Hatteras Island Real Estate: Market Perspectives
By TOM HRANICKA
the end of July, I had the pleasure of participating in a conference
that was attended by several hundred of the most successful real estate
professionals in the country. Two of the keynote presentations were
given by nationally recognized leaders within the industry. The
observations that they made and the perspectives that they offered were
surprisingly similar. Their main thoughts and projections are
summarized below for your consideration.
There will be challenges in the real estate market until unemployment
declines, consumer confidence rises, and the inventory of distressed
properties is worked off.
Distressed properties (foreclosures and short sales) will impact the
real estate market for as long as 3 to 5 years. It may be longer in
some places like California. The “shadow inventory” of approximately 5
million distressed properties will be released by the lenders at a
measured pace rather than all at once.
Nobody really knows what is going to happen with the real estate
market. The recovery, when it occurs, will be gradual. It would not be
unreasonable to believe that while all real estate markets are local in
nature, the broader real estate conditions that the country is
experiencing will be with us for the next 3 to 4 years.
The market for lower priced properties will recover more quickly than
the luxury home market. Mortgage availability is good for lower priced
The real estate recovery will be a “saw tooth” recovery, characterized
by inventory and price cycles. As the supply of homes
prices will increase, causing more properties to become available for
sale which will then cause prices to decline again.
Now is an exceptional time to buy real estate. There has been
significant decline in prices since the buyer’s market began, and
interest rates are at their lowest point in the past 50 years. In the
future, people will be saying, “I wish I had bought that property in
2010 when prices and interest rates were low.”
Investment/rental properties will be in high demand. Investors can
purchase properties at today’s low prices and have them produce
positive cash flows. (Note: This observation applies more to the
purchase of investment properties in urban/suburban markets than in
resort markets. We are not yet seeing many investors in the current
Hatteras Island market.)
I think that you can see from these comments that individuals who are
at the center of the national real estate community have a very
conservative view of market expectations for the next few years. They
are not shy about pointing out that the market for primary residences
(although not our second home market) has been supported during the
past few years by artificial credits. They are also quick to see the
opportunities that exist in today’s environment of low prices and low
interest rates for those with the financial resources to take advantage
of these conditions.
Here on Hatteras Island, we continue to see a real estate market
characterized by increasing sales at lower prices. Through
first six months of this year, the growth in sales offset the decline
in prices, resulting in a higher dollar value of sales compared to the
same period in 2009.
The following table displays key residential market indicators,
comparing January – July 2010 with January – July 2009.
Value of Sales
The remarks and advice of the industry experts at the conference echoed
a theme that you have been hearing in my articles for at least the past
year – this is a great time to be a buyer on Hatteras Island. Let me
give you just one example. During the past year, there have
nine four-bedroom oceanfront homes sold on the island. The
selling prices of all of these homes were $100,000 or more
the average selling price of an unimproved oceanfront lot alone five
Buyers today are saying, “I am not sure that the market has reached the
absolute bottom yet, but it is close enough that I don’t want to miss
out on the next upward cycle.” My sense is that this is a
accurate summary of a wide range of quantitative and qualitative market
(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]
Copyrightę2010 Tom & Louise Hranicka. All rights