| July 22, 2013
the summer when the island is most active, I like to publish an updated
version of an article that addresses some of the most frequently asked
questions that I hear from prospective buyers and sellers. Many of the
issues remain unchanged, but occasionally a new question will make its
way into the list. As an example, prospective buyers have
recently been inquiring about plans to stabilize Highway 12 at the
northern end of the island.
Hatteras Island Real Estate:
Frequently asked questions
By TOM HRANICKA
According to Park Service
reports, each year several million people visit the Cape Hatteras
National Seashore. Quite a few choose to spend some of their
well-deserved vacation time talking with our local Realtors about
property in Hatteras Island’s seven villages. While each person’s
specific needs and interests are different, a number of surprisingly
similar questions arise during these conversations. Some of the most
commonly asked questions and their answers are presented below.
Question: We are just starting to consider buying property. Do you have any recommendations for a game plan?
Hatteras Island is a very special place, and each of its villages has
its own novel charm. My advice is to visit each of the villages, drive
around, and let your feelings be your guide. Usually, one or two areas
will appeal to you more than the others. Once you find the location
that feels right for you, then start to clarify price ranges that meet
your criteria and zero-in on the “perfect” property.
Q: What does real estate cost on Hatteras Island?
A: There are properties to meet just about every need and every budget. Be aware that prices may vary among the villages.
- Oceanfront homes are priced from $225,000 to $2.4 million. Lower priced homes usually have erosion concerns.
- Current asking prices for oceanfront lots begin around $175,000 and peak at $695,000.
- Oceanside and soundside lots start around $29,900, and cottages range from $94,500 to about $1.4 million.
- Soundfront homes cost $195,000 to $1.6 million.
- Soundfront lots are available for $69,000 to $799,000.
- Canalfront homes reflect asking prices from $168,000 to $479,000.
- Depending upon location, size, and age, condominiums range in price from $89,500 to $450,000.
When annual rental income is taken into account, the cost of owning a cottage on Hatteras Island can be surprisingly affordable.
Q: How has the Hatteras Island real estate market performed over the past few years?
Over the long term, the real estate market on Hatteras Island has
rewarded property owners with attractive returns on their investments.
As the real estate market has weakened, the average selling prices of
houses and undeveloped lots have declined. I am reasonably confident
that at this time we are within the bottom range of the market cycle
and that the stage is being set for the market’s next movement upward.
HATTERAS ISLAND AVERAGE SELLING PRICES
Q: Is it better to buy an existing cottage or to purchase a lot and build?
There is no one answer to this question that is right for
everyone. Some feel more comfortable with the construction
process than others. My general advice is that if you find an
existing home that you really like, go ahead and purchase it. If
none of the homes you see is truly what you want, then buy a lot and
build a home that reflects your personal tastes.
there are a number of variables to take into consideration, in today’s
market, the cost of purchasing an existing home is just about the same
as the cost of buying a lot and building a new home.
Q: If I should decide to build a new home, what can I expect it to cost?
Construction prices for new homes are currently about $130 per square
foot. A complex design and upgraded features can raise the cost
of construction even higher. The cost of the lot, furniture, and any
amenities would be added to reach the total price. We have
well-qualified builders, and the North Carolina building code for
coastal properties is considered to be quite strict.
Q: How difficult is it to obtain financing for real estate purchases on Hatteras Island?
For qualified buyers, financing is available through a variety of
lenders. In mid-July, 30-year fixed-rate mortgages were available
with interest rates as low 4.5 percent with the payment of one point or
You should be aware that underwriting standards
have increased across the spectrum of loans, especially for loan
amounts over $417,000 and for unimproved lot loans.
Q: What role are foreclosures and short sales playing in the Hatteras Island real estate market?
The number of foreclosure sales and short sales certainly bears
watching both for its influence on our local market as well as being a
measure of the effectiveness (or ineffectiveness) of governmental and
private efforts to stem the tide of families losing their
properties. Fortunately, the numbers of new foreclosure filings
on the island have significantly declined since the peak in 2009.
Through the end of June, foreclosures represented about 18 percent of
residential sales, and short sales (situations where the mortgage
balance is more than the value of the property) accounted for 21
percent of sales. In total, 39 percent of all residential sales were
While comparatively small in terms of
absolute numbers, the presence of foreclosures and short sales in the
market, combined with an excess of supply in relation to buyer demand,
have contributed to a decline in selling prices. Purchasing foreclosed
properties and short sales can be more challenging that a traditional
purchase, so be sure to seek the assistance of a real estate agent who
is familiar with these types of transactions to guide you through the
Q: How does it work if we want to rent our cottage when we are not using it ourselves?
There are professional real estate firms on Hatteras Island that for a
fee will provide a comprehensive property management program. Services
include advertising your cottage, scheduling rentals, cleaning,
maintenance, and all necessary accounting. Once you make the decision
to rent, they will take care of just about everything else.
and soundfront houses generally rent for 25 to 28 weeks per year with
some select homes exceeding the 28 week performance. Soundfront
properties will rent a few weeks less. Oceanside and soundside cottages
usually experience somewhat fewer rental weeks depending on their
distance from the water and the amenities that are offered. Prime
waterfront properties have the highest occupancy rates and generate the
greatest rental incomes.
Q: What happens to the furnishings when a home is sold?
In the majority of sales, the buyer and seller negotiate a price for
the furnishings, and the furnishings stay with the property.
Lenders can only lend on the land and the structure. The
furnishings are considered to be personal property and are sold by a
separate Bill of Sale in conjunction with the transaction. The seller
may choose to identify certain items that are excluded from the Bill of
Sale such as the contents of owner storage closets and items of
personal or sentimental significance.
Q: How difficult is it to get flood insurance on Hatteras Island?
There should be little, if any, problem getting flood insurance
coverage for most properties on Hatteras Island. In fact, there are
some locations in which flood insurance may not be required. Flood
insurance is available through both the National Flood Insurance
Program (NFIP) and private insurance companies.
You should also
be aware be aware that there are some areas on the island where flood
insurance offered through the National Flood Insurance Program is not
available. This is an important fact to know when purchasing a home,
since the cost of private flood insurance can be substantially higher
than the cost of an NFIP policy.
Q: What is the current situation concerning the availability of water and sewage services?
The Dare County Water System provides central water service to all
villages on the island, although private wells are still in use in some
locations. A new central water system for Rodanthe, Waves and Salvo was
completed in 1996, and a reverse osmosis plant in Frisco provides water
service to the southern villages.
Private septic systems are the
standard method for waste disposal on Hatteras Island, although at
least one community has a central sewage treatment facility.
Q: What are the current plans for stabilizing Highway 12 access to the island?
A. There are three main projects to improve Highway 12 between Oregon Inlet and the northernmost village of Rodanthe.
1. A new bridge over Oregon Inlet parallel to the existing Bonner Bridge.
2. A new bridge to replace the temporary bridge over the Pea Island Inlet.
Either a bridge that will extend from an area north of the S-curves
into Rodanthe or a road from Highway 12 to the Pamlico Sound connecting
to a bridge in the sound that would bypass the S-curves. As an interim
measure, there are plans to nourish the beach in the vicinity of the
S-curves to stabilize that area while a final decision is being made on
which option will be implemented.
These projects are in various
stages of planning while the necessary construction permits are being
obtained and hearings are scheduled as part of the permitting processes.
Q: How many year round residents are there on Hatteras Island?
The 2010 census results indicated that the population of Hatteras
Island is 4,322 compared to 4,001 in 2000. In 1990 the census reported
3,814 island residents. The populations by village were reported as:
Rodanthe, Waves, and Salvo 624; Avon 777; Buxton 1,526; Frisco
891; Hatteras 504.
Q: It is my impression that Hatteras Island experiences severe weather. What can you tell me about weather conditions?
While it is true that Hatteras Island from time to time does experience
severe weather, if you think about it, so does just about every place
else in the country! The perception that we get more than our fair
share may, in part, be the result of the prominence of Cape Hatteras as
a geographic landmark and the fact that it is frequently used as a
reference point by weather forecasters. Statistically, the experts say
that on average the Outer Banks will experience weather that has the
potential to cause damage about three times a year. A study by the
National Oceanic and Atmospheric Administration estimated that, based
on historical records, a major storm strikes the island about every
The weather on the island is normally quite
pleasant. We get generous amounts of rainfall. The wind averages
about 11 mph, and the average temperature is a comfortable 69 degrees.
Believe it or not, according to National Weather Service records, the
official temperature on Hatteras Island has never reached 100 degrees!
The highest temperature ever recorded was 97. Constantly changing
weather patterns are a part of life on Hatteras Island.
perspective, the number of warm, sunny days and star-filled nights far
outweigh the concerns created by the strong storms that have been a
fascinating part of the island’s history.
Q: Is now a good time to buy?
After experiencing double-digit rates of appreciation for several
years, the average selling prices of properties have declined
substantially as they have across the country. Prices on Hatteras
Island offer a very strong value relative to other resort areas along
the East Coast.
This is an excellent time to be a buyer on
Hatteras Island. Both interest rates and prices are low – a combination
that does not often exist. Although starting to increase, interest
rates remain near historically low levels, and the average selling
price of residential properties has declined about 40 percent since
2005, making homes more affordable. A fairly large supply of cottages
for sale means that a good selection of properties is available for
Opportunities in the market for
unimproved lots are even more compelling. Since peaking in 2006, the
average selling price of lots has declined almost 75 percent.
All things considered, there are encouraging signs that our local market is on the road to recovery.
that you have the answers to the most frequently asked questions about
island real estate, take the next step and start investigating how
current opportunities may fit into your personal plans to purchase a
home or undeveloped lot. When all is said and done, there is no place
like Hatteras Island!
(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.