Two years ago a Realtor might struggle to find something good to say about the Outer Banks real estate market.  This fall is a different story.  In fact, what prices are doing lately has been a subject of debate among Outer Banks Realtors. There are some very good signs in today’s market place. Many Realtors are arguing that we’re now on the upswing since the median sales price of single family detached residences has risen in our MLS 14% compared to the first eight months of 2010.  They also argue that the inventory continues to decrease and with that supply becoming scarce prices will go up. It is true that the supply of both residences and land has gone down double digit percentages since this time last year. Another indicator that points towards a stronger market is that the number of transactions through the local MLS has gone up around 4% over the first eight months of 2010. With all this good news one certainly can make a good argument that we are turning the corner.

On the other hand there are still a few statistics that are not so positive.  The sold price per square foot for single family detached residences is still down. Adding in the condominium sales and this statistic does not get any better. Also distressed properties are still over 30% of all sales in the local MLS. Even though the inventory is becoming smaller, there is still plenty out there to be absorbed by smart buyers. Making an argument that prices are still falling is not unreasonable.

Looking at just the increase in the median sales price does not tell the entire story. The only thing this shows is that people are buying more expensive homes. Perhaps more homes have been purchased in a more expensive market segment. Looking at just the sold price per square foot also does not mean prices are going down.  Because the land value is part of the sales price it could be that they are just buying homes on less expensive land.

One thing is certain and that is our market is changing. How long we will be in this transitional market is anyone’s guess. But, it’s safe to say we are much closer to the end of this downturn than the beginning. If you have ever thought about buying here, you may want to begin seriously looking before all indicators turn in favor of sellers. Contact your Realtor for a complete market summary in the area you have interest.

Despite the fact that North Carolina receives almost as many landfalls from hurricanes as Florida, insurance is still available for Outer Banks homes. Most homeowners carry three types of insurance.  First, they have a typical homeowner’s policy that covers fire, liability, theft while excluding wind and hail.  This policy is very similar in cost and scope to homeowner’s policies in inland areas.

Second, homeowners carry a wind and hail policy.  Usually the wind coverage comes from the North Carolina Insurance Underwriting Association. This is a pool of companies that share in this risk. This type of policy created by the state has a deductible of usually one percent of the replacement cost when damage comes from a named storm. It is best to get a quote or two for each specific property but a rule of thumb I use for the cost of that insurance is about $1 per year per heated square foot of living area. This number can change quite a bit depending upon different features of each property so a quote from an insurance carrier is important.

Third most homeowners have a flood policy that covers damage from rising waters. If the property is located below the 100 year flood plain (base flood elevation), then the lender will require flood insurance for the home. Fortunately for most OBX areas, flood insurance is underwritten by the National Flood Insurance Program and is reasonably priced. For example, a 2800 square foot home located in an area below the base flood elevation in Kitty Hawk recently acquired insurance for less than $430 per year. A deductible on a policy like this is likely to be $1,000 per claim. This home had no heated living area below the base flood elevation. Any damage to garages and/or storage areas below the base flood elevation is not covered by this type of policy. Nationally 35% of all flood claims are out of the special flood hazard zone so it might be a good idea to carry flood insurance regardless of your Outer Banks location.

Insurance costs here compared to many less threatened inland areas are likely to be close to double. Fortunately, the Outer Banks has lower property taxes because vacation rental properties do not require as many governmental services as a year round resident. There are many excellent insurance agents on the beach, contact your Realtor to help you find the right one for you.

Visiting the Outer Banks for a week is perfect for relaxing with family and friends while recharging your batteries to face home life back on the mainland. After living here over twenty years surprisingly little of that magic has worn off for me. No where is perfect but overall the Outer Banks is a fantastic place to live. Here are few things that make living on the Outer Banks just as special as vacationing here.

It’s a small town nine months of the year. In the off season it is hard to go anywhere on the beach without seeing someone you know. It is nice to be able to stop and catch up for a moment with people in the grocery store or at a restaurant. Locals also get spoiled by the relatively empty beaches and stores during the off season. After living here a few years, most locals avoid places when they know they’ll have to face a crowd or line.

Outer Bankers are community oriented. Many OBX groups and organizations give back to our community. For example, the Outer Banks is one of the highest giving per capita communities in the nation for the American Cancer Society’s Relay for Life events. The Outer Banks Community Foundation is another local organization that has a huge impact on the Outer Banks. This foundation awarded over $345,000 in grants and scholarships locally in 2010. Many needy locals would never have been able to go to college without the generosity and hard work of this foundation. Outer Bankers also look out for each other. It is amazing how many charity events just spring up to help a local in need.

Outer Bankers focus on the weather like folks from metropolitan areas focus on the traffic. Because there are so many fun things to do outside, locals often schedule their time off around the best weather for their favorite activity. Here you will find the “best of the best” surfers, fishermen, kite surfers and others who came here to enjoy their favorite activity and hone their skills. Locals sometimes do need to be careful about becoming too laid back but when conditions are right for your favorite activity it’s hard to say no.

The retired population has a wonderful positive impact on the community. Vacationers converted to OBX retirees have time to volunteer and help improve the Outer Banks. If you attend the marathon or some other Outer Banks event you’ll meet folks who give their time freely to help make that event a success.

If you are here for a week or two and enjoy your stay, then consider coming back again in the off season. Who knows… maybe you’ll find the Outer Banks is a place you’d like to live permanently.

This lot located in the four wheel drive area is just a short walk to the beach directly up the sand road.  Here you are just a couple thousand feet from the Virginia state line so beach traffic is almost non-existant. This is a great value at $29,900

In the summer, Outer Banks Realtors receive an inordinate amount of inquires on the inexpensive ocean front homes. Why not learn more when an ocean front is priced under $300,000 and a similar house four or five lots off the ocean is about the same price? Often the reason for the low price is that many of these ocean front properties are endangered by erosion. In the summer when the weather is beautiful and the ocean is calm it’s hard to believe any structure is threatened.

Erosion is a part of ocean front ownership in some areas of the beach including Kitty Hawk, Nags Head and Rodanthe. But this factor should not keep you from eliminating ocean front property from your search all together. Like buying any investment or property it is best to learn all the facts, calculate the risks and then make the best decision for your specific situation.

So how can you tell if the house you are considering is threatened?  Probably the easiest way is to go take a look at how close the ocean is to the property.  Is there a dune on the ocean side of the house?   Is there vegetation on the eastern side of the house?  If the answer is no to either one of these then it is likely the house is threatened by the ocean.

To get a better feel for the level of threat to a property, your Realtor can provide you with the state erosion rate map for that area of the beach.  Erosion rates vary greatly on the Outer Banks depending upon the area. Just because there is hardly any space between the house and the beach does not always mean the property is going to be gone in the next few years.  North Carolina and the Federal Government have been studying erosion and its causes for years here. Viewing their information can be the difference between a good decision and a bad decision.

One last variable that is new to this erosion talk is the beach nourishment occurring in Nags Head this year.  No one knows for sure how the new beach will fare when it is up against a raging nor’easter in the coming years.  But one thing is certain; many of the endangered ocean front properties in that area will have a better chance of surviving with this new beach.  If this project is successful then the endangered properties in Nags Head will greatly increase in value.

Real estate sales today on the Outer Banks are a mixed bag. There are some good things happening but not all signs point towards a complete recovery.  Similar to an ocean tide, the real estate market is cyclical. It’s safe to say we’ve been in an ebb tide since 2006 when real estate sales dropped significantly from the boom years. But things are beginning to turn…

A favorite activity of visitors and locals of the Outer Banks is to go to Oregon Inlet. Sitting out on this little sand spit is an amazing experience. Besides watching an Osprey catch a fish or cooling off in the warm inlet water, you can actually watch the tide turn.  At the peak of the outgoing cycle the water is moving out so swiftly the fastest swimmer could not keep up.  As the tide gets closer to its lowest point the current slows down and eventually stops. For about 20 minutes it stays completely still. If you arrive at the inlet during that 20 minute time its hard to tell if the tide is getting ready to come in or go out. This is likely where our real estate market is today.

The number of spring sales has been as good as it has been since 2006. First quarter total sales in the Outer Banks Association of Realtors MLS system were up over 16% in the local MLS system compared to the first quarter of 2010. Low prices, extremely low interest rates and record vacation rental income have made purchasing Outer Banks homes much more affordable. The rental income of many vacation rental homes is coming very close to paying for these properties that are selling today.  This has rarely happened in over ten years.

On the other hand, there are still quite a few bank owned properties that have to be sold. As of this writing, about 40% of the homes that sold this year were distressed properties. Banks and owners of short sales will continue to reduce their asking prices until their property sells. This spring’s distressed sales have negatively affected the values of all other properties here.

We are seeing both good things and bad things happening in the Outer Banks real estate market today. Right now it is hard to tell if the tide is now coming in or the tide is still going out in the current economic cycle. Hopefully soon we’ll see even more signs pointing towards a recovery in Outer Banks real estate sales.

Lower property values have caused many sellers to become upside down on their Outer Banks residence. Top that off with a weak economy and many owners are having trouble making their mortgage payments and want to get out from under their property. Short sales are a large part of the market today.  Knowing a few key facts may help you decide if you want to include short sales in your Outer Banks real estate search.  Here are the top five facts about Outer Banks Short Sales:

Often they already have a contract on them.  The local Multiple Listing Service has listing agents put their under contract short sales in an “under contact continue to show” status.  Properties with this status are included in the data feeds that go out to all the web sites.  This status can be a little misleading because a new buyer has to wait for the first offeror.

They are sold with no repairs being made.  Most times short sales have not been maintained like a regular home. There is no money for repairs to be made so the buyer purchases the property in an “as is” condition.  Of course the buyer can have a home inspection once they know the bank accepts their contract.  If they don’t like what they find then the buyer can void the contract. If you are looking for a home with little or no immediate maintenance then short sales may not be for you.

It can take a long time to get an answer.  Before the seller’s lender will approve a short sale there is likely to be a long waiting period.  During this time the lender will check to make sure the seller can not bring money to closing, as well as make sure they are not underselling the property.  This can take as little time as a month or as long as a year.

Many are attractively priced.  Not every buyer wants to deal with the head aches of buying a short sale. Also, most lenders will not talk with a seller about a short sale until they have a contract on their house.  Therefore, a common strategy sellers use to speed up the short sale process is to under price their property. 

Don’t count on the rental income.  Buying a vacation rental short sale right before or during the main vacation rental season can be a foolish thing to do.  Often the seller has already spent the funds they have already received from the upcoming rental season. The buyer then may end up owning the property and not be getting the proceeds from those vacation rental tenants that paid before he owned the house.

Purchasing a short sale can be a tricky process.  This is especially true in a resort real estate market. Contact an agent at Scott Team Realty to help you successfully negotiate through the pitfalls of purchasing vacation rental property.

Yesterday I was out showing property to some great clients from Pennsylvania. They purchased a home from me a few years back and decided it was time to get another.  One of the things I like to provide my clients when looking at homes is the MLS history of the property.  As long as the address was entered correctly in the MLS it will show when the property was first listed, how many times it has been listed and all the times the information has been amended.  Occasionally you’ll also see when the property was previously sold as well.

We were viewing a home that had been on the market for quite some time and looked at the property history.  It showed that the property had first been listed a couple years ago at $200,000 more than its current list price. It had been incrementally reduced at least twelve times during the course of the listing period following the market down the entire way. You feel bad for the seller in this situation. Obviously they still want to sell it since the price continues to drop.  In fact the last price reduction occurred less than a month ago. I wonder if they had been receiving bad advice or just never really knew what was going on in the Outer Banks real estate market. Either way making good decisions about pricing a property here requires good information about which way the market is heading and a strong knowledge of recent similar sales.

Had this property been priced right in the first place, it is almost a sure thing that the seller would have received more for his property when prices were much higher than they are now.  Furthermore, they would not have had the expenses of carrying this property during the remainder of the marketing period. One last point…had the seller sold his home in 2008 he could have put the money he received at settlement in the bank and made some interest on it. Pricing the property incorrectly has cost this seller tens of thousands (and maybe hundreds of thousands) of their hard earned dollars. When getting ready to sell make sure you contact an agent at Scott Team Realty who will help you put the right price on the property so it sells in the time period you prefer.