By: Tom & Louise Hranicka, Associate Brokers, Outer Beaches Realty
At the beginning of each year, I like to look back on the results from the previous year and attempt to see if they can give us some insights into the state of the real estate market as we move forward.
To understand where we are on the spectrum of progress with respect to the island’s real estate market, I believe the picture is often clearer when we look back to see where we have been. Some of those who have studied the real estate market on the Outer Banks over a long period of time have said that their experience suggests that the market seems to run in 10-year cycles. Hatteras Island appears to follow this same pattern.
The residential real estate market on Hatteras Island first entered its most recent downturn in June of 2005. Home prices declined dramatically over the subsequent four years and then remained basically flat until 2015 when we started to see some signs of improvement. If past trends continue, as we begin 2020, we will be entering the sixth year of the recovery.
The following two charts show the annual change in the median sale price of residential properties since 2014 as well as the history of median sale prices at the end of each year. As you can see, the market started turning upward again in 2015.
While residential median sale prices have moved forward in a stair step manner, they are clearly increasing. It should also be noted that the midpoint of home sale prices has moved upward from the $200,000 price range a few years ago to the $300,000 price range at the present time. If this trend continues, we will soon cross the threshhold into the $400,000 price range. Median sale price performance has been the bright spot in the current market recovery cycle.
It is also interesting to examine the relativities between the supply and demand for properties.
For all practical purposes, the inventory of residential properties for sale has changed very little over the past five years. After some ups and downs, the number of homes for sale at the end of 2019 was the same as it was in 2014.
At the same time, the number of home sales has steadily increased, bringing buyer demand for homes almost in balance with the supply of properties. Stated differently, at the end of 2019, we had a little over a one-year supply of homes for sale on the island. When the demand for homes exceeds the available supply, we will move into a seller’s market. Up to the $400,000 price range, it is already a seller’s market - demand exceeds the available supply.
When we combine the increase in the number of sales with the rising median sale price, the result is an increase in the total dollar value of sales as shown in the final chart.
The bottom line of this analysis is that, barring our ever present unforeseen circumstances, the real estate market on Hatteras Island appears poised to continue on an upward path during the coming months. For prospective buyers, the message is that prices are rising. If you are thinking about purchasing the island home of your dreams, now is the time to take action before prices move higher. If you are a seller, market conditions are conducive to the sale of your property, especially if your home could be expected to be listed with an asking price below $400,000. Above the $400,000 price point, the supply of properties can in some cases exceed current buyer demand by a wide margin, potentially increasing the length of time that your property might be on the market before a qualified buyer is found.
I hope that you have found this market review to be both interesting and informative. Regardless of where we may find ourselves in the real estate market cycle, one fact never changes – “There is no place like Hatteras Island!”
Tom & Louise Hranicka
Avon, NC 27915
Copyright 2019 Tom & Louise Hranicka. All rights reserved.