Outer Banks Market Trends

market trendsWe’re starting to get our first glimpse of the 2018 Outer Banks economic picture and the image that is emerging is of a growing and healthy economy. Tourism continues to increase, the real estate market is strong and the indications are that new construction continues to expand.

It’s important to remember that this is based on statistical information and there are a number of variables that may affect the numbers.

As an example, one of the numbers we look at for our tourism picture are Occupancy Tax Collections as reported by the Outer Banks Visitors Bureau.

The numbers they report do not include increases in rental rates or any increase in the number of properties or rooms available for visitors. With that caveat in hand, we would also point out that by any standard, Occupancy Tax Collections have far outstripped the rate of inflation over the past 15 years.

Occupancy and Meal Tax Collections

These statistics come from the Outer Banks Visitors Bureau and are for Dare County only. Currituck County also collects Occupancy and Meal Taxes but their reports have a considerable lag time.

As noted earlier, all indications are that the Outer Banks tourism industry is healthy and growing.

Although Hatteras Island lost two weeks of revenue because the company constructing the replacement bridge across Oregon Inlet severed the power line to Hatteras Island, Dare County collections still grew at an annual rate of 5.8%. The only glitch was a 4.5% decline in August—undoubtedly a reflection of the situation on Hatteras Island.

Overall, the northern beaches outperformed Hatteras Island, although the power situation certainly affected that.

What does this mean?

Generally speaking rentals increase at about the same rate as inflation. There are a number of mitigating factors in that, but as a basis for understanding what’s happening, that is a good place to start.

With that in mind, the increase in collections occur in two areas: stronger shoulder seasons and more properties or rooms available for rental.

Both would seem to be the case.

We know April and May in the spring and September and October in the fall have become increasingly important to the Outer Banks economy and the numbers bear that out. From 2016 to 2017 shoulder season occupancy increased by 13.5%.

Visitation is harder to quantify because there is no one method to count visitors that everyone agrees is accurate. There is, however, some evidence that an increase in visitors is also occurring. Jockey’s Ridge State Park in Nags Head reported more than 1.5 million visitors last year, an increase of 18.8% over 2016, making it the most visited state park in North Carolina.

Real Estate Sales and Construction

We’re going to start this section with a reminder that nothing substitutes for working with someone with knowledge of the local market. There is a lot of nuance in any market and that’s where the experts at Outer Banks Blue become so important.

The Outer Banks real estate and housing market is healthy. The exception seems to be commercial properties that do not seem to be keeping pace with residential sales, but other than that, there does not appear to be much of a downside in the market.

A quick snapshot of the health of the real estate sales is Land Transfer Tax collections. Since every real estate transaction in Dare County carries a transfer tax, trends in the market can be tracked.

A transfer tax is a percentage of a sale and has nothing to do with the number of sales that are happening; nonetheless, if over time, there is a steady increase in collections, it’s a very good indicator that the market is expanding.

For the past five years at least, Dare County Land Transfer Tax collections have been increasing. Although we are at the mid point of fiscal year 2017-2018, it looks as though 2018 will continue that trend. Through February collections were up 6.6%

One of the trends that does seem to be emerging is a shift from a buyer’s market to a seller’s market. It’s never all one way or another, but there are some indicators that point to the change.

In 2011 the average number of days on the market after a property was listed was 238; through February of this year, the average number of has been 152.

The number of units sold is also an indicator. In 2011 1075 units were sold; in 2017, which gives us a full year for comparison there were 1544 units sold, a 43.6% increase.

The increase in the number of units sold and coupled with a decrease in days on the market is consistent with investors looking to take advantage of a growing visitation market. Not everyone is purchasing a property for rental, but an increase in Occupancy Tax collections coupled with indications of an increase in the number of visitors coming to the Outer Banks seems to point to more investors looking to Outer Banks property management opportunities.

There is a significant amount of new home construction on the Outer Banks, and early indications are that it will continue.

For the year 2017 there was a small decrease in the number of building permits issued. That trend seems to have reversed itself through February.

Building permits are very much in the raw data category. Permits are sometimes issued but construction never takes place. The number of permits also does not say what the permits are issued for. Nonetheless, there is some interesting information that can be taken from the initial reports.

The number of permits issued through February is up a modest 2.6%, but what is significant is the average permit value has increased by 11.5%. That is a clear signal that that larger, more complex projects are being planned, and a part of that would be new home construction.

That means the Outer Banks tourism market will continue to expand. It also means that, for existing rental property owners, a competitive market is going to stay competitive and may become even a bit more competitive.

Which brings us to another important point to consider. Summer is coming; properties should look as good as possible with any improvements done as soon as they can be made. However, looking at the trends in construction, it is apparent that contractors and builders are very busy right now. There is going to be lead time in getting any work done. Schedule the work as soon as possible.

Real Estate Selling Tips for Your Home on the Outer Banks

“US homes more valuable than ever before.” and “buyers unable to find homes” are the most typical headlines you will see any real estate news page. The reason is simple- shortage in the market. But, to you, as a seller, that does not mean that you should just go out there and list you home straight away, no! Here are some tips for sellers in Nags Head, Corolla, Duck, Kill Devil Hills or anywhere on the North Carolina beaches.

The First Impression is the Last Impression

Sounds old, but still it’s the most practical thing, especially when you are selling your home. Just imagine you want to buy a vacation home, you drive by the house before setting an appointment and it doesn’t look good form the outside. You would just drive to the next home.

What to do?

  • Green your lawn. Clean it, make sure all the dried leaves are swept out.
  • Clean. Sweep the walkways and remove all the debris.
  • Trim the trees and shrubs, mow and edge the grass.
  • Paint- just a touch up to make it look fresh

Invest Wisely

One of the most common mistakes sellers make is investing too much in renovation and remodeling. Consider your likely return on investment before going for a whole kitchen remodeling or bathroom redesign. Talk to your Realtor about this!

What to do?

  • Do not over invest.
  • Make small improvements- getting your home painted always works. Get plumbing repairs done.
  • Do a little research. Find the preferences of buyers in the region, see what colors they prefer.

Appoint the Right Real Estate Agent

This is the most important part. Firstly, don’t do it by yourself. Real estate market is complex, it’s competitive. Hiring a professional is the only way to get the top dollar for your home. Secondly, hire the right one. Ask questions, consider their experience, and know the expected sale value they can deliver. Not just that, make sure their goal synchronize with yours.

What to do?

  • Don’t to it by yourself. Never.
  • Get in touch with recent clients
  • Have a look at their current projects.
  • Do your research.

List and Price It Right

Sellers usually tend to price it high initially, and when the home fails to sell at the price, they lower it. The fact is, the first thirty days of activity in the market when you list your home is the best activity for you. If you want to sell it quick and for the best price:

What to do?

  • Don’t overprice. In fact, experts believe that pricing it lower than the numbers you get actually helps.
  • List when the time is right. Do your homework, research for the perfect timing before you list. Your agent will help you out here.

Present a Clean House

When the buyers come to see your home, they visualize themselves living in it. Make it easy for them, make them feel that it could be their dream home.

What to do?

  • Remove all your personals. They distract the buyers.
  • Clean, clean and clean. Make your house look well maintained.

 

Apart from that, market your home well, trust your real estate agent and know that the competent professional will bring you more return than you spend on their commission.

If your interested in finding out about the best way to market your home on the Outer Banks give me call.

Ken Baittinger
252-305-5255
ken@outerbanksblue.com

Outer Banks Real Estate Sales Update

As an Outer Banks real estate agent for 31 year I’ve heard these questions almost every day, “How is the market?,” “What is selling?,” “How is my neighborhood doing?,” etc.

To answer these questions we put together an Inventory Matching Market Analysis for the market my team works from which includes Corolla through South Nags Head, Colington Island and Colington Harbour and Lower Currituck County:

Single Family, Condos & Townhomes
Inventory Matching 12-2-15 through 12-2-16
Price Range # Ave/Month %
$100,000 – $149,999 46 3.8333 3.9519%
$150,000 -$199,999 110 9.1667 9.4502%
$200,000 – $249,999 159 13.2500 13.6598%
$250,000 – $299,999 199 16.5833 17.0962%
$300,000-$349,999 142 11.8333 12.1993%
$350,000-$399,999 120 10.0000 10.3093%
$400,000-$449,999 79 6.5833 6.7869%
$450,000-$499,999 76 6.3333 6.5292%
$500,000-$549,999 49 4.0833 4.2096%
$550-000-$599,999 37 3.0833 3.1787%
$600,000-$649,999 12 1.0000 1.0309%
$650,000-$699,999 19 1.5833 1.6323%
$700,000-$749,999 14 1.1667 1.2027%
$750,000-$799,999 14 1.1667 1.2027%
$800,000-$849,999 10 0.8333 0.8591%
$850,000-$899,999 9 0.7500 0.7732%
$900,000-$949,999 11 0.9167 0.9450%
$950,000-$999,999 7 0.5833 0.6014%
$1,000,000-$1,099,999 7 0.5833 0.6014%
$1,100,000-$1,199,999 3 0.2500 0.2577%
$1,200,000-$1,299,999 7 0.5833 0.6014%
$1,300,000 – $1,399,999 7 0.58 0.6014%
$1,400,000 – $1,499,999 3 0.25 0.2577%
$1,500,000 – $1,599,999 3 0.25 0.2577%
$1,600,000 – $1,699,999 4 0.33 0.3436%
$1,700,000 – $1,799,999 4 0.33 0.3436%
$1,800,000 – $1,899,999 1 0.08 0.0859%
$1,900,000 – $1,999,999 3 0.25 0.2577%
$2,000,000 – + 9 0.75 0.7732%
TOTAL 1164 97.00 98.9691%

Current Inventory 12/20/2012  = 957 Homes for sale (a 10 month absorption rate).
Average Sales price = $410,000.
67% of sales were between $200,000 and $500,000.
Southern Shores North = 421 Homes Sold (36%) (Average Sales price = $559,000).
Corolla Sales = 238 Homes Sold (20%).

We had 1164 sales the past year, with +/- 1 – 5% of the previous two years. 957 homes currently for sale. A 10 month absorption rate or 10 month supply.

BUYERS VERSUS SELLERS MARKET:  The National Association of REALTORS chief economist suggest that when there is a six month supply of active listings (unsold inventory) the market is neutral or balanced with any equal number of buyers and sellers.  My experience indicates that a five to eight month supply is the range for a generally balanced market; that a seller’s market is when there is a three month or less supply; and that a buyer’s market exists when there is a twelve month or great supply.  Prices generally react faster in a seller’s market than in a buyer’s market since the individual home owner will raise their price quickly but will resist lowering their price.   This is a basic function of the human trait of “greed”.

Our average sales price is $410,000 and our market “sweet spot,” the price range where 65% to 75% of the sales occur, is between $200,000 to $500,000. 67% of all sales fall in this price range.

Our most productive range is between $250,000 and $299,999 where 17% (1 in 6) of all homes are selling.  This market overlaps year round/2nd home purchases.

For Southern Shores, Duck and Corolla the average sales price is $559,000. 20% of all sales are in Corolla.

I hope this information is helpful! Maybe a little more information than the answer.  But as my old friend Ed Rabbel would say, “it’s picking up.” He was a garbage man!

The Best Real Estate MarketFor more detailed information on the current state of the Outer Banks real estate market, please feel free to call Danny or Danielle Fenyak at (252) 256-1818 or email him at dfenyak@outerbanksblue.com.

Listing Your Outer Banks Home in the Winter

As the dust settles and the smoke clears from the holiday season, you may think this is a horrible time to have your home on the market. This is actually one of the best times of year to list your home for sale for several reasons: 1) Inventory is usually at its lowest level at the beginning and end of the year, 2) access for buyers to see your home is also easy… much easier than in the summer months; and 3) many potential buyers receive holiday bonuses from the employers or gifts from family members.

All stats to which I refer in this blog are based on single-family homes from Corolla to Ocracoke, including Colington and Roanoke Islands. Per OBAR MLS statistics dating from 01/01/10 to 11/30/16, the months of November, December, January and February tend to have the lowest levels of average inventory. In fact, since 01/01/10, the two months with the lowest levels of average inventory were January 2013 (1,146 units available) and December 2016 (1,155 units available). The difference between 2013 and 2016 is that our current pace of sales is much stronger. In all of 2013, there were 1,126 unit sales whereas we hit 1,180 units at the end of November this year. I’m predicting a year-end 2016 total of 1,269 units sold… based on past historical trends.

outer-banks-winterTo better understand the difference in 2013 and 2016, we look to the absorption rate which is a theoretical calculation. It takes the current inventory and sales rate to determine the time it would take to deplete the current inventory. The average inventory for 2013 was 1,235 units and in 2016 has been 1,272 units. You may say that 2013 was a better year for sellers because the inventory was lower. However, the units sold in 2013 was 1,126 units versus [a predicted number of] 1,269 units for 2016. Using these figures, 2013 had an average absorption rate of 12.8 months [12*(1235/1126)] and 2016 looks to have an absorption rate of 12.0 months [12*(1272/1269)].

Simple supply-and-demand economics suggest that lower absorption rates put upward pressure on prices. At the very least you should continue to see days-on-market times getting shorter and seller discounts falling. You can see in the chart above that absorption rates rose in 2013 and 2014 before resuming the downward trend in 2015 and 2016. The average time on the market in 2013 was 233 days versus 212 days for 2016. The average discount off of asking price in 2013 was 5.59% versus 4.43% in 2016. Based on the average priced Outer Banks home, that is roughly $4,000 more dollars in the sellers’ pockets… and, 3 weeks quicker than back then!! On top of that the average price per square foot in 2013 was $185, whereas it is now averaging around $194. If you owned a 2,000 square foot home… that would be an $18,000 appreciation!!

You can see that the market has improved for sellers and that instills confidence in buyers, which will continue to fuel the market improvements. We’re in the season of hope, right?

With an improving market, ease of access and the holiday season of gifts and bonuses upon us, you may want to seriously considering getting your property out there on the open market. If you don’t own an Outer Banks home yet, now would be a great time to get in and reap the benefits of owning a piece of paradise, while the getting is good!

adamContact us today. The OBX Island Guys are here to serve!

For a complimentary professional consultation for buying and/or selling Outer Banks real estate, feel free to call or email me anytime. I look forward to hearing from you soon.

Adam Burkhimer
(252) 256-0086
adamburkhimer@gmail.com