| July 26, 2016
Hatteras Island Real Estate: Frequently Asked Questions
By TOM HRANICKA
the summer months 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 been inquiring more frequently about the new
bridges at the northern end of the island.
According to Park Service reports, about two million people visit the
Cape Hatteras National Seashore each year. 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
Question. We are just starting to consider buying property. Do you have any recommendations for a game plan?
Island is a very special place, and each of its villages has its own
unique 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 $285,000 to $1.9 million. Lower priced homes usually have erosion concerns.
- Current asking prices for oceanfront lots begin around $314,000 and peak at $800,000.
- Oceanside and soundside lots start around $22,500, and cottages range from $110,000 to about $1.4 million.
- Soundfront homes cost $189,000 to $1.4 million.
- Soundfront lots are available for $29,900 to $725,000.
- Canalfront homes reflect asking prices from $199,500 to $1.7 million.
- Depending upon location, size, and age, condominiums range in price from $122,500 to $399,000.
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 in the past?
A. 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.
Q. Is it better to buy an existing cottage or to purchase a lot and build?
A. 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
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 to $140 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?
qualified buyers, financing is available through a variety of
lenders. In late July, 30-year fixed-rate mortgages carried
interest rates as low 3.50% with the payment of one point or
You should be aware that, while recently showing some signs of easing,
underwriting standards have increased across the spectrum of loans.
Funding for mortgages is readily available, but buyers still have to
meet qualification requirements that are more stringent than they were
in the past. An important improvement in the lending environment is
that loan amounts in excess of $417,000 are becoming easier to obtain.
Q. What role are foreclosures and short sales playing in the Hatteras Island real estate market?
A. 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. During the past year,
foreclosures represented about 4 percent of residential sales, and
short sales (situations where the mortgage balance is more than the
value of the property) accounted for 5 percent of sales. In total, only
about 9 percent of all residential sales were distressed properties.
So, it appears that the distressed property trend has just about run
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 served to moderate significant
increases in selling prices. Purchasing foreclosed properties and short
sales can be more challenging than 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 process.
Q. How does it work if we want to rent our cottage when we are not using it ourselves?
A. There are
professional real estate firms on Hatteras Island which 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.
Oceanfront 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
Q. What happens to the furnishings when a home is sold?
A. 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
Q. How difficult is it to get flood insurance on Hatteras Island?
A. 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
You should also 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.
Significant changes are taking place in the National Flood Insurance
Program, as well as in local flood zone maps. Buyers and sellers are
advised to consult with a professional insurance agent to understand
the impact of these changes on a specific property.
Q. What is the current situation concerning the availability of water and sewage services on Hatteras Island?
A. 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
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.
- A new bridge over Oregon Inlet parallel to the existing Bonner Bridge.
- A new concrete bridge to replace the metal bridge over the Pea Island Inlet.
road that will extend from an area north of the S-Curves from Highway
12 to the Pamlico Sound connecting to a bridge in the sound that would
by-pass the S-curves and re-enter highway 12 in north Rodanthe.. As an
interim measure, the beach in the vicinity of the S-Curves was
nourished several years ago to stabilize that area while the “jug
handle” bridge project is finalized.
Last fall, the North Carolina Department of Transportation and the
Southern Environmental Law Center reached agreement on several aspects
of the stabilization of Highway 12. This paved the way for construction
to begin on the new bridge over Oregon Inlet and the construction of an
interim concrete bridge over the Pea Island Inlet. Many believe that
visible progress on these projects will serve as a stimulus for the
next cycle of growth in the Hatteras Island real estate market.
Q. How many year-round residents are there on Hatteras Island?
A. 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;
Q. It is my impression that Hatteras Island experiences severe weather. What can you tell me about weather conditions?
A. 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 11 years.
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.
From my 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?
experiencing double-digit rates of appreciation for several years, the
average selling prices of properties declined substantially. 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 projected to increase, interest rates remain near
historically low levels, and the average selling price of residential
properties has declined over 40 percent the high point in 2005 making
homes more affordable. A fairly large supply of cottages for sale means
that a good selection of properties is available for buyers’
Opportunities in the market for unimproved lots are even more
compelling. Since peaking in 2006, the average selling price of lots
has declined about 75 percent.
All things considered, there are encouraging signs that our
local market is in the early stages of recovery after a prolonged
Now 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!
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 © 2016 Tom & Louise Hranicka. All rights reserved.)