| February 11, 2013
Hatteras Island Real Estate:
things considered, 2012 was a pretty good year for the Hatteras Island
real estate market, especially in light of the impact that Super-storm
Sandy and the two nor’easters that followed had on access to the
2013 State of the Market Report
By TOM HRANICKA
Here is a look at the major residential market indicators comparing last year with 2011.
|# FOR SALE||+6.4%|
|AVERAGE SALE PRICE||+3.8%|
|DOLLAR VALUE OF SALES||+11.6%|
|# UNDER CONTRACT||-41.0%|
|# FORECLOSURE FILINGS||-25.0%|
|# FORECLOSURE SALES||+5.5%|
|# SHORT SALES||-15.8%|
you can see, both the number of sales and the average selling price
showed modest gains, and new homes are once again being constructed
throughout the island. The dominant residential trend is more sales at
slightly higher prices.
If you have been tracking the
performance of the national real estate market, then you have read
reports about the supplies of properties for sale decreasing
substantially. This situation is not characteristic of what we are
seeing on Hatteras Island. The supply and demand curves for residential
properties were coming together nicely with the inventory decreasing
and sales increasing until the end of 2011. Throughout 2012, the two
curves have been parallel to each other with both rising together at
approximately the same rate.
Residential properties under
contract to be sold are considered to be a leading indicator of future
sales. The significance of the drop in this measure of the health
of the market is, quite honestly, not completely clear to me at this
time. On the one hand, there is a pattern of seasonal decline
that we often see at the end of the year. Then, properties under
contract tend to increase throughout the spring months. My sense is
that the issues associated with Highway 12 that we experienced from
late October through most of December are somewhat responsible for the
larger than usual decrease in this number, and I am hopeful that it is
just a temporary anomaly.
The statistics presented above are for
all residential properties including single family homes, condominiums,
and mobile homes. If we dig deeper into the figures and look only at
price indicators for single family homes by their location, some
interesting variations emerge.
AVERAGE RESIDENTIAL SELLING PRICE BY LOCATION 2012 VS. 2011
|Single Family Only||+4.7%|
|Single Family Oceanside||+8.4%|
|Single Family Soundside||-4.3%|
|Single Family Oceanfront||+18.8%|
|Single Family Semi-Oceanfront||-22.7%|
|Single Family Soundfront||-4.2%|
|Single Family Canalfront||-6.4%|
number of sales in all of the categories, except for soundside
properties, was higher in 2012 than in 2011. I think the figures show
that buyers were taking advantage of the exceptionally attractive
prices for high demand oceanfront properties and that price behavior
was dependent on location. Keep in mind that price is just one
dimension of the purchasing decision. Location, condition, and price
are the central buying criteria that we are seeing in today’s
Of particular significance are the changes
that are taking place in the distressed property segment of the real
estate market. In previous articles, I have commented that a reduction
in the number of bank-owned properties and short sales was an important
pre-condition for prices to rise. It is my belief that the corner
has finally been turned relative to this indicator. Distressed
properties represented 55.7 percent of all residential sales in 2011
and 49.1 percent of residential sales in 2012. In contrast, today
there are just 11 foreclosures and 13 short sales that are for sale
among 248 active listings – less than 10 percent. This is potentially
good news for prices this year.
One other observation that is
important to note is the distinction between the price of a property
and its cost. The average selling price of a home on Hatteras Island in
2012 was $338,412. This is roughly the same as the price level
that existed in 2002. The significant difference is that the average
interest rate on a 30-year fixed rate mortgage in 2012 was about 3.6
percent compared to 6.5 percent in 2002. What this means from a
financial standpoint is that the monthly cost of a mortgage on a
$300,000 house last year was around $532 less per month than it was ten
years ago. Looked at another way, at today’s low interest rates, you
can buy more house for the same monthly outlay.
low interest rates that we are currently enjoying cannot last forever.
The benefit of concurrent low prices and low interest rates is an
opportunity that prospective buyers should recognize and act upon to
make their dreams of purchasing a home on Hatteras Island a reality
before the price/interest rate dynamics change.
Thus far, we
have been examining the residential market on the island.
Unfortunately, the market for undeveloped lots is not recovering as
well as the market for homes.
The following table depicts the year-end statistics for unimproved properties.
|# FOR SALE||+9.4%|
|AVERAGE SALE PRICE||-8.5%|
|DOLLAR VALUE OF SALES||+44.2%|
|# UNDER CONTRACT||-58.3%|
|# FORECLOSURE FILINGS||-53.2%|
|# FORECLOSURE SALES||+147.1%|
|# SHORT SALES||-13.3%|
story that these numbers tell is that buyers are scrambling to purchase
undeveloped lots at prices decimated by distressed properties and at
price levels last seen in 1999. In contrast to the residential market,
the summary comment for the undeveloped lot market is -- more sales at
In terms of location, 36 percent of lot sales on
the island in 2012 were on the soundside in Avon. The remaining sales
were spread among the other villages.
The impact of bank-owned
properties in terms of the number of sales and the decline in the
average selling price of lots is quite evident. Like the residential
market, the decline in foreclosure filings is a welcome sign that the
long slide in lot prices may finally be coming to an end.
are many ways that the statistics can be analyzed, and each variation
provides us with a deeper insight into market behavior. In this report,
I have attempted to present the indicators that I consider to be the
most relevant for identifying the major market trends.
I think that the Hatteras Island real estate market is in the early
stages of recovery. I expect that we will see a steady improvement in
sales and price appreciation as the next market cycle takes shape. Only
time will tell the exact pattern of the recovery, but I have tremendous
faith in the belief that Hatteras Island is singularly unique in so
many ways and that as more and more people recognize its distinctive
qualities, the future for the island and its real estate market will be
very bright indeed.
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.