The factors currently affecting real estate on the Outer Banks now and for the next few years are:
1. Dare County taxes have increased by 3.25%
2. Homeowners insurance has gone up 17%
3. Interest rates have risen slightly
4. Flood Insurance rates are still set to rise over 400% for new purchases in October
The first four factors can affect how much a buyer can qualify for as all of these expenses are included in the calculation by the lender to determine their loan limit amounts.
5. Occupancy tax on vacation rentals is due to go up 1% in 2014 for beach nourishment in Dare County. That will impact rental rates and ultimately net income.
6. Average sales price for the area is down 6% YTD, and 9% from this same time last year
7. Foreclosure filings are at their highest levels since August 2012
8. Average sales price for Bank Owned homes is down 22% YTD, with 7% more sales
9. Supply of homes for sale continues to exceed 16 months
10. Average number of new properties coming on the market each month YTD is 400
Why then, are people still selling their homes in this market? There are two reasons for this.
- First it’s important to calculate the amount of money the home costs you to own versus the time it will take for the market to appreciate to the price you desire. For example: It costs the average person $10,000 to $20,000 to own their beach home. So figure $15,000 per year. Most sellers are looking for 25% more than the market can bear for their home right now. At 5% appreciation per year (once we finally start going that direction) it would be another 5 years of ownership. 5 years x $15,000 is $75,000. Ask yourself if it makes sense to spend $75,000 keeping this home all the while the home will be 5 years older at that time.
- The second reason people are still selling in this market is for buying up power. If you sell low, you also get to buy low and take advantage of the low interest rates. Right now you can buy more house in a better location for less than ever before. So if you’re thinking about selling ask yourself this question…when the market comes back, do I still want to be in this house? Or the new one?
As always if I can help you with any real estate questions please contact me!
