Outer Banks Real Estate

A new blog from the Heart of Nags Head

Found another local blog this morning and it will be one to watch.  Bob Oakes from Village Realty has started his own Nags Head Blog.  This is a good sign - I wrote earlier that it seemed local politicians waited until after they were out of office to start their own site (Bob and David to name two).  Bob Oakes is a Nags Head Commissioner and also the President of Village Realty not to mention a great guy.  He sure is starting out strong with a great mix of media.  Like Monty said - Nags Head could be the online publishing capital of the Outer Banks.

11th Annual Outer Banks Polar Plunge scheduled for Saturday March 15th 2008

See what happens when you jump in the 55 degree ocean in March?  You smile a lot and try to breathe. 

It is that time of year again - time for the crazies to put on their suits and take the plunge.  The Outer Banks Polar Plunge will be held on March 15, 2008 at the Ramada Hotel in Kill Devil Hills.  The plunge will happen at 1:00. 

This event was started by the folks at Ocean Atlantic Rentals to support the Outer Banks Family YMCA We Build People campaign.  The cost to plunge is $25 and it includes a meal from Outback, a cool shirt and the chance to do something your mother would probably frown upon.   There are all kinds of prizes for kids young and old.  This years grand prize goes to the team that raises the most money - a week rental of an oceanfront home donated by Stan White Realty. 

If you decide you are not quite adventurous enough to take a swim in March - come on by and enjoy some good food and buy a tee shirt.  You will be supporting a great program and have some fun while doing so.

And while you are in town, stick around for the Kelly's St. Patrick Day Parade on Sunday March 16th.  Hope to see you there. 

Outer Banks Stimulus Program - will loan limits change on the Outer Banks in 2008?

I had a comment on my post about the governments stimulus program signed by the President last week.

So what exactly IS the limit on loans that are not considered jumbo for the Outer Banks now? Is it still $417,000?

Good question Key - first what we know.  Conforming loan limits on the Outer Banks are currently set at $ 417,000.  Why does this matter so much - it is because conforming rates are anywhere between 1.25% and 1.5% less expensive than Jumbo Rates.

HUD has 30 days from the day the President signed the package into law to identify the impacted MSAs (Metropolitan Statistical Areas) – meaning sometime in mid-March, all mortgage lenders will simultaneously receive the official notification.  The current Dare County MSA is listed at $ 349,600.  Currituck County stands at $ 313,500. 

Now for what we don't know.

Although several mortgage lenders have promoted lists of what they believe the new limits will be, these are only estimates because HUD has yet to determine the higher loan limits. We know that HUD will determine the new loan limits based on the median area sales prices. But, we do not know what timeframe will be considered … will it be the:

·         previously published prices from the third quarter of 2007?

·         yet-to-be announced prices from the fourth quarter of 2007?

·         yet-to-be announced prices for the entire 2007 sales year?

Because of the changes in the mortgage industry, the median area sales prices may be dramatically different throughout the year. So the timeframe used by HUD to determine the higher loan limits is key. 

We expect the impacted areas to be announced in mid-March and remain in effect until Dec. 31.

At this point - the Outer Banks is not considered a high cost area.  We could see conforming loan limits remain at $ 417,000 for Dare and Currituck Counties.  We could see FHA limits increase but that would just help those looking to purchase primary residences.  Second and Vacation homes would be out of the picture.  For now - we will all have to wait and see what happens. 

Mortgage Bonds dropping like a not so secret spy satellite

So you might have heard there is this super secret satellite dropping from the sky.  How does this relate to mortgage rates you ask?  They don't really - except the mortgage bond chart looks very similar to the degradation of the orbit of USA 193.

The chart on the left shows the orbital height of USA 193 - the chart on the right shows the mortgage bonds at the close of business today.  The chart shows bonds going down which means rates are going up.

We had a late afternoon rate increase today (represented by the really long red bar on the right  side of the chart).  It caused conforming rates to go up by 1/8% today (loans under $ 417,000).  Jumbo rates took one in the face again with already high rates jumping 3/8% from earlier pricing. 

Back to the satellite - the US government has decided to try to shoot down USA 193 tomorrow around 9:30pm EST.  If it works as planned - the satellite will fall harmlessly in the Pacific Ocean.  We might be in for a treat tomorrow night if some of the debris burns up overhead while the lunar eclipse is going on. 

Should be a busy day for the mortgage bonds tomorrow.  The biggie - Core Inflation is scheduled to be released at 8:30am.  Core inflation is the measurement of inflation minus fuel and food.  Mortgage bonds really don't like inflation - if the number is higher than expected - we could see some significant worsening in rates.  If the number comes in as expected or even lower - we might see a welcome lowering of rates. 

Outer Banks Link Lube

Just a few links about happenings on the Outer Banks:

Nags Head Water Tower deconstruction time lapse video.  Pretty cool to watch but some explosions and fire would have made it even better. 

Monticello our resident BoSox fan gives an update on the Sandbag Removal Deadline which will affect many in South Nags Head.  (All sandbags must be removed from oceanfront properties in North Carolina before May 1, 2008).  Question for Monty - did that traitor use steroids or HGH before he went to the dark side? 

Pete Hummers from the Outer Banks Sentinel published a story about our most famous Outer Banks resident.  Andy Griffith donated a sword he used many years ago while playing Sir Walter Raleigh to the Lost Colony Recovery Effort.  The Lost Colony lost 80% of their costumes in a fire September 11, 2007.

Bob Muller published a response to the Coastland Times about the tax burdens of Dare County and other resort communities.  Political Science class credit - 2 hours.  Bob is supposed to be retired - but quite a few want him back in political office.  He would be a true asset to our government. 

Jason Summerton from Twiddy Real Estate covers the 4WD area of the Outer Banks.  He has published two articles of importance to many - first an update on the Mid Currituck Bridge - there will be three public meetings to discuss the bridge on February 26th at the Hampton Inn in Corolla, Feburary 27th at Griggs Elementary School in Poplar Branch and February 28th at the Southern Shores Town Hall.  All meetings will be from 4 - 8 pm.  This is an important issue for many of us on the northern end of the Outer Banks.  He also posted about the Wild Horse herd - we have 89 healthy horses roaming the beaches.

Gotta Laugh

When the markets turn ugly like they did today - I look for therapy.  Therapy in the form of laughter.  Found this clip on OMG Larry - it is a keeper.  I was laughing so hard that I started to cry.  If you had a tough day - a hearty laugh really helps get things back in perspective.  Enjoy.

Happy Valentine's Day to all.

Becoming your parents

Scott Adams from Dilbert fame has his own blog that I read every chance I get.  This guy gets it.  Here is an excerpt from one of his latest posts:

I have noticed that the person living in a household who pays the energy bills is the only one interested in turning off the lights when leaving a room. Given human nature, this is unlikely to change. That’s why I have two inventions to close the gap.

The first invention is the Whole House Light Switch. It’s located by the inner door to the garage. When you are heading toward the car with the rest of the family, and they have left on every light in every room in which they have entered in the past 24 hours, you just flip the one switch and all the lights in the house go dark. I suppose you could designate one light to be the exception, so it looks like you are home when you are away.

My other invention involves each family member wearing a ring with an RFID sensor, so the lights only stay on if at least one ring is in the room. As you enter the room, and pass near the sensor, the lights come on by themselves. The light switch would need three settings in this case: 1) On, 2) Off, and 3) Sensor. If you have house guests, they simply use the on/off part of the switch. When only the family is there, everything is on auto.

I considered an Allowance Meter, which decreases the kids’ allowances based on light use, but that would have unintended consequences.

Will the Stimulus Package help the Outer Banks Real Estate Market?

I had calls today from three Realtors about the proposed stimulus package - most were hoping that the conforming limits for Outer Banks Real Estate would be close to the $729,500 limit.  What does it mean for homeowners on the Outer Banks?  Probably not as much as we would all hope.

The President signed the stimulus program today.  There is much speculation as to who this really helps.  Most believe that it will only help a few.  The program is geared towards property that is in what is considered "High Cost" areas.  Even though most of us on the Outer Banks feel that Real Estate is "High Cost" - we are not.  Think L.A., Las Vegas, Miami and Hawaii.  The new law signed today will increase the conforming loan limits from 417,000 to 125% of the given MSA up to $729,500. 

(b) Determination of Limits- The areas and area median prices used for purposes of the determinations under subsection (a) shall be the areas and area median prices used by the Secretary of Housing and Urban Development in determining the applicable limits under section 202 of this title.

FHA recently updated Dare County limits to $347,500.  Typically they go by the HUD median prices - and it that is the case we will not see a significant increase if any to the conforming loan limits.  What that means - if you want a loan larger than $417,000 - you will probably still be paying an additional 1% for your mortgage rate.   

The real downside of foreclosures on the Outer Banks

Saw this cartoon today from Daryl Cagle and it really hit home for a few reasons.  First - Chief Brody (Roy Scheider) passed away yesterday.  Roy had some great roles throughout the years.  Besides playing Chief Brody in Jaws  - he played a cool dude in The French Connection.  Enough with the movie reviews and on to the subject at hand.

Some folks might be sitting back thinking that foreclosures really won't affect them.  They have a small mortgage or are financially secure enough to ride out the recent decline in the market. 

Here is a potential scenario of how a foreclosure property can adversely affect you.

• The house down the street goes into default and winds up at a foreclosure sale. 
• The only group that bids at the courthouse steps on the home is the bank holding the note.
• Once the bank takes ownership - they find that the house has been stripped of all furniture, appliances and anything not bolted down. 
• The bank turns around and places the house back on the market to sell through traditional means (Multiple Listing Service through a Realtor)
• The problem is - the bank is trying to sell their foreclosed Outer Banks Beach Home against a ton of competition - competition that is fully furnished with all of the bells and whistles that people want in their vacation rental machine.
• The bank does not want to be in the business of holding property so they start dropping the price in hopes of moving the home out of their inventory.
• House sells for well below the market value - this is now a comp used by appraisers.
• Now you decide that the carnage is over and you want to borrow some money out of your equity to add a master suite or build that great pool you always wanted.  The problem is the home down the street that was bought at well below market value is used as a comp to estimate the value of your home.  Now according to the appraiser - you have lost a large chunk of equity.  Maybe now you just have to wait on adding that pool.

One way to avoid this will be if buyers decide to purchase the foreclosures at the courthouse steps.  These purchases are not considered comps for the appraisers.  For now it seems the majority of sales are in fact being bought back by the banks.   More on the risks of buying foreclosures in a later post. 

Rates are great now - if you are thinking about getting some of your equity out for improvements - it might not be a bad time to start.  We still have conforming rates (under $417,000) under 6% and with the recent drop in prime rates - home equity loans are starting to become attractive again.  If I can be of any assistance, please don't hesitate to contact me at your convenience.

Outer Banks Real Estate locals quoted in the Friday edition of the Wall Street Journal

The Wall Street Journal has had a number of interesting articles lately about Real Estate - even Outer Banks Real Estate.  My wife reads the Wall Street Journal every day.  If she finds an interesting article that relates to my field - she saves it for me to read once I cut off the computer.  There were two recent articles she saved for me and another I found through Digg. 

Since some locals made it in a paper from New York City - I thought I would talk about them first.  The article was in Friday's Weekend Journal and Tim Cafferty from Outer Banks Blue Realty Services and Stewart Couch from Hatteras Realty discussed the state of the rental market on the Outer Banks.  Tim stated the average summer rental week is running $3,107 a week - up 5% from last year.  Stuart mentioned that some of the older houses were seeing a decrease in the number of weeks rented.  He said part of the reason was the supply of like houses on the island.  From what I hear - the rental market for 2008 is shaping up to be a great one. 

The second article I read dealt with the changes in attitude about foreclosures.  It was also in Friday's paper in the Opinion section.  The title of the article was The Rise of the Mortgage 'Walkers' written by Nicole Gelinas.  The article discussed the shift in public attitude about walking away from a mortgage.  It seems that many are making the decision to walk away from their home when their debt is greater than the value of their home.  Nicole had some interesting lines:

Such behavior, where not precipitated by willful fraud, shows that American homebuyers supposedly duped by their lenders aren't so dumb.  They're perfectly capable of acting rationally without political interference. 

Another point she made - vacation homes and investment properties are even easier to let go. 

Finally - I read and article through Digg about Renting out a second home while keeping your sanity.  The couple purchased and were renting their lodge in Vermont on their own.  I thought it was interesting that they had only owned the property for three months.   It would be interesting to talk to them again this time next year to see if it was really worth the headache of "doing it themselves".