number of well-informed professionals have observed that the real
estate market on the Outer Banks runs in 10-year cycles. If there is
any substance to this comment, then I think it is fairly safe to say
that the market appears to be stabilizing and forming a foundation for
its next movement upward. The current market momentum could be
characterized as trending toward stabilization with a slight downward
Real Estate: 2012 market predictions
By TOM HRANICKA
Sometimes the future can become a little clearer if we look at the
past. The following graph shows the trends in average
selling prices since 1994.
My sense is that we have at least another year or two of flat selling
prices, mainly because of the continuing inventory of foreclosed
properties and short sales that place a ceiling on price
The good news is that the number of foreclosure filings has decreased
on the island for the past three years, and the number of distressed
property sales has increased. Last year, distressed property sales
represented 56 percent of the total residential sales on Hatteras
Island and 54 percent of unimproved lot sales.
Another positive factor among local market indicators is that the
supply and demand curves for residential properties have been steadily
moving closer to each other. I am anticipating that the two curves will
meet in 2012, setting the stage for a transition from the current
buyer’s market to a seller’s market once again.
At the same time, I believe that any price appreciation that we
experience will be modest compared to the extraordinary run-up that we
saw between 2001 and 2005.
The market for unimproved lots will take a little longer to recover
since prices just started showing signs of stabilizing for the first
time last year, and those supply and demand curves are still fairly
It was also encouraging to note that during 2011 we saw a glimmer of
interest in the higher priced properties ($1 million-plus) with three
properties sold in this range.
All things considered, I am looking forward to more sales at flat to
somewhat lower prices on Hatteras Island in 2012.
While the focus of our interest is Hatteras Island, we do need to keep
an eye on the world outside our shores for events and patterns that
could affect us. As an example, a very highly regarded real
estate trends report (Swanepoel Trends Report 2012) is expressing
concern about the faltering European economy and the potential that
exists for exporting a potential recession in Europe to the United
States. Unemployment and underemployment, low levels of consumer
confidence, and ongoing tight credit are national issues that are
Looking at the national real estate market, the predictions are
strikingly similar to those for Hatteras Island – rising sales, flat to
declining prices, falling inventories of properties for sale, and high
levels of foreclosures and homeowners in negative equity situations.
Interest rate levels are expected to remain low, but if people don’t
have jobs and loan underwriting stays restrictive, then it is going to
be difficult to generate any significant improvement in real estate
results in most places across the country.
As the government looks for additional sources of revenue, there is
backroom talk in the halls of Congress about eliminating some of our
most cherished tax deductions, such as the mortgage interest deduction,
deductions on second homes, and deductions for state and local taxes.
You can be assured that the National Association of Realtors has given
these discussions a very high priority, and for the rest of us, they
certainly bear close watching.
To place these comments in perspective, when you think about it, there
are always positive and negative events and trends that exist at any
given point in time. Nonetheless, when real estate is considered for
the long term, it has almost always been a good investment.
So, let’s keep our eye on the ball and realize that the real estate
market operates in cycles. Right now, I honestly believe we are in one
of the best purchasing environments that anyone may see for a long time
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 © 2012 Tom & Louise Hranicka. All rights