| December 10, 2012
Hatteras Island Real Estate:As
the year draws to a close, it is always interesting to look back and to
try to gain some insights into how the real estate market on Hatteras
Island has performed. In the past, I have made the comment that the
island’s market is like an automobile that is slowly moving forward but
not on all cylinders. From what I can tell, this analogy still holds
true. Let’s take a look at some of the major market indicators and the
implications for buyers and sellers.
Year-end market perspectives
By TOM HRANICKA
Supply vs. Demand
year-end, the inventories of both residential properties and
undeveloped lots that are for sale continued to exceed buyer demand.
This is disappointing in the sense that the supply and demand curves
were consistently headed toward an equilibrium point until January of
this year. Since then, the two curves have been in a parallel
pattern as shown in the following chart.
sellers, this means that we are still in a price-driven market in which
a competitive asking price is their most effective marketing tool. In
order to stand the best chance of selling, homes and lots have to offer
the most compelling prices among competing equivalent properties.
message for buyers is that as long as supply is greater than demand,
the real estate market on Hatteras Island presents attractive
purchasing opportunities. However, buyers need to recognize that
the days of the really great deals are rapidly drawing to a close.
observation is based on a significant decline in the number of
distressed properties in the current inventory. As an illustration of
this changing dynamic, 52.4 percent of oceanfront homes sold on the
island through November of this year were either short sales or
foreclosures. At the present time, among all of the oceanfront
properties for sale, there is only one foreclosure and one short
sale. This trend is repeating itself across almost all categories
of homes and lots that are being offered for sale.
silver lining in the supply/demand statistics is that the sales of both
residential properties and unimproved lots this year have been up 10.9
percent and 71.2 percent respectively.
prices have shown a slight increase this year, while undeveloped lot
prices continued to decline. Whether we are evaluating average or
median selling prices, and whether we are looking at all residential
sale prices or just single family sale prices, the increases have
ranged from less than 1.0 percent to 2.6 percent.
the other hand, the average selling price of unimproved lots has
decreased 15.1 percent, while the median sale price of lots has dropped
balance between supply and demand and an ongoing reduction in the
number of distressed properties in the inventory are, in my opinion,
preconditions for prices to post a significant recovery.
of the beneficial effects of lower lot prices is that new home
construction is starting to show signs of life once again. Buyers are
purchasing bargain-priced lots and then building the homes of their
dreams. Through November, the number of new single-family building
permits that have been issued on the island is up 34.8 percent over the
same period last year. Please keep in mind that while the percentage
increase is high, the actual number of permits is still fairly
constrained (31 vs. 23).
a broad overview of these statistical measures, I think two
observations are relevant. One is that the press and media reports
stating that a major recovery is underway in the national real estate
market overstate what is happening in our local island market. As
you read and listen to these reports, also keep in mind that the
largest gains are for the most part being seen in the states that were
at the center of the foreclosure crisis.
other observation that I would make is that, while not booming, our
local real estate market is doing quite well considering that, over the
past 15 months, we have experienced Hurricane Irene, Super-storm Sandy
and two back to back northeasters that have created extended
disruptions in access to the island on two separate occasions. Yet, in
the face of these severe weather events and their impacts, we have seen
meaningful increases in the number of sales and some rise in
residential prices. When combined with a decrease in distressed
property activity and ongoing low interest rates, I am cautiously
optimistic that these trends suggest that 2013 will be a very favorable
year for the Hatteras Island real estate market.
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.