As we approach the second half of the year, it’s important to notice the little shifts happening along the way. Remember, real estate markets don’t crash overnight. It happens slowly at first, then all of a sudden. We are in the slowly at first phase.
Our market here gets insulated because it’s not a primary market. Being a discretionary sale and discretionary purchase for the majority of transactions, it provides a lag time from when we start to see primary markets destabilize.
If you are thinking about what to do with your OBX investment home, you need to look big picture. Consider first and foremost, just because you don’t HAVE to sell, does not automatically mean that keeping the home is in the best financial interest for your family. Always consult your financial adviser for guidance.
Let’s now take a look at the two options, sell or keep. Regardless of what you choose, this information will help you set up the best expectations for either choice.
Sell
- Good news! Prices are still at record highs. You have not missed the boat.
- However, pricing strategy must remain fluid. No longer set the price and then 3 months later look at it. If you want to maximize profit here, you must be the trend setter, not the follower.
- Inventory is rising – up 29% from this time last year
- Demand is dropping – down almost 10% from last year, and last year demand dropped 50% from 2022
- Price reductions are increasing – in May 368 new listings came on and 287 listings had a price reduction
- Must be negotiable – 66% of properties sold are below asking price.
- Affordability is still the number one concern for buyers
If you employ a listing strategy with this in mind, you will maximize your return and get the home sold in a reasonable amount of time.
Keep
- Remember how these cycles have worked over the years.
- Boom 1985/86 – fell apart early 90’s – stagnant until 2000.
- Boom again 2004/05 – fell apart 2008/09 stagnant until 2019/20.
- Boom 2021/22 – 2023 activity dropped by half, pricing is just starting to crack with price reductions and under asking price sales.
- If the pattern continues it could be stagnant again until 2035 or longer.
- Rising Insurance as well as other increasing vendor costs.
- be prepared for at least a 14% increase in dwelling policies and unknown yet for homeowners.
- Service providers are increasing costs: lawn care, pool/hot tub maintenance, linens, etc
- Return to pre-pandemic rental income.
- It starts with lower vacancy rates. 2024 is already seeing only 90% booking.
- Next will be set lower rates – discounts are already happening.
- If you stay, the cost to own will go up, with income to support going down.
- Prepare for capital improvements.
- Tightening insurance underwriting regulations are requiring updates to stay insured. Roof, water heater, etc
- Continued lack of demand for homes that have not been updated. Especially as inventory increases, you’ll need to have prime condition and updating to be chosen.
- Reality of a major storm this year or next. Let’s face it, no one likes to say it, but we haven’t had a hurricane since 2018. Generally, we see a 6 to 9 year pattern.
If you do decide to keep the home through the next cycle, let’s at least put together a plan to get your home updated and where to best spend the money. I also have a list of trusted vendors who can help you get things done.
Now that you have the big picture, let me know if I can be of any help as we navigate this next market shift.
It’s no secret the real estate market is in very bad shape right now. And in an effort to be as up-front as possible about the pros and cons, I wanted to create this quick list of the main things to consider before buying or selling.
Although it sounds reasonable to think with all the guests coming, it would be better to just sell the home in the fall or spring, take a look at these 5 reasons you could be missing out by waiting.
It’s no secret the real estate market on the Outer Banks is shifting. Even as we move into a seller’s market, keep in mind a majority of our home sales are secondary homes. This means more than 50% of our home buyers will spend up to 2 years searching for the right home. They can do that because they aren’t physically moving into the home.
