Market Update – OBX Real Estate Optimism Springs Forth!
By Jeff Scott –
In thinking about the 100th issue of this publication, I was looking at some old articles written years ago about the Outer Banks real estate market. It was interesting to see that it was the fall of 2006 when the current real estate market slow down was first reported. That issue stated that sales in the Outer Banks Multiple Listing Service (MLS), that year were running about half of what they ran in the year before. Now after almost six years of less than desirable market conditions, it is good to have some pretty decent news to share with both owners and buyers of Outer Banks real estate. This article will outline this good news.
Sales are up! Both January and February had a high number of sales agreements. In fact, the number of sales agreements written for the first two months of 2012 is almost double what was written for the first two months of 2009. Compared to the first two months of last year, sales agreements are up approximately 35%! Of course some of this increase might be attributable to the lack of snow storms that limited buyers making it to the beach, but not all of it. This increase in demand should certainly help reduce some of our excess inventory this spring.
Inventory continues to trend down! The inventory has dropped since its peak back in 2006 and now is just 75% of what it was three years ago. Is it low enough yet for us to see appreciation? Probably not but we are getting closer.
Most experts agree that home values increase when sales are occurring fast enough that all the homes currently listed could be sold in just six months, (assuming the rate of sales and the inventory remain the same). In most OBX areas it would take between 12 and 15 months to sell off the inventory at today’s pace of sales. The good news here is that even though we are not yet at a level of supply where we see appreciation, at least we are quickly heading in the right direction.
Recently a client shared a letter with me from an OBX owner who was caught off guard when a recent appraisal came in tens of thousands of dollars less than their 2010 appraisal. Unfortunately that has been a common occurrence in this market. Thankfully, with our increase in sales and reduction in inventory, stories like these are less likely to occur over the next couple years. It looks like the Outer Banks real estate market is finally seeing a light at the end of the tunnel.