The real estate news these days is dominated by the surge in residential sales, both locally and nationally, as well as the drastic reduction in the number of homes available for purchase. Driving around the island, there also appears to be a large amount of construction taking place – something we have not seen for quite a while. In this month’s article I thought it would be interesting to see how our anecdotal impressions compare to the actual statistics.
One of the underlying assumptions might be that new single family building permits would follow patterns similar to undeveloped lot sales since lot sales would precede construction. The following chart shows that while -new single family detached building permits sometimes follow patterns that track with lot sales, this is frequently not the case. Interestingly, lot sales and the number of new home building permits are just about the same today as they were in 2012. During the past ten years, an average of about 35 new single-family building permits have been issued each year.
These results surprised me a little because I thought that we were seeing an uptick in new residential construction. So, how do we resolve the apparent difference between what our eyes seem to be telling us and the story the numbers are showing? The answer lies in the relative volume of the different types of permits that are being issued. Looking at the Dare County building permit records – renovations, repairs , and additions are playing the lead role in construction projects vs. new home construction. Given the aging of the inventory of residential properties on the island, this makes a lot of sense. As homes get older, sooner or later, roofs, decks and siding need to be replaced. As a point of reference, between 1980 and 2009 almost 4,000 homes were built on Hatteras Island!
For an additional perspective, it is interesting to consider current construction trends in relation to the pattern of residential development on the island over very long periods of time. Research into the Dare County tax records to determine the number of homes actually built on Hatteras Island during each 10-year period since 1960 revealed that the island started being discovered by the outside world during the 1970s. The construction of new homes then accelerated until the most recent real estate market downturn began in mid-2005. During the decade of 2000 to 2009, almost 80 percent of the homes were built between 2000 and 2005. From these figures, it is easy to see why so much of the recent construction activity has been focused on repairs and renovations vs. new construction.
Another dimension of the construction statistics is where building is taking place on the island. Over the past two years, Avon and Salvo have been the top locations with the highest number of single family building permits. These results have probably been influenced by the introduction of new phases of development in subdivisions in these two villages.
There are some who believe that a by-product of the current boom in residential sales accompanied by a significant decline in the number of homes for sale will cause buyers to shift their focus to the purchase of undeveloped lots. In fact, we have seen a significant rise in the number of undeveloped lots under contract to be sold over the past year although the relative magnitude of this increase in much less that the magnitude of the increase in residential sales.
While the opportunity to purchase undeveloped properties is slowly getting smaller, there are many very attractive vacant parcels that are still available on which to make Hatteras Island dreams come true!
Questions and comments may be sent to Tom Hranicka at P.O. Box 280, Avon, NC 27915 or by e-mail to email@example.com.
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