|February 12, 2008
Hatteras Island Real Estate: It’s a great time to be a buyer
By TOM HRANICKA
many times have you sat on the deck of your vacation cottage and
commented, “Wouldn’t it be great to have a home here on
Hatteras Island? We really should look into what it might take to buy a
house or a lot.” You may be surprised to learn how easy it
can be to make your dream come true. Conditions in the real estate
market are currently very favorable for buyers.
is no secret that real estate is a cyclical business. There are
times when market forces favor the sellers of properties and other
times when circumstances favor buyers. Since the summer of 2005, we
have experienced a buyer’s market on Hatteras Island. This
has created an environment that makes it an opportune time for anyone
thinking about buying a cottage or lot on the island to turn their
thoughts into action. Consider these factors:
underwriting requirements have become more rigorous across the spectrum
of loans, financing is readily available for qualified buyers on the
Outer Banks, and the cost of borrowing is reasonably inexpensive.
almost 450 residential properties and 300 unimproved lots being offered
for sale, prospective buyers now have a very broad selection from which
to choose. One of the indicators of a “buyer’s
market” is a supply of properties that significantly exceeds
demand. On Hatteras Island at the end of 2007, there was a 3.6
year supply of homes for sale and a 6.7 year supply of lots.
a by-product of the increased supply of properties relative to buyer
demand, prospective buyers should find the purchasing environment less
stressful. There is less competition among buyers for the
available properties. There are fewer buyers looking at properties, and
there are increased inventories of homes and lots, which give buyers a
wide range of choice.
the wide gap between supply and demand, both the listing prices and the
selling prices of properties have already dropped by a significant
amount. Between June 2005 and December 2007, the median selling
price of residential properties decreased 44 percent, and unimproved
lot prices declined 23 percent.
addition to the price decreases that are being seen, buyers may find
sellers more willing to offer concessions during contract
negotiations. Examples might include the seller paying a portion
of the buyer’s closing costs, the seller “buying
down” the purchaser’s interest rate by paying loan points,
and, in some cases, the seller guaranteeing a specific dollar amount of
rental income for the first full year of ownership.
rates are near historical low points. Low interest rates make
properties more affordable and provide a strong incentive to purchase
before rates once again head upward.
interest rate recently offered through a major lender for 30-year,
fixed-rate conforming loans (loan amounts of $417,000 or less) was
5.625 percent with no points. A point equals one percent of the loan
amount. The interest rate for jumbo loans (loan amounts in excess
of $417,000) was 6.25 percent with the payment of one point. Check with
your Realtor for current rates.
headlines like “Mortgage Meltdown,” “Home
Implosion,” and “Credit Crisis” that we have seen in
the national media can cause all of us to think that the best course of
action might be to sit on the sidelines, do nothing, and wait for
prices to decline further. The fact is that the nightly national
reports that we see and hear often say little about what is actually
happening in the Hatteras Island real estate market.
you read the newspaper and watch television, keep two or three things
in mind. First, real estate is cyclical, and it is a long-term
investment. The reports that we are watching and reading focus on
the short-term crisis du jour. Second, every real estate
market is local. While there can be no denying that events in the
outside world have some effect on the Hatteras Island market, the
statistical profile for our resort environment is quite different from
the national, primary residence market that is the basis for the
reports. Third, as we have seen, our government is not going to sit
idly by and let an economic collapse occur, especially in an election
agree that, except by pure luck, it is highly unlikely that anyone can
time the market and purchase at the exact bottom. Most of us end up
buying after the bottom has passed, and a clear upward trend is
evident. During this phase of the real estate cycle, prices will
have begun to rise, and there will be more competition among buyers for
the same properties. In addition, the cost of borrowing can be
expected to increase. This fairly common scenario leads to the
observation that, all things considered, it is probably more beneficial
for buyers to make their purchases during the later part of the down
cycle in real estate markets rather than waiting until the market
bottom has been confirmed.
In summary, now is an especially good time to investigate the benefits of owning a place at the beach.
- There is a wide selection of properties from which to choose.
- The purchasing environment is less stressful.
- Prices on Hatteras Island are very attractive relative to other resort areas.
- Properties can be expected to cost more in the future.
- Resort real estate has performed very well as a long-term investment.
- Second home sales now account for about 36 percent of all residential transactions across the country.
- Most importantly, there is no place like Hatteras Island!
Your real estate broker can help you to find the right property,
determine what comparable properties are selling for, assist with
paperwork and negotiations, and help to arrange financing.
It really is a great time to be a buyer on Hatteras Island!
(Tom Hranicka is an
associate broker with Outer Beaches Realty. Questions, comments, or
suggestions for future articles may be sent to Tom Hranicka at P.O. Box
237, Avon, NC 27915, or e-mail to [email protected] )
Copyright©2007 Tom & Louise Hranicka. All rights reserved.