August 31, 2015

Hatteras Island Real Estate:
Trends in vacation and investment properties


Each year, the National Association of Realtors publishes an Investment and Vacation Home Buyers Survey that reflects trends outside the primary residential and commercial markets. The survey, which was based on a sample of nearly 2,000 home buyers in 2014, always contains some interesting insights.

Before discussing this year’s survey, a word of caution is in order. Loosely translated, the National Association of Realtors defines an investment property as a home bought to rent to others or to diversify investments. A vacation home is one that is used as a family retreat or is purchased as a principal residence in the future.

You can see from these definitions that our Hatteras Island properties are really a hybrid of these two categories. Most of the residential purchases on Hatteras Island would probably be considered as vacation homes rented to others for part of the year.

With these caveats in mind, last year, the market share of vacation home buyers increased from 13 percent to 21 percent of the total sampled, and investment purchases dropped slightly from 20 percent to 19 percent.  This suggests that 40 percent of residential sales nationwide in 2014 represented vacation or investment home purchases.  While no similar data are available for Hatteras Island, my sense is that investors are just starting to reenter the market.

The survey also indicated that 45 percent of vacation home buyers and 44 percent of investors purchased properties that were either foreclosures or short sales. By comparison, last year on Hatteras Island, 26 percent of residential sales were distressed properties. This segment of the market on the island is clearly declining.

Among vacation buyers, 40 percent purchased in a beach area, 19 percent bought in the country, and 17 percent purchased in the mountains followed by 15 percent choosing lakefront, 4 percent buying ranches, and 5 percent preferring other locations. The south was the region of the country most favored by these buyers. The west came in second at 25 percent.

Looking at price performance, nationally, the median sales price of vacation homes declined 11.1 percent for vacation properties and 3.8 percent for investment properties when 2014 was compared to 2013. In contrast, in the Hatteras Island market, the median residential sales price decreased 8.8 percent. Both the number of sales and the total dollar value of sales on the island increased around 11 percent in 2014.

From a marketing standpoint, the majority of vacation buyers looked online as the first step in their home buying proces,s followed closely by contact with a real estate agent. Investment buyers preferred to contact a real estate agent as their first choice, followed closely by online searches. Similarly, 48 percent of vacation home buyers and 43 percent of investment property purchasers found the home that they ultimately purchased online. Locally, we are seeing this same pattern in which buyers first identify properties through Internet sources before they visit the island to actually look at homes that are of interest to them.

More than 80 percent of vacation and investment buyers felt that now is a good time to purchase real estate. The majority of buyers found the mortgage application and approval process to be just about what they expected, but not difficult.

It is always fun to look at national trends and statistics and to compare them with what is happening in our little corner of the country. All things considered, I think that we are doing pretty well considering that a market recovery is just starting to take shape on the island.

(Source: National Association of Realtors Investment and Vacation Home Buyers Survey 2015, April 2015.)

(Tom Hranicka is a broker with Outer Beaches Realty. Questions, comments, or suggestions for future articles may be sent to Hranicka at P.O. Box 280, Avon, NC  27915 or emailed to [email protected] Copyright 2015 Tom & Louise Hranicka.  All rights reserved.)

comments powered by Disqus