Hatteras Island Real Estate: A time to be grateful By TOM HRANICKA
As we enter the holiday season, it is a time of the year when our thoughts frequently turn to appreciation for the many things for which we are grateful. With the spirit of the season in mind, I recently looked at the island’s real estate market to see what good news there might be to brighten our expectations for the New Year. I was pleasantly surprised to see the positive momentum that appears to be building among the major market indicators.
Supply and Demand
I have always believed that supply and demand are the most basic forces that shape market conditions. It has been encouraging to observe that the statistical curves are moving steadily toward the point where the supply of property equals demand.
Currently, there is a little over a one-year supply of residential properties available for purchase. Based on past experience, our local market can be considered to be in balance when a nine-month supply exists. Once this equilibrium is reached, we should start to witness a cyclical shift from a buyers’ market to a sellers’ market with a corresponding rise in prices. In fact, we are already seeing demand outpacing supply in some market segments. I think it is reasonable to anticipate that the two curves may meet sometime next year.
The supply/demand indicators for the unimproved lot market are trending in the same direction as the residential market, but there is a wider gap (2.7 years) to be closed.
The following chart displays the residential supply/demand relationship over the past few years.
Sales
Through October of this year, the number of residential sales has increased about 5 percent compared to the same period 2010 – another positive indicator. Lower prices have certainly contributed to the rise in sales as buyers have recognized the remarkable opportunities that exist in combination with historically low interest rates.
The number of unimproved lot sales on the island is down slightly from last year.
Selling Prices
The average selling prices of both houses and lots appear to have stopped their precipitous declines since 2009. Since then, the selling prices of both types of properties have remained essentially unchanged, forming a pattern consistent with a U-shaped recovery. Average residential selling prices have stabilized in the $340,000 range, and lot prices have leveled off in the $100,000 range although properties with lower prices are readily available.
While studying patterns in the number of sales by price range, I was pleased to see the reappearance this year of home sales above $1 million. In 2010, there were no sales in these higher price ranges.
Foreclosure Filings
One of the truly heart-wrenching aspects of the buyers’ market both locally and nationally has been the number of homes that have been lost to foreclosure. Therefore, it was especially uplifting to observe that the number of foreclosure filings for homes and lots is down between 25 to 30 percent from last year. Let’s hope that this trend continues!
Distressed Properties
At first glance, the fact that short sales and foreclosure sales have increased this year would seem to be the Grinch in an otherwise upbeat story.
However, if you think about it, the sales of distressed properties have fueled the market in recent years, increasing the number of sales and decreasing the supply of properties available for purchase. At the same time, until the inventory of distressed properties is sold off, it will be difficult for prices to rise by any significant measure.
Well, there we have it – a holiday story for the Hatteras Island real estate market. To paraphrase a line from a beloved Christmas poem – “What to our wondering eyes should appear, but trends that bode well for the coming New Year!”
I think that you will agree that, all things considered, these trends offer a hopeful message for which we can all be thankful after six long years of subdued market conditions.
