
6 Coble, Howard R 202-225-3065
7 McIntyre, Mike D 202-225-2731
8 Hudson, Richard R 202-225-3715
9 Pittenger, Robert R 202-225-1976
10 McHenry, Patrick T. R 202-225-2576
11 Meadows, Mark R 202-225-6401
12 Vacant
13 Holding, George R 202-225-3032
The latest version of the bill can be found here http://docs.house.gov/billsthisweek/20140303/BILLS-113hr3370v2-SUS.pdf
The legislation does the following:
- Reinstates Grandfathering – This bill permanently repeals Section 207 of the Biggert-Waters Act, meaning that grandfathering is reinstated. All post-FIRM properties built to code at the time of construction will have protection from rate spikes due to new mapping – for example, if you built to +2 Base Flood Elevation in an AE zone, you stay at +2, AE zone, regardless of new maps. Also importantly, the grandfathering stays with the property, not the policy.
- Caps Annual Rate Increases at 15% – This bill decreases FEMA’s authority to raise premiums. The bill prevents FEMA from increasing premiums within a single property class beyond a 15 percent average a year, with an individual cap of eighteen percent a year. Pre Biggert-Waters, the class average cap was 10%. Biggert-Waters raised the class average cap to 20%. The bill also requires a 5% minimum annual increase on pre-FIRM primary residence policies that are not at full risk. The updated legislation also states that FEMA shall strive to minimize the number of policies with premium increases that exceed one percent of the total coverage of the policy (e.g., 1% of $250,000 = $2,500).
- Refunds policyholders who purchased pre-FIRM homes after Biggert-Waters (7/6/12) and were subsequently charged higher rates after their 10-1-14 renewal. Permanently Removes the Sales Trigger – This bill removes the policy sales trigger, which allows a purchaser to take advantage of a phase in. The new purchaser is treated the same as the current property owner.
- Allows for Annual Surcharges – This legislation applies an annual surcharge of $25 for primary residences and $250 for second homes and businesses, until subsidized policies reach full risk rates. All revenue from these assessments would be placed in the NFIP reserve fund, which was established to ensure funds are available for meeting the expected future obligations of the NFIP. Funds the Affordability Study and Mandates Completion – This legislation funds the affordability study required by Biggert-Waters and mandates its completion in two years. Includes the Home Improvement Threshold – This bill returns the “substantial improvement threshold” (i.e. renovations and remodeling) to the historic 50% of a structure’s fair market value level. Under Biggert-Waters, premium increases are triggered when the renovation investments meet 30% of the home’s value.
- Additional Policies Included: This legislation includes several other provisions including preserving the basement exception, allowing for payments to be made in monthly installments, and reimbursing policy holders for successful map appeals. It also includes a study of voluntary community-based flood insurance options that would assess options, methods, and strategies for making available voluntary community-based flood insurance policies through the NFIP; gives states authority to regulate private flood insurance; and mandates that regulations and rate tables be published in the National Register and open for comment for not less than 45 days before becoming final.
Information courtesy of the Outer Banks Association of Realtors Legislative Council.
