Outer Banks, NC Real Estate Resource
While there isn’t much change to report this month, I predict by October/November there will be more inventory and the beginning of a quantifiable shift in pricing. You know I’ll keep you posted! To see the full effect of the logarithmic path, I’m comparing January 2024 to July 2024.
| Jan 2024 | Jul 2024 | |
| Months of Inventory | 4.8 | 5.9 |
| Active Homes | 492 | 700 |
| % Under Contract | 24% | 21% |
| Price Changes/Month | 171 | 232 |
You may have heard in the news about the NAR Settlement, and there was a lot of bad information floating around. Having been licensed in NC since 1997, teaching the real estate license law for 15 years, and a member of the Board of Directors for the Outer Banks Association of Realtors, I’m bringing a snapshot of what to expect as we approach the implementation date on August 17th.
Firstly, be aware that NC has had buyer agency in place since 1995. Secondly, sellers in NC have never paid the buyer’s agent. Our listing agreement has a section where sellers “acknowledge” the listing firm may split the compensation the seller pays the Listing Firm, and a disclosure of what that split will be. Our local MLS then served as a binding and blanket offer of compensation from the listing firm to the selling firm. So, in this state, we’ve really been doing it right the whole time.
*Special Note: Compensation has ALWAYS been negotiable and based on the services provided as established by each individual Firm. As of this blog, we truly have seen only a handful of sellers choose to not offer or authorize a compensation to a cooperating firm. We don’t expect there to be a big change in this. Most sellers realize it is in their best interest to cooperate with buyers agents.
The purpose of the non-exclusive agreement is to establish an agency relationship, with limited duties. Buyers can sign this agreement with more than one agent as they conduct their search. Beware this type of searching can result in the agents ending up in a procuring cause dispute. So always be up front and honest with agents to avoid this situation.
If you are out with an agent touring multiple homes and have no written agreement, most likely the agent is not operating in compliance with the Settlement. There are two exceptions: they are not a REALTOR member subject to the settlement agreement, or all homes viewed are listed with the agent’s firm and you are unrepresented.
There are multiple benefits to interviewing and hiring a good Buyer’s Agent, especially in the Outer Banks market where the average price is $800,000. That’s a big investment! Here are some of the reasons:
There’s a reason it takes 45 to 60 days from offer writing to closing a real estate transaction. It is a full time job! I have prepared a full presentation with valuable information. If you are thinking of interviewing a great agent to find your perfect OBX home, give me a call!
In a nutshell, the market here is changing…slowly…but surely. These types of cycle shifts don’t happen all at once. Fortunately, because I study the market every day, I can help you see it coming. After all, you can get out of the way of what you don’t see!
Inventory
Total Everything – up 27% since January (currently over 1,000 listings)
Homes, Single Family and Condos/Townhomes – up 24%
Activity
Absorption Rate has gone from 4.8 months to 5.5 months since January
This means it would take longer to sell the homes we currently have on the market. Once this goes over 6 months, we enter a Slow Market
Price
53.5% of homes are still selling within 0-30 days, of those…
97% of asking price is what they are selling for
67% of homes are now selling under asking price
Basic supply and demand economics tell us that when supply is inching up, demand is inching down that prices will start to waiver. How long will this current market last? We just have to keep watching. We are noticing more price reductions coming in and fewer multiple offers. This is an active situation. Stay tuned for next month’s report!
If you have thought about buying or selling, let me know so we can plan your strategy.
History repeats itself. A saying I’m sure you’ve heard and said dozens of times. I might not yet be a half of a century old, but I’m old enough, and have been in this business long enough (27 years) to recognize a similar pattern. Let’s revisit the timeline of the Outer Banks real estate market from the year 2000.
Year/Sold Units Sold Average Price Sold
2000 n/a* $275,000 *I don’t have access to the # of sales that far back
2005 2104 $555,973
2008 1045 $427,718
2011 1333 $370,569
2014 1611 $370,351
2017 1995 $385,774
2019 1966 $400,592
2020 2614 $520,009
2021 2889 $668,994
2022 2096 $770,901
2023 1446 $746,351
Now, I know that is a lot to unpack. All of this data is telling me that the drop in home sales is a clear indication that we have reached the peak and are on the way back down and soon. The last peak was in 2005, and the crash is attributed to 2008. That 32% decline in pricing didn’t happen overnight. It was spread out over a few years.
Let’s talk about unaffordability for a minute. This is not just an interest rate issue. In fact, even if interest rates come down to 5% again, it will only create a small impact on the overall cost of owning a beach home.
So, does this mean I’m saying it’s not a good time to buy? Not at all! It’s just not a good time for EVERYONE to buy. How so?
However, if you are a current homeowner and your retirement plan includes the proceeds of this home, you may need to really consider how long you can/want to keep it. If you aren’t in to see this next cycle through, you have a prime time this spring to take advantage before what I believe is the end of this bull market.
Factor in the waning rental occupancy, rising costs, and the boomers knowing it’s time to cash out, it appears we will see an influx of inventory this spring. That will be the one catalyst to start a more rapid decline in pricing.
Please know that it’s never my intention to be a downer; I’m just a realist. You can’t avoid what you don’t see coming. It’s coming. I was taught that you can’t make the best decisions without looking at all the information. Please reach out if I can help you strategize your move in 2024.
The insanity of the Outer Banks market continues. The almost full-year snapshot reveals some interesting things for sure!
Below, you’ll find each town broken down for SINGLE FAMILY HOME sales from January 1st to November 30th.
| Area | 2023 Sales | Median Price | 2022 Sales | Median Price | %Diff |
| Corolla | 197 | $930,000 | 310 | $895,000 | 36% |
| Duck | 60 | $1,087,500 | 99 | $1,050,000 | 39% |
| SShores | 74 | $743,000 | 105 | $780,000 | 29.50% |
| Kitty Hawk | 53 | $690,000 | 91 | $659,000 | 41% |
| KDH | 167 | $549,000 | 270 | $530,000 | 38% |
| Nags Head | 120 | $712,000 | 174 | $799,000 | 31% |
The strangest thing I’ve ever seen is a decreased demand by this much and ZERO effect on pricing. The only thing that is keeping it afloat is the continued lower inventory. If next spring we get the typical 30% spike in inventory and demand stays low or lower, you can expect falling prices almost immediately.
| Area | Active | 30% Increase | New Active | #Months Inventory |
| Corolla | 88 | 26 | 114 | 6 months |
| Duck | 21 | 6 | 27 | 5 months |
| SShores | 17 | 5 | 22 | 4 months |
| Kitty Hawk | 18 | 5 | 23 | 5 months |
| KDH | 60 | 18 | 78 | 5 months |
| Nags Head | 40 | 12 | 52 | 5 months |
As you can see, it won’t take many listings in each market to push the inventory to 5 or 6 months. And this is based on current demand numbers. If demand weakens more, it could push the absorption rate higher, creating even weaker conditions. Only time will tell, but we’ll be watching!
Let’s take a basic approach this month.
Inventory is generally the highest in our spring market. This year, we are seeing a 26% increase in inventory in fall versus spring. That’s pretty unusual.
Similarly, sales are also at their highest in the spring market. Here, we see a normal 14% drop so far for fall.
It’s still not taking long to get properties sold.
Pricing hasn’t changed very much, despite seeing more price reductions. We aren’t seeing a tangible change just yet.
While mortgage applications are down, it’s not impacting us yet.
Bottom line is for now, things are still moving along. However, there are these subtle differences. Markets don’t change all at once. It happens little, by little, by little, then all at once!
I’ll be watching.
What to expect? Well, short of some financial event or credit crisis, probably more of the same. The big challenge with resort markets, aka discretionary markets, is the lag time. It generally takes about 18 months for economic factors in the real world to make their way to us.
Because we don’t have a large section of properties that “have to sell” to keep our market moving, as soon as buyers slow down, inventory piles up. At least that’s how it normally is. Truthfully, we are not that far from inventory pushing that market shift from “normal” to “soft.”
That being said, right now here are the main highlights of our current market for Single Family Homes.
Corolla, Duck, Southern Shores |
KDH, Kitty Hawk, Nags Head |
| Active – 110 | Active – 110 |
| Under Contract – 52 | Under Contract – 44 |
| Sold – 274 (30 buyers/month) | Sold – 289 (32 buyers/month) |
| Absorption Rate – 3.6 months | Absorption Rate – 3.4 months |
I double-checkedhose numbers, and it is such a coincidence to have the same active for both north and south markets! They are shockingly similar in all categories.
With 30 buyers a month, 180 active would make it a 6-month absorption rate. That’s only 70 more listings to push us into a soft/declining market. I don’t think it’s unrealistic to suggest we could be there by spring.
Real estate is long term investment. You can time it right, or you can hold and enjoy. If you have questions on what is the best strategy for you, call for an appointment.
We are closely watching the main stats on supply (up 33% since January) and demand (down 44% since January). Part of that is watching more specific pockets of activity to glean a closer insight into future trends. One of those trends I’ve noticed in my near 30 year career is that of high-end home sales.
Homes sold $2M and over:
2019 – 6
2020 – 26
2021 – 64
2022 – 51
2023 – 17 YTD (Likely on track for 27 total)
With interest rates rising, insurance costs rising, rents stabilizing to pre-pandemic times, it’s really clear that a shift in pricing has to take place. The timing of this is what’s left to be seen. This strange anomaly of still very low inventory (although is starting to slowly climb) is keeping us stuck in limbo.
If you’re thinking about selling, let’s talk about what your home’s value may look like in this market.
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