August 8, 2016

Hatteras Island Real Estate: Undeveloped lot market update

By TOM HRANICKA

Most of the reports and analyses of the real estate market that we see both locally and nationally are focused on residential properties. I think it is important that we also keep abreast of the market for undeveloped lots because there are some real bargains to be found in this sector and because the summer and fall months are prime times for lot purchases.

Buyers often like to acquire lots before the end of the year, build their new homes over the winter months, and have them ready for the next rental season.

To provide some perspective on the size of the market for lots relative to the market for residential properties, during the past year, undeveloped building sites accounted for about 24 percent of total real estate sales and 10 percent of the total dollar value of sales.                                             

Looking back, the market for lots peaked in 2006, followed by a 76 percent decline in average selling prices over the next four years. After that drop, selling prices have remained essentially flat. Average and median sale prices have followed similar trends as shown in the following chart.

                  

The lot market is still recording mixed results, although the total dollar value of undeveloped property sales was higher during the first half of this year, compared to the same period in 2015, and there are some indications that selling prices may be improving.

It is also interesting to note that while the presence of distressed properties was a significant factor in the island’s real estate market several years ago, today, out of 180 undeveloped lots for sale, only nine are bank owned, and two are short sales. This is good news since a reduction in the distressed property inventory has been considered to be a pre-condition for prices to increase.

There is a saying that nothing increases the value of a property like a waterfront location. This table offers some insights into the availability of waterfront properties and their price ranges.



In my opinion, undeveloped properties represent opportunities in today’s market that are worth careful consideration. Some building sites in very attractive locations can be purchased for as little as $30,000 to $50,000. 

It  looks like a good time to buy before prices take off again. As an example, the selling prices for oceanfront lots through June ranged from $300,000 to $500,000. This is about half of what they were during the peak year of 2006.

Currently, financial news reports are filled with articles concerning investor anxiety over the possibility of a significant stock price decline after seven years of gains. The potential for interest rate increases by the Federal Reserve is also a favorite topic of ongoing discussion. Given the uncertainties of the present financial market outlook, it may make sense to look for a reasonably priced real estate purchase to provide some balance in relation to other investments.

Undeveloped lots are certainly an essential segment of the overall Hatteras Island real estate market. This may be an opportune time to contact one of our local island Realtors, and explore how an undeveloped property might fit into your personal financial strategy!


(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 2016 Tom & Louise Hranicka.  All rights reserved.)



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