Economic instability seems to be the only thing that is permanent in the market which can instill fear among real estate investors around the globe. However, the fluctuating economic climate and the figures that are the main focus do not necessarily have to be a cause for concern when it comes to real estate investing. In fact, many real estate investors have managed to find the “light at the end of the tunnel” and make significant profits, even during a recession.
Total Sales for December were flat (less than a 1% change from December 2017) and are down 6% for the year compared to last year. The number of properties that are in an Under Contract status are 9% lower than compared to 2017. Inventory; there are 2,197 total listings on the market in the entire MLS compared to 2,091 in 2017. The 2018 Median sale price of $343,000 has been on the rise since 2012 and remains about the same as 2017. Land prices are up 3% over last year.
Distressed inventory continues to drop. This includes both short sales and foreclosures. There are just 23 properties listed for sale that are either bank owned or short sale. These make up a very small percentage of inventory and sales as compared to 2013 when they were at record highs.
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?
According to the Outer Banks Association, or REALTOR MLS, single family homes have seen modest gains in prices (~1.4% annually) over the past 5 years as well as shorter average time on market (~5.9% less time) and decreasing discounts off asking prices (less than 5% off, versus a little over 6%). These are some of the favorable market attributes from the sellers’ perspective. What’s in it for the buyers? Five years of gains (remember I said modest) instills confidence in the market. The gains aren’t enough to have buyers feeling “priced out” and, 5 years of gains shows that the tide has most likely turned for the next upcycle. To offset the small increase in cost of ownership, due to price appreciation, the interest rates are down about 1 full percentage point in that same time period; according to Freddie Mac. I even saw a 3.75% rate for a 30-year loan with no origination points on a lender’s rate sheet last week!! Since recordkeeping of mortgage rates has been tabulated by Freddie Mac in the early 1970s, this is the 2nd lowest average rate year we’ve seen. The lowest was in 2012. There is a lot of chatter out there in the markets saying that the rates could possibly go even lower.
When the conditions are right, it’s always a great time to buy or sell a home. Currently, we are in a favorable market for either side. If you are buying or selling a vacation rental home, now is one of the best times of year to get in the market, or get your home on the market for sale. The main rental season starts at the end of May. There is a strong demand to purchase rental homes and to time the closing to where the rental income begins flowing immediately, or shortly after closing. In many cases, rental deposits have already been taken and would be an instant bonus at closing for the buyers. The bonus for the sellers is that the discount (off of asking price) is at its lowest on the closings occurring between April and July, which translates to contract signing occurring between February and May.
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
**All statistics and real estate statistical references are sourced from OBAR MLS 01/01/2011 – 12/31/2015
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