Lies, Damn Lies and Statistics - The Real Estate Market Conditions on the Outer Banks

For anyone that has every taken a statistics class, you have probably heard the title phrase.  In the Real Estate world, many use statistics to prove their point.  The National Association of Realtors announced yesterday the big drop in existing home sales but put the "statistical spin" by saying the good news is that the median price increased. 

Everyone wants to know about Real Estate market conditions on the Outer Banks.  I found an article on a local blog that bothered me.  Much of the article focused on the national and regional (North Carolina) Real Estate numbers.  Real Estate is local and what happens in Charlotte and the Triangle has nothing to do with the market conditions on the Outer Banks.  The problem was how the author portrayed the Outer Banks Real Estate Market as "hot".

The bright spot on the Outer Banks statistics is found in comparing homes under contract in the first two months of 2007 compared to 2006. With 211 units contracted this year compared to 123 last, that’s an increase of 72%. Land sales remain highly depressed on that same measure: down 67% compared to 2006. Tip O’Neill once said that all politics is local, and real estate is all about the specific location. The top submarkets for homes on the Outer Banks, based on activity so far this year, are Kill Devil Hills, Nags Head, Kitty Hawk, Corolla, and Duck. Another bright spot is that median pricing in February is down only 1% from the same month in 2006. Back in July of 2006, the median price was down nearly 20% from a year earlier.

Here are some of my observations

• The market YTD is down 30% over the same 6 months last year.
• The top submarkets for homes - did he say Corolla?  Corolla is hurting today.  Some of the developments have 7 years of inventory on the market today. 
  
• The fact is that home prices on the Outer Banks are down between 15 - 25% from prices three years ago.
  

Don't get me wrong.  I make my living providing mortgages to people that want a piece of the Outer Banks.  I understand people trying to keep a positive attitude.  The problem I have with this article is how the facts are skewed to make buyers believe it is a hot market.

There are some great opportunities available today.  Some sellers are willing to make significant concessions.  The number of foreclosures on the Outer Banks seem to be picking up correction - thanks to Chris Toolan from Village Realty for pointing out that Outer Banks Foreclosures are down compared to last year - more on that later.  And finally, income from rentals is strong according to the rental companies I have spoken with.  It sure does help offset the cost of owning that second home at the beach.  Feel free to drop me a line if you have any questions.

Comments

[bobbyg]

Good information Ronnie. It seems that the days of the part time realtor is not far around the corner. Or at least one of the life partners working a full time job with benefits to bring in some income and stability to a family. In hindsight,when we saw everyone becoming either a builder or realtor we should have recognized the top. It will take a long time for this to shake loose. So in the meantime, this fall when seasonal rents cease, we should have some real buying opportunities. In 20 years will talk about how people actually flipped a home and made money!
Thanks for the info,
Bobby

[christ]

I'm not as depressed as bobbyg (previous comment post)...perhaps because my wife works and provides the benefits...who knows? I appreciate your perspective written here as well. My take is that the sooner we start embracing the bottom, the sooner our buying customers will as well. Be careful however...One of my favorite Irish quotes is is from the late Senator Danial Patrick Moynihan "Every one is entitled to their own opinion, but not to their own facts"...and according to Dare County, foreclosures are down from last year...so far. This to me is the best news to me so far! Unlike 1989-93 there are now part time jobs to get to supplement income.

[Ronnie Roach]

Bobby,

The market on the Outer Banks is cyclical - there was a big adjustment in the late 80s and early 90s that really affected a lot of people. The market then started a steady recovery and in 2000 it started to get a little crazy. It is deja vu all over again...

Chris,

I agree that everyone needs to face the facts and move on. The market is what it is. It is slow but there is activity. It sure isn't up 72% from last year. As for the foreclosures - I did not base it on any facts - just what I have heard from many locals. Good point though - if I am criticizing some for loose facts, I should do my homework and make sure my own are correct. Thanks for clearing this up.

[Greg Cremia]

It is wrong to lump all of the Outer Banks into one big real estate market. There are areas that prices are going up and there are areas where prices are going down and some of those areas are across the street from each other. Nags Head between the roads is seeing an increase in value while Nags Head ocean front and west side are not. Similar stories apply all over the beach. A good agent knows their market.

As far as real estate agents getting second jobs to supplement their income. If they knew what they were doing they would not need to. We are on track to double what we did in sales last year. Some people expect it to be easy. It is not.

[Paula The Surf Mom]

Loved the article so much I posted a link to it on my new Outer Banks Forum.