February 1, 2016

Hatteras Island Real Estate: 2016 State of the Market Report

Back in the 1960s, Bob Dylan wrote a hit song titled, “The Times They Are a Changin.” This could easily describe the current state of the Hatteras Island real estate market with the addition of the words “for the better.”

For perspective, a buyer’s market began on Hatteras Island in June 2005. At the depths of that market, residential selling prices had dropped almost 50 percent, and undeveloped lot prices had plummeted close to 75 percent. When evaluating where the market is today, consider the following trends.
                       
Most key real estate market indicators are showing improvement.  The number of residential and undeveloped lot sales are both displaying strong upward momentum. The total dollar value of residential sales was up over 11 percent last year when compared to 2014. It was refreshing to finally see meaningful improvement in the market for undeveloped properties.



However, the average selling prices of both houses and lots continued to remain persistently flat. The average residential selling price was $331,901, and the corresponding value for lot prices was $99,274.



The geographic distribution of sales across the island was fairly evenly spread among the tri-village area, Avon, and the three southern villages.

Several years ago, distressed properties (short sales and foreclosures) were a dominant feature of the island’s real estate market. Today, there are only eight short sales and two foreclosures in the residential inventory. A reduction in the number of distressed properties was a pre-condition for prices to start rising once again.

We are also starting to see a recovery in the market for high-end properties. Last year, seven homes had selling prices of $1 million or more. In 2014, there were four million-dollar-plus properties sold. This was in contrast to the two previous years when no million-dollar homes were reported sold on the island. In addition, investors are beginning to re-enter the market.

     

Overall, it would be reasonable to conclude that during 2015, we may have witnessed the beginning of a long-awaited recovery in the island’s real estate market.

Looking at broader economic measures of the Hatteras Island economy, meal tax receipts which reflect the health of food service businesses, were up nearly six percent through November, the latest data available..

Occupancy tax receipts which are an indicator of the performance of the island’s lodging industry were more than five percent ahead of 2014 results.

The charter fishing boat fleet reportedly had a good year with gas prices down and no extended periods of bad weather.

The strength or weakness of commercial fishing seemed to depend on what targets the boats were pursuing. It was a banner year for shrimp and dogfish catches, but Spanish mackerel fishing was a challenge. Pound netters had varying degrees of success.

In the recreational sector, the bait and tackle shops for the most part reported having a good year. Lots of visitors and good weather generally contributed to positive bottom line results. At the same time, the periodic closure of prime fishing areas and beach driving restrictions are still drawing negative reactions from fishermen.

Visitation statistics presented by the Outer Banks Visitors Bureau showed mixed results. More than 2.3 million people visited the Cape Hatteras National Seashore – an increase of three percent over the previous year. Remember that in addition to Hatteras Island, the Cape Hatteras National Seashore extends more than 70 miles from South Nags Head to Ocracoke Island.

The number of people climbing the lighthouse was down about 15 percent, and vehicle traffic on the Hatteras to Ocracoke ferry was 2.3 percent lower than in 2014. Some of this weakness was attributable to facilities being closed for a brief period when Hurricane Joaquin threatened the island last fall.

Another lingering weakness in the island’s economy is the construction industry. Last year, on average only about two new single family building permits were recorded each month. This is the same level of activity that we have seen for quite a few years.  Builders have taken up the slack by focusing on repairs, remodeling, and additions.

2015 will be remembered as a watershed year for actions to stabilize access to the island via Highway 12. The most important development was the agreement that was reached between the North Carolina Department of Transportation and the environmental groups represented by the Southern Environmental Law Center, allowing construction of a new bridge over Oregon Inlet. Work on the replacement bridge is expected to begin in March.

In addition, a contract was signed for the construction of a concrete bridge that will temporarily replace the metal bridge over the inlet on Pea Island.

While these two projects are underway, the NCDOT will be working with the Federal Highway Administration to identify long-term options for protecting Highway 12 at the S-Curves north of Rodanthe and at the Pea Island Inlet.

Finally, a beach nourishment project is planned to expand the beach from an area north of the Buxton motels to the end of Old Lighthouse Road. This project is scheduled for the summer of 2016.

When taken together, these infrastructure improvements demonstrate that the various governmental entities are paying attention to the importance that stable access to the island and the quality of our beaches have to both residents and visitors.

All things considered, this is a very positive report for the real estate market and for Hatteras Island businesses. Barring any severe storms, there is reason to believe that 2016 will see a continuation in the recovery of the island’s economy.

(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.)



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