As 2022 began, it appeared to be following a similar trajectory to 2021. The MLS report from the Outer Banks Association of Realtors revealed record-breaking sales in December 2021, along with the lowest inventory levels ever recorded. Meanwhile, in January 2022, the average 30-year fixed mortgage rate was 3.22%, a slight increase from the 2.96% average seen in 2021. Despite these factors, buyers remained enthusiastic about the prospect of homeownership due to the low rates and limited inventory.
The real estate market experienced a significant shift in the second quarter of 2022 due to the Federal Reserve’s drawback on mortgage stimulus and sharp inflation growth. This shift was evident in Corolla, where on March 2nd, 2022, there were 76 oceanside properties under contract and only 14 active listings. However, by the end of May, the number of properties under contract had dropped to 29, while the number of active listings increased to 39. This was a drastic change in less than three months. Mortgage rates continued to climb throughout the year, with the average 30-year fixed Freddie Mac rate reaching 7.08% by October.
The Outer Banks Association of Realtors MLS Statistical Report revealed a 28% decline in property sales in 2022 compared to 2021. However, despite this downturn, the residential median sales price rose by 17%, while the lot/land sales price saw a growth of 20%. Notably, median sales prices for residential homes have been steadily increasing since 2022, with rises ranging between 17% to 20%.
According to the Association of Realtors Pending Homes Sales report, there has been a rise in pending homes for the first time since May 2022. In the northern beach market, which includes Corolla through South Nags Head, Colington, and lower Currituck, only 42 homes were sold in January 2023. This figure is in stark contrast to January 2022 when 124 homes were sold, or January 2021 when 135 homes were sold, resulting in a 68% decrease in sales compared to the 2021-2022 averages. Interestingly, in January 2019 (pre-COVID), there were 62 homes sold, which is 33% more than in 2023.
It’s worth noting that the national and local markets were in a comatose state during the last five months of 2022, thanks to a 40% appreciation over the past 36 months and around 7% mortgage rates. From August 1st through December 31st, 360 pending sales were recorded, compared to 559 pending sales in the same period in 2021, representing a 36% decrease. Looking ahead, there is good news for the real estate market that may help to stimulate activity:
- Home prices are expected to decrease by around 10%.
- Mortgage rates are currently declining.
- Sellers are more willing to negotiate, and the trend of upward price pressure has subsided.
- Despite the recent market downturn, buyers are still eager to make purchases, and there are sufficient buyers in the market.
Despite the recent downturn, inventory remains very limited, and this scarcity factor has been somewhat offset by a reduced number of buyers. For sellers considering a sale, being in the first or second position in terms of value and price in your specific market is advantageous when there are only a few competing homes available. A recent example from Nags Head illustrates this point, with a home listed in the first or second position receiving six offers within 36 hours, resulting in an accepted contract.
For buyers, the situation remains largely the same, meaning they must be prepared to act quickly. This entails having financing in order and being ready to visit or view properties remotely via Facetime or other means. However, the timeframe for making a decision has shifted, with buyers now expected to make a decision within two to four days, compared to two to four hours in 2021-2022.
For more detailed information on the current state of the Outer Banks real estate market, please feel free to call Danny Fenyak at (252) 256-1818 or email him at dfenyak@outerbanksblue.com.
