The Outer Banks Vacation Realty Market was red hot for the last ten years with money being made by absolutely everyone with double digit housing value increases the norm. That was, of course, until the Real Estate Bubble Burst of 2007-2008. The US government tried to "ease" the fall, but how successful have they really been? The Outer Banks Real Estate Market in general, and the Outer Banks Vacation Realty Market in particular, is driven by vacation homes, clearly not where the government is focused, as its primary concern is trying to help people save their primary residence.
So now, after almost a year of foreclosures and bank-owned sales, where is the Outer Banks Vacation Realty Market now? It will be the goal of Outer Banks Revealed to update this report every six months at the end of the Spring and Fall market season and take the pulse of those on the front line of this battle: The Outer Banks Realtor. This should optimize the information most relevant to vacation home buyers and sellers. Who better than they to tell you how the Outer Banks Vacation Realty Market is performing? This Roundtable is as of the end of the Fall 2009 Season.
This will be a roundtable approach, with each of the participants being asked the same questions. If you should be in the Outer Banks Vacation Realty Market, please consider these dedicated realtors with your next transaction. It should become quickly apparent how well they know the Outer Banks Vacation Realty Market and what an asset they will prove to be for you.
Now, on to our first roundtable. I would like to thank all of the participants. To find out more about each of the realtors who responded below, please click on the link in the first set of answers and it will bring you to their page on Outer Banks Revealed. Each one has a contact form where you can get in touch with them to further explore your options.
Outer Banks Revealed: What has been your experience with the Fall buying market? (Stronger, weaker, etc.)
Heather Sakers: Pretty consistent and strong, but the majority of buyers are initially looking for distress type sales.
Jean-Paul Peron: The fall is always stronger than the summer here. In the summer people are in town for vacation. In the fall they are in town to buy real estate.
Morgan Mason: More buyers seem ready to make a decision, more direct (non internet) inquiries. More awareness that this buyer market could slip by soon.
Tara Burlage: We are definitely seeing an increase in activity and sales, particularly in the month of October. While the majority of sales still continue to be foreclosures and homes under $300,000, we are seeing properties move in higher price ranges where Sellers are listening to their agents, reviewing market statistics & pricing their properties correctly. I believe Buyers are finally feeling some comfort in "getting off the sidelines" and taking advantage of the best market in over 20 years to invest in real estate.
Outer Banks Revealed: Have you noticed a loosening of credit for second/vacation homes in the market?
Tara Burlage: Somewhat. It's still difficult to get loans over 1 million unless you have 25-30% to put down on a home. Most other properties require 20% but on the flip side, I have some buyers with excellent credit and long-standing relationships with their banks, obtaining loans for second and investment homes with only 10% down
Heather Sakers: No. Corolla is still considered a depreciating market, so 30% down is pretty much required for most price points in that area. Lenders are still strict with guidelines on what income can be used for qualifying, etc and it only seems to be getting stricter.
Jean-Paul Peron: Not too much. Still getting mostly cash buyers.
Morgan Mason: In our market, which is predominantly second home/investment rental properties, the lenders I use are very adept at funding our loan requests. I think the new rules on appraisals have muddied things a bit but the local lenders I use are welcoming these borrowers and suffering through the anxiety of lenders forced to use out of area appraisers.
Outer Banks Revealed: What role has bank-owned houses had on the market?
Morgan Mason: Although in the past appraisers ignored foreclosure and short sale comps, that is not the case today. So bank-owned sold property hurts the comps, especially under the current appraisal rules. Also, the more bank-owned properties on the market in a given area, the more the market is seen as declining.
Tara Burlage: Foreclosures are playing a huge role in our sales activity and will continue to do so until they clear out in the next year. They currently comprise about one third of our sales and while they can be bargains, they often aren't for everyone. They are always sold "as is" and many are in poor condition. You are also seeing a lot of the banks pricing them very low and buyers getting back into "bidding wars", which generally, just leaves a bad taste in buyers mouths.
Heather Sakers: These properties are really only consisting of about 17-20% of all real estate home sales as opposed to the 90% people are thinking. However, they are still keeping prices down for everyone.
Jean-Paul Peron: It has been affecting the prices of the others.
Outer Banks Revealed: What are you anticipating around further foreclosures?
Jean-Paul Peron: Not sure.
Morgan Mason: I have no idea. I expect we will see a lot more before it is over.
Tara Burlage: So many investors bought homes here on 1/3 & 5 ARMS, were dependent on rental income and obtained financing with stated no documentation loans. We are still seeing many of those homes go into foreclosure when the terms of the loan are due. Once these homes are moved off the market, we'll see foreclosures level off since the lending industry is back lending money the way it should be for real estate investments.
Heather Sakers: Based on the pre-foreclosure lists for Dare & Currituck Counties, we are going to see a lot more foreclosures hit the market.
Outer Banks Revealed: What do you anticipate for the Spring 2010 market?
Heather Sakers: Continuing from the above question, these foreclosures that we have yet to see come on the market will continue to keep prices low and slightly declining in some areas. I expect sales to increase, but I do not expect prices to stabilize or increase for at least another year.
Jean-Paul Peron: If the pilings go in the ground at Aydlet Rd. it will be a VERY ACTIVE Spring.
Morgan Mason: If the fall market is any indication, I anticipate a busy spring market. Having said that, all is dependent on the overall economy and buyer confidence, which can be elusive this far in advance.
Tara Burlage: I think Buyers will be out in full force. We hope the economy will continue to improve as we begin to pull out of this recession and the extended tax credit to July 1 2010 will help move inventory as well. My biggest fear is that interest rates are predicted to possibly increase an entire point at the end of first quarter of 2010 after the government steps away. That will really hurt the real estate industry but it's a very likely possibility to keep inflation under control.
Outer Banks Revealed: What signs are you looking for to decide if the market has "recovered" and is starting to grow again? When do you anticipate seeing that?
Tara Burlage: I gauge that by watching national and local statistical trends and predictions like anyone else. However, I believe that when the number of new listings on our local MLS begins to invert comparatively, to the number of homes under contract, we'll know we're on our way out of the weeds.
Heather Sakers: The % of bank owned sales, the average days on market of bank owned sales & regular sales, average list prices now compared with the previous 6 months, average sold prices now compared with the previous 6 months, and change in # of listings on the market compared with the previous 6 months.
Jean-Paul Peron: Construction starting on the Mid-Currituck Bridge. Spring 2010.
Morgan Mason: Consistency will tell us a great deal. An end to the existing decline in home prices. Smaller inventory. Fewer short sales. My hope is to see this pattern by June of 2010.
Outer Banks Revealed: What would you recommend to a current homeowner who are considering selling his/her house?
Morgan Mason: If you don’t have to sell right now, hold off. If you do have to sell today, price it so it will sell quickly. Do NOT put it on the market to "see what happens".
Tara Burlage: If you don't have to sell right now, hold off--at least until the Fall of 2010 and then re-evaluate the state of the market with your agent. If you have to sell, hire a competent and forthcoming agent that will be honest with you regarding the state of your local market, your properties value and where you can realistically expect to sell it. Even the best agents with the most comprehensive marketing programs can't perform miracles and sell overpriced homes in this type of market.
Heather Sakers: First consider your motivation. If you need to sell within a certain time frame, be realistic and pay attention to the comps your agent goes over with you. Remember your agent does not drive the market, and right now it is what it is. You need an honest agent who will give you an honest assessment of where you need to be. If you are "in no hurry" to sell, then this may not be the time to do so, but don't expect the market to recover in 6 months.
Jean-Paul Peron: If you are ok with the price and time frame then do it.
Outer Banks Revealed: What would you recommend to a prospective buyer in this market?
Jean-Paul Peron: Now is the time to BUY!
Morgan Mason: There are many good buys today, without foreclosure or short sale properties. I recommend a prospective buyer keep an open mind, look at all available within his/her criteria and make your best offer. Do NOT low ball. Properties that are priced right today are selling within 2-3% of asking price. To get value for your money today, let your REALTOR show you the real buys.
Tara Burlage: Find a good real estate broker that can educate you on the market and the inventory. Get pre-approved. BUY and BUY SOON.
Heather Sakers: Don't look at bank owned homes if you are really planning on buying 3-6 months from now. These homes are staying on the market an average of 40 days, so they will not be available in 3-6 months. Get pre-approved for a loan ... it is free and takes about 30 minutes. This is basically a must in this market and you will need this done prior to writing any offer. Work with one agent who then will commit to work with you for your best interests.
I would like to thank all of our Realtors for participating in the first Outer Banks Realtors Round Table. Let's hope we start to see a bounce back soon in the Outer Banks Vacation Realty Market. It certainly feels like we are headed in the right direction. We look forward to the Spring 2010 Round Table where we hope to hear more positive news on the Outer Banks Vacation Realty Market. Look for an update around May 2010.