Island Real Estate: Hatteras Island home sales and trends for March

Real Estate Market Update – March 2024

My main takeaway from the latest Outer Banks Association of Realtors (OBAR) monthly statistical report was land – vacant lot inventory is down even further than it was last year. Residential home inventory is improving (thank goodness) but land inventory is trending the opposite way. I touched on the growing scarcity of buildable lots in August of last year, and had this to say –

We all know what happens to prices when supply dries up, and how many buildable lots will remain in another 5, 10, or 20 years? Something to think about…

Well, year-over-year lot listings on the Outer Banks are down 7%, and on Hatteras Island specifically, we have just 69 active residential lot listings. The median list price on these lots is $200k. If you are looking to own your “slice of the beach” on Hatteras Island, the window for buildable vacant lots seems to be slowly closing. After all, over 85% of the island is either federally-owned, state-owned, or protected wetlands. And of the buildable acreage that exists, a large percentage has already been built on.

Land Inventory Continues to Shrink

You can see the land inventory dropped from almost 600 in February 2021 to 355 in February 2024, a decrease of nearly 40%. Median sales price of vacant residential lots on Hatteras Island in Jan/Feb 2021 was just $75k, however median sales price in the first 2 months of this year was $115k, a rise of over 53% in price. Given the relative scarcity and supply/demand pressures, I could see this trend continuing.

Watch the Foreclosures

Foreclosures in our area have been few and far between for years now, but with inflation causing expenses to rise for many Americans we are unfortunately seeing a rise in the national foreclosure rate beyond a multi-year trend. The OBAR statistical report notes this as a headline item:

Areas to Watch – there has been a jump in the number of Dare County Foreclosures in 2024. The foreclosed listings have not hit the MLS yet but they are coming soon. 

If you are feeling the stress and worried that things might reach the point of foreclosure, you may have options. Many owners who have been in their homes for 3+ years have equity they can tap into and get a loan or do a cash-out refinance (although at today’s rates, that would hurt). You can always list your home for sale before losing it. Reach out to a financial advisor to discuss your specific situation and how a lender or real estate agent might be able to help you avoid foreclosure.

The foreclosure rate nationally is almost 1/10th of 2009/2010 highs, but if you see more and more foreclosures appearing it could impact home prices.

Hatteras Home Prices Up 29%?

Year to date median residential sales prices on the island are up 29% vs 2023. This happened with far fewer sales YTD vs last year, so there’s a smaller sample size. Looking at data from the two time periods, there were 2 condo sales in Jan/Feb this year but 7 condo sales during the same time period in 2023. Maybe that could skew the numbers lower in 2023, but there were multiple $2m+ sales YTD in 2023 and zero $2m+ sales YTD this year. It might just balance out. I’ll be watching this trend over the next few months.

Despite this impressive gain in median sales price, look at the drop in sales volume. Ask any real estate agent around town and we will tell you that there are fewer transactions happening vs last year and certainly vs 2022. The rapid rise in mortgage rates caused many owners to be locked in with their 3% rates. This has helped to prevent “normal” inventory levels from returning and can actually put upward pressure on prices.

Our market has softened a bit since the white-hot real estate market of 2020-2022. Total transactions are definitely down but prices aren’t. And unlike other metro/suburban areas where they are building 500+ new homes in large subdivisions, we don’t have those kinds of options to bring a flood of new supply to the market. There’s a natural cap on our potential total inventory thanks to geography (life on a sandbar!) and government-owned/protected acreage. Don’t be surprised if we finish 2024 with higher home prices yet again because of this.

If you would like to see the entire report you can view it every month on the OBAR website:
https://www.outerbanksrealtors.com/market-data/

Thanks for reading and go enjoy the beautiful weather this week!

About the Author: Stephen Smith is an Outer Banks realtor with Real Broker, LLC. He was nationally recognized as an award-winning agent in 2021 and 2022 at his previous firm. He has lived on the Outer Banks for nearly 20 years, and met his lovely wife on Hatteras Island. They currently reside in Nags Head with their daughter, but Hatteras Island is still home in many ways. For questions on the Hatteras or greater OBX real estate market, you can contact Stephen directly at stephensmithobx@gmail.com or 252-216-9230. His website is https://www.stephensmithobx.com or you can receive his weekly newsletter by signing up at https://mailchi.mp/43cd4a4bf1a6/obxnewsletter.