Consistent Growth Shows Spring and Fall Opportunities

opportunities

The Outer Banks has proven itself to be a resilient and powerful tourist destination. From Carova on the Virginia border to Ocracoke, the area has become an economic engine that drives the economy of northeastern North Carolina. There are a number of  factors that have created the success, so many that it is not possible to discuss all of them, or even list all of them, at one time. There is, though, one part of the Outer Banks picture that is an integral part of the puzzle but is not necessarily included in discussions of what has created that success story.

The property owners who have invested in homes for the rental market are as much a part of the prosperity of the Outer Banks as any other facet contributing to the consistent growth of the region. Certainly the marketing of the Outer Banks as a premier family vacation destination has been extraordinarily important in what has happened. But if investors had not bought property and built homes for those families, it wouldn’t matter how beautiful the Outer Banks may have seemed—no one would have come.

Most of our property owners have invested here because they enjoy the Outer Banks and what it has to offer, but those properties are an investment and like any investment it needs to generate revenue.

Over the past few years there are some emerging trends in the Outer Banks market that could create some new or additional opportunities for property owners. These are opportunities to enhance the revenue a property generates; it will not replace the summer peak season income.

There has been a noticeable and consistent increase in shoulder season visitation. The observation is based on increases in occupancy tax collection over the past five years. We are using the data from Dare County, and there are two reasons for that. Dare County is the center of the Outer Banks tourism industry and is an accurate barometer of activity. Additionally Dare County’s reporting is more up to date than Currituck County or Hyde County that includes Ocracoke.

Using occupancy tax as an indicator of trends is a little bit risky—it is just one part of a larger picture. However, in this case, the trends are so strong and consistent that using occupancy tax as a bellwether seems safe.

The shoulder seasons are the spring and fall: March through May and September through November. Over the past five years, their percentage growth has outperformed the peak summer season buy a remarkable degree. Keep in mind this is a percentage increase, not a dollar increase, but those percentage increases represent a very significant growth in collections over that period of time.

The figures we are using are for 2017 since 2018 is not completed yet. For comparison, here are the occupancy tax collections as reported by the Dare County Visitors Bureau.

Spring
2017 March-May Collections: $58,987,781
2013 March-May Collections: $40,249,090
Increase 2013-2017: $18,738,691
Percent increase: 46.56%

Fall
2017 September-November Collections: $81,047,380
2013 September-November Collections: $59,573,121
Increase 2013-2017: $21,474,259
Percent increase: 36.05%

For comparison, here are the number for the peak summer season:
2017 June-August Collections: $322,399,021
2013 June-August Collections: $284,449,766
Increase 2013-2017: $37,949,255
Percent increase: 13.34%

Looking at these numbers, it is apparent that the bulk of business is occurring during the summer months. However, it is equally as apparent that the increases in visitation in the shoulder seasons is so significant that opportunity must exist in those areas.

Every property owner has to decide for themselves how they want to address some of these opportunities; that is not something that can be done effectively in this format. What can be done, though, is to outline some of the factors or forces at work that are creating the opportunities.

The Macro Trend

Probably the biggest driver of visitation in the shoulder seasons is the sustained growth of weddings and events. At one time, this segment of the Outer Banks economic picture was focused almost exclusively on weddings, but increasingly, the Outer Banks is being marketed as a place for events—family reunions, business meetings, and seminars.

Although the large event homes are often where people gather, they are not always where people stay, creating an opportunity to provide housing for guests of the bride and groom or family members gathering for a reunion.

April, May, September, and October are the big months for weddings.

Music Festivals and Special Events

The fall especially has become the King of the Event Schedule on the Outer Banks.

September is filled with smaller but popular events. The Eastern Surf Association (ESA) finals are held every year in mid September at Jennette’s Pier in Nags Head; Pridefest has been a very popular event; there are also a number of fishing tournaments. None are huge events, but the aggregate effect is to bring a significant number of visitors to the Outer Banks.

October has really become festival month.

There are three major music festivals—The Outer Banks Bluegrass Festival in Manteo, the Duck Jazz Festival in Duck and what was the Mustang Music Festival that is now the Mustang Rock and Roast, combining barbecue and food.

The Outer Banks Seafood Festival, which consistently attracts up to 10,000 visitors, also occurs on the third weekend of the month

Things culminate with the Outer Banks Marathon over Veteran’s Day Weekend.

There are not nearly as many events or festivals scheduled for the spring, although, and this could have an impact, the Outer Banks Bluegrass Festival is moving to May in 2019.

Other Factors

There are some national and probably international trends emerging on how people view travel and leisure. One of the more important emerging trends is seeing a vacation as a time to experience what an area has to offer as opposed to sitting on the beach, reading a book and relaxing.

This seems to be a generational shift with younger travelers more apt to look for experiences.

With an extraordinary array of activities available, the Outer Banks is ideally positioned to take advantage of this trend. Surfing and water sports, wind sports, ecotourism—the Outer Banks offers all of that in abundance. And, for most of those activities, spring and fall are the best times to do them.

The shoulder seasons offer a fantastic opportunity for property owners. It is important to note, though, that there is no one size fits all way to benefit from the trends we are seeing.

Outer Banks Blue property owners, contact us and let’s discuss how best to take advantage of the spring and fall shoulder seasons.

The Outer Banks in the Fall is Awesome

Fall is an awesome time of the year in the Outer Banks for visitors and for real estate.

During September and October, the Outer Banks transforms back to what I consider paradise. The weather is pretty much perfect, as the water is still warm and the air temperatures are too. The humidity drops off for the most part and you begin to get some of those mornings where the air is crisp. The stop and go traffic on 158 is just a thing of the past. Even left turns are possible again onto the big road. You typically don’t have to wait in long lines at the grocery stores, restaurants, or any of the other local establishments. It’s that time again for oysters, the return of tuna season, football, and long sleeves in the evenings. There is plenty to do without feeling crowded. The schools hold their annual pumpkin fairs. There are Halloween parties and the annual seafood festival, and the sound-front site in Nags Head has been recently, gorgeously transformed. Do yourself a favor and come out this October 17 for a great gathering of local restaurant owners who will be showing off their finest vittles. And don’t forget, you can still go anytime and enjoy our greatest asset – the beach!!

The Outer Banks in the fall is also a great time to be in the real estate market, whether you are buying or selling. Historically, between 15 – 20% of the total year sales of single-family homes occur in these two months, before falling into the winter market slumber. The average inventory tends to rise after the summer months and the demand seems to increase fairly proportionately to the rise in the number of homes for sale. Christmas and especially Thanksgiving are extremely popular off-season weeks for out-of-towners to spend here. And what better way to celebrate the season than in a new home?

Speaking of celebrating, I think we can all appreciate some appreciation in real estate prices. The overall Outer Banks single-family home market has continued to improve. Since 2013, the pricing has increased between 2.6 – 4.1%, based on three metrics I use. Those three metrics are: average sale price, average sale price per square foot and average sale price per bedroom. While 2.6 to 4.1% over three years doesn’t equate to a huge annual appreciation rate, it is a confidence booster to have positive price trending for several consecutive years. The average pricing has been actually been trending upward since the 2010/2011 time frame. Annual sales have been on an upward trend just about every year since 2008 and average inventory is down 11% from the year 2010. We would have to expect some upward pressure on pricing with those economics in place. The fact that the gains are modest keeps our market from getting “out of control”. Everyone can come out a winner in today’s market.

outer banks real estate teamFor your free market analysis or if you are interested in buying or selling real estate on the Outer Banks, feel free to contact me directly. I look forward to hearing from you soon. Please feel free to call Adam (252) 256-0086 or Shane (252) 202-1193 with OBX Island Guys of Outer Banks Blue. adam@outerbanksblue.com or shane@outerbanksblue.com.

All references to real estate statistics are sourced from OBAR MLS (01/01/04 – 08/30/15).