October 15, 2012

Hatteras Island Real Estate:
The days of the great deals are numbered


At this point in the real estate market cycle on Hatteras Island, I think it is a good time to update the trends that we are seeing with regard to foreclosures and short sales. An awareness of the role that distressed properties are playing in the overall market is important for several reasons.

First, buyer expectations of the availability of “great deals” need to be adjusted to reflect present market conditions. Second, a noticeable decrease in the level of distressed properties in the current inventory is a signal that market dynamics may slowly be shifting in favor of sellers. Third, the changing balance in the market between distressed and non-distressed properties is a pre-condition for selling prices to start rising once again.

The following graphic shows the 32.8 percent decline that has occurred in the number of foreclosure filings between 2009 and 2011.  If the present pattern continues, foreclosure filings will be down again this year.


The next chart depicts the changes that have occurred in both the level and the mix of distressed property sales in 2011 and year to date in 2012.





Short Sales

% Distressed


Short Sales

% Distressed








Sep 2012







In total, foreclosures and short sales represented 55.6 percent of all sales transactions on the island in 2011 and 51.4 percent of sales through September of this year. As you can see, distressed property sales, while slowly declining, still represent over half of all transactions.

Keep in mind that these statistics reflect past history and are, therefore, somewhat like looking in the rear view mirror. What the future holds is perhaps the more relevant understanding that we should be seeking.  Properties under contract give us some idea of current purchasing behavior. Presently, short sales represent 48.1 percent of the houses and lots under contract, but bank-owned properties account for only 9.0 percent of the total.  

This pattern may reflect the fact that buyers have in the past shied away from short sales because of the associated delays and uncertainties and have favored foreclosures because of lower prices and smoother transactions. As the number of available foreclosures has decreased, buyers may be more willing to consider short-sale properties because of their price advantage over non-distressed properties.

Where we really see the impact of the diminishing role of distressed properties is in the inventory of homes and lots that are presently for sale. Out of 400 properties that are available for purchase, only 20 are bank-owned and 18 are short sales.  This equates to just 9.5 percent of the total number of properties for sale.
By presenting these observations, I am not suggesting that foreclosures and short sales are going to disappear any time in the near future. What I am saying is that the number of distressed properties relative to the total inventory of properties can be expected to play a much smaller role in the future than they have over the past few years. 

As buyers search for homes and undeveloped lots to make their dreams of owning a place at the beach come true, they would be well-advised to look for properties that are priced appropriately for current market conditions and not be too disappointed if they don’t find some of the bargain basement prices that we have seen during the height of the buyer’s 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]

Copyright 2012 Tom & Louise Hranicka.  All rights reserved.

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