| November 28, 2016
Hatteras Island Real Estate: Perplexing market data
By TOM HRANICKA
are a lot like the weather. Everyone talks about the trends, but no one
seems to be able to do anything about them. The current real estate
market seems to be a good example of this saying.
September, real estate market statistics for Hatteras Island continued
to reflect confusing results. The numbers remind me of what the ocean
looked like a few weeks ago – waves coming from both the north and the
south, colliding in a disorganized plume of spray. Consider the
HATTERAS ISLAND REAL ESTATE MARKET INDICATORS
JANUARY – SEPTEMBER 2016 VS. JANUARY – SEPTEMBER 2015
you can see, it is not easy to reach solid conclusions from the
data. Traditional economic theory tells us that when supply
declines and demand increases, prices are supposed to go up. If that is
the case, then what is going on in the residential market where selling
prices are declining or flat depending on the measure you choose? On
the other hand, in the market for undeveloped lots we are seeing both
fewer properties for sale and lower numbers of sales, but prices are
rising. In addition, when viewed in the perspective of time, selling
prices in both market segments have been essentially flat since 2009.
Here is a look at average residential selling prices since 2005.
bright spot in the statistical reports is that building permits have
finally started to recover, increasing 75 percent over the level
recorded through September 2015.
have been scratching my head trying to figure out what is underlying
these bewildering patterns. A few years ago, I would have focused on
delays in approving the construction of the new bridge over Oregon
Inlet and other issues affecting access to the island via Highway 12.
However, that no longer seems to be a reasonable culprit since
everyone can see visible progress on both the Bonner Bridge
replacement project and the new bridge over the Pea Island Inlet. In
addition, there appears to be progress on the proposed “jug handle”
bridge around the S-curves in Rodanthe.
considerable thought and more than a few sleepless hours, I am
leaning toward focusing on much broader national trends that may be
influencing our local real estate market.
following table shows the annual growth rate in the United States
economy for the past 10 years adjusted for inflation and statistics
for household income.
As you can see, the national economic growth rate has been less than
3.0 percent - lethargic at best. In addition, the median household
income adjusted for inflation has remained basically unchanged since
2007, fluctuating in a narrow range from $53,051 to $58,503. In fact,
during the past five years, median family income has hovered toward the
lower end of this range.
This leads to a possible conclusion that potential
buyers do not feel that they are making much progress in their personal
financial situation, and, if true, they may be reluctant to make a
fairly large commitment to a discretionary purchase like a vacation
home or lot.
My other line of thought is that demographic trends
may be impacting the Hatteras Island real estate market. The Baby
Boomers who purchased island homes in the 1980s and 1990s are getting
older. They are starting to sell their properties, and they are
downsizing in their personal lives as they retire in greater numbers.
In comparison to the Baby Boomers, the Generation X population (age 35
– 50) is smaller, so there may be fewer potential buyers to absorb the
housing inventory that is being offered for sale. In addition, the huge
Millennial generation (the oldest of whom are now around age 34) are
not yet financially secure enough to be purchasing resort properties in
This hypothesis has some holes in it, the largest
one being that this year we are seeing decreases in the number of
residential properties for sale on the island accompanied by rising
Finally, some observers have felt that real estate
market results should be viewed in the context of current events. There
is a belief that potential buyers have been waiting to see the outcome
of the recent presidential elections before making a decision to
One thing is for sure - time will resolve the
inconsistencies, and some sense of clarity will return to the market. I
sure hope so!
What are your thoughts on the facts, trends, and observations presented in this article?
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.