By Submitted Story on March 3, 2016
It’s probably the most common question local Realtors are asked: “How’s the real estate market?”
Opinions vary greatly even among full time career Realtors. Perspective plays a large part of that opinion.
For a buyer, a great real estate market would be one with many choices, great interest rates and low prices.
Plenty of competition and low prices are certainly not a good sign for a seller.
Most people would agree that a good market is one where property values are going up at a sustainable pace. Nobody likes falling real estate prices, and home values appreciating too quickly is not healthy either.
The Outer Banks Association of Realtors updates market statistics on a monthly basis. The following is based on information from those statistics.
As of this writing an argument can be made for slight appreciation in most market segments. There are many segments in which the average residential sold price and median residential sold price are now slightly higher than the year before.
Towns like Nags Head, Kitty Hawk and Corolla had a few more sales and these indicators moved up just a little in almost every instance. These modest improvements or steady values are significantly better than they three or four years ago.
The average sold price per square foot for residences is another indicator that should be steadily going up if we are seeing appreciation. This indicator was up slightly in 2015, but it was still way off what it was nine or 10 years ago. It took many years of prices dropping to get to this point and will likely take many more for this indicator to return to the levels of the last decade.
An exception to minor appreciation is the entry-level lot market on the northern beaches. This market is showing signs of strong appreciation. For example, in 2014 most entry-level lots sold in Kill Devil Hills went for less than $60,000. In 2015 only a few sold for less than $60,000 and many sold for as much as $70,000!
This segment of the overall market is being affected by builders building spec homes.
So what has kept the majority of our local real estate from returning to a more robust market? It is likely the number of properties for sale. The beach almost always has more properties for sale than metro areas. This is because many are second homes or investment properties.
Selling is more of a want than a need for many of these sellers. They are willing to wait to get their number. Even during the boom years we had five or six months’ worth of residential inventory on the market.
That is how long it would take to sell all the residences for sale at the current rate they are selling. This is called the absorption rate. When too many properties are on the market, demand does not pressure prices.
Today the absorption rate is considerably less than it was at this time last year. In fact it is as low as I have seen it since I started keeping records in 2008.
As long as this trend of demand and supply continue, we may actually see some decent and sustainable appreciation in beach values this year.