Hatteras Island Real Estate: Frequently asked questions
By TOM HRANICKA
year, during the summer when the island is most active, I like to
publish an updated version of an article that addresses some of the
most frequently asked questions that I hear from prospective buyers and
sellers. Many of the issues remain unchanged, but occasionally a new
question will make its way into the list. As an example, for
past two years, inquiries about foreclosures and short sales have
become more noticeable.
According to Park Service reports, each year several million people
visit the Cape Hatteras National Seashore. Quite a few choose to spend
some of their well-deserved vacation time talking with my real estate
colleagues and me about property in Hatteras Island’s seven villages.
While each person’s specific needs and interests are different, a
number of surprisingly similar questions arise during these
conversations. Some of the most commonly asked questions and their
answers are presented below.
are just starting to consider buying property. Do you have any
recommendations for a game plan?
Island is a very special place, and each of its villages has its own
novel charm. My advice is to visit each of the villages, drive around,
and let your feelings be your guide. Usually, one or two areas will
appeal to you more than the others. Once you find the location that
feels right for you, then start to clarify price ranges that meet your
criteria and zero-in on the “perfect” property.
Q. What does
real estate cost on Hatteras Island?
There are properties to meet just about every need and every budget. Be
aware that prices may vary among the villages.
- Oceanfront homes are priced from
$160,000 to $1.98
million. Lower priced homes usually have some special conditions or
concerns like erosion or ocean overwash.
- Current asking prices for oceanfront
lots begin around $415,000 and peak at $1.07 million.
- Oceanside and soundside lots start
around $29,995, and cottages range from $125,000 to $1.42 million.
- Soundfront homes cost $330,000 to $2.5
- Soundfront lots are available for
$135,000 to $1.4 million.
- Canalfront homes reflect asking prices
from $199,000 to $795,000
- Depending upon location and size,
condominiums range in price from $91,250 to $579,000.
When annual rental income is taken into account, the cost of owning a
cottage on Hatteras Island can be surprisingly affordable.
How has the Hatteras Island real estate market performed over the past
long term, the real estate market on Hatteras Island has rewarded
property owners with substantial returns on their investments. As the
real estate market has weakened, the average selling prices of houses
and unimproved lots have declined, although some movement toward price
stabilization has been seen this year.
ISLAND AVERAGE SELLING PRICES
Is it better to buy an existing cottage or to purchase a lot and build?
There is no one answer to this question that is right
for everyone. Some feel more comfortable with the
process than others. My general advice is that if you find an
existing home that you really like, go ahead and purchase it.
none of the homes you see is truly what you want, then buy a lot and
build a home that reflects your personal tastes.
While there are a number of variables to take into consideration, in
today’s market, you may be able to purchase an existing home for less
than the cost of buying a lot and building a new home.
If I should decide to build a new home, what can I expect it to cost?
Construction prices for new homes are currently about $125 per
square foot. A complex design and upgraded features can raise
cost of construction even higher. The cost of the lot, furniture, and
any amenities would be added to reach the total price. We
well-qualified builders, and the North Carolina building code for
coastal properties is considered to be quite strict.
How difficult is it to obtain financing for real estate purchases on
For qualified buyers, financing is available through a wide
selection of lenders. In mid-July, 30-year fixed-rate
were available with interest rates as low as 4.75% with the payment of
one point or less. Loan amounts higher than $417,000 carried
interest rate of 5.625% with the payment of one point or less. A point
equals one percent of the loan amount. Interest rates today are
reported to be at their lowest point in the last 50 years.
You should be aware that underwriting standards have increased across
the spectrum of loans, especially for loan amounts over $417,000 and
for unimproved lot loans. In addition, the borrower’s credit profile
can have a significant impact on the ease or difficulty associated with
What role are foreclosures and short sales playing in the Hatteras
Island real estate market?
The growth in the number of foreclosures and short sales
certainly bears watching both for its influence on our local market as
well as being a measure of the effectiveness (or ineffectiveness) of
governmental and private efforts to stem the tide of families losing
their properties. The number of new residential foreclosure
filings on the island was 6.3 percent higher during January through
June of this year compared to the same period in 2009. Through the end
of June, foreclosures represented about 23 percent of residential
sales, and short sales (situations where the mortgage balance is more
than the value of the property) accounted for 22 percent of sales. In
total, about 45 percent of all residential sales were
While comparatively small in terms of absolute numbers, the presence of
foreclosures and short sales in the market, combined with an excess of
supply in relation to buyer demand, have contributed to a decline in
selling prices. Purchasing foreclosed properties and short sales can be
more challenging than a traditional purchase, so be sure to seek the
assistance of a real estate agent who is familiar with these types of
transactions to guide you through the process.
Q. How does
it work if we want to rent our cottage when we are not using it?
There are professional real estate firms on Hatteras Island, which
for a fee will provide a comprehensive property management program.
Services include advertising your cottage, scheduling rentals,
cleaning, maintenance and all necessary accounting. Once you make the
decision to rent, they will take care of just about everything else.
Oceanfront and soundfront houses generally rent for 25 to 28 weeks per
year with some select homes exceeding the 28 week performance.
Soundfront properties will rent a few weeks less. Oceanside and
soundside cottages usually experience somewhat fewer rental weeks,
depending on their distance from the water and the amenities that are
offered. Prime waterfront properties have the highest occupancy rates
and generate the greatest rental incomes.
difficult is it to get flood insurance on Hatteras Island?
There should be little, if any, problem getting flood insurance
coverage for most properties on Hatteras Island. In fact, there are
some locations in which flood insurance may not be required. Flood
insurance is available through both the National Flood Insurance
Program (NFIP) and private insurance companies.
You should also be aware that there are some areas on the island where
flood insurance offered through the National Flood Insurance Program is
not available. This is an important fact to know when purchasing a
home, since the cost of private flood insurance can be substantially
higher than the cost of an NFIP policy.
Q. What is
the current situation concerning the availability of water and sewage
Dare County Water System provides central water service to all
villages on the island, although private wells are still in use in some
locations. A new central water system for Rodanthe, Waves and Salvo was
completed in 1996, and a reverse osmosis plant in Frisco provides water
service to the southern villages.
Private septic systems are the standard method for waste disposal on
Hatteras Island, although at least one community has a central sewage
Q. How many
year-round residents are there on Hatteras Island?
The 2000 census results indicated that the population of Hatteras
Island is 4,001. Interestingly, the number of full-time residents on
Hatteras Island has remained fairly constant. In 1990 the census
reported 3,814 island residents. The populations by village were
reported as: Rodanthe, Waves, and Salvo 567; Avon 792; Buxton
1,163; Frisco 845; Hatteras 634.
Q. It is my
impression that Hatteras Island experiences severe weather. What can
you tell me about weather conditions?
While it is true that Hatteras Island from time to time does
experience severe weather, if you think about it, so does just about
every place else in the country! The perception that we get more than
our fair share may, in part, be the result of the prominence of Cape
Hatteras as a geographic landmark and the fact that it is frequently
used as a reference point by weather forecasters. Statistically, the
experts say that on average the Outer Banks will experience weather
that has the potential to cause damage about three times a year. A
recent study by the National Oceanic and Atmospheric Administration
estimated that, based on historical records, a major storm strikes the
island about every 11 years.
The weather on the island is normally quite pleasant. We get generous
amounts of rainfall. The wind averages about 11 mph, and the
average temperature is a comfortable 69 degrees. Believe it or not,
according to National Weather Service records, the official temperature
on Hatteras Island has never reached 100 degrees! The highest
temperature ever recorded was 97. Constantly changing weather patterns
are a part of life on Hatteras Island.
From my perspective, the number of warm, sunny days and star-filled
nights far outweigh the concerns created by the strong storms that have
been a fascinating part of the island’s history.
Q. Is now a
good time to buy?
After experiencing double-digit rates of appreciation for
several years, the average selling prices of properties have
declined. Prices on Hatteras Island offer a very strong value
relative to other resort areas along the east coast.
This is an excellent time to be a buyer on Hatteras Island. An abundant
supply of homes for sale means that an attractive selection of
properties is available for buyers’ consideration, and the purchasing
environment is less stressful with fewer buyers in competition with
each other. In addition, sellers may be more willing to make
concessions during contract negotiations. Interest rates remain at
historically low levels, and the average price of residential
properties has declined about 40 percent since 2005, making homes more
All things considered, there are encouraging signs that our local
market is on the road to recovery.
• The average selling price of
is moving closer to the historical growth curve that we saw prior to
the boom years.
• Residential supply/demand curves are
trend slowly toward each other after being relatively flat for a few
• The number of monthly residential sales
is starting to increase.
• The Hatteras Island Pending Home Sales
leading indicator of future sales, has remained above its long term
downward trend for the past 13 months.
When all is said and done, there is no place like 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]hatterasisland.com
CopyrightŠ2010 Tom & Louise Hranicka. All rights