Outer Banks Real Estate

Outer Banks Foreclosure site up and running

OBXforeclosures.info is live.  There are about 100 properties in Dare County that are in some stage of foreclosure - we currently have the first 25 listed.  The information is free - you can even sign up for free email updates by completing the form.  The goal is to list 5 a day until we have every property listed and updated.  We will also be adding Currituck County to the mix.

If you have any questions or suggestions, please feel free to contact us.

Here is a sample of what information is currently offered:

321 Duck Road - Southern Shores NC

Southern Shores, NC - 5 Bedrooms, 3 Baths

File number 08-SP-787

File Date:  11/20/2008

Hearing Date: 12/22/08

Foreclosure Sale Date: 1/12/09  - Opening Bid:

Assessed Value:  $ 446,500
Principal Sum Owed:  $ 390,000

If you would like more information on this property or if you would like to place a bid, please feel free to contact us. 

Southern Shores, NC - 5 Bedrooms, 3 Baths

File number 08-SP-787

File Date:  11/20/2008

Hearing Date: 12/22/08

Foreclosure Sale Date: 1/12/09  - Opening Bid:

Assessed Value:  $ 446,500
Principal Sum Owed:  $ 390,000

If you would like more information on this property or if you would like to place a bid, please feel free to contact us. 

OBX Foreclosure Site teaser...

Outer Banks Foreclosures is getting a face lift.  We hope to have the site live by the end of November.  You can read the details about what we plan on offering and what sets us apart from the rest.  If you want to receive updates, just fill out the super friendly form and voila - free updates delivered to your inbox. 

Foreclosures up in North Carolina for August - but by how much?

The Triangle Business Report published a story about the increase in foreclosures in North Carolina.  The headline stated: RealtyTrac:  NC foreclusure filings up 32%.  Sounds pretty bad for the Tar Heel State.  I do not dispute the fact that foreclosures are up for the month of August - I do take issue with the percentages.

I know articles are meant to have that "gotcha" effect.  The problem is the way this stuff is reported and the true numbers.  You know what they say about statistics.  Outer Banks foreclosures are not published anywhere except in the local papers and the Dare County and Currituck County Courthouses. 

The article today even went into details about the different reporting styles.  They did quote numbers from the North Carolina Commissioner of Banks that reported a 10% increase.  Here is an excerpt from the article with the details:

RealtyTrac’s numbers differ from those put out by the North Carolina Office of the Commissioner of Banks. While RealtyTrac counts every foreclosure filing, including multiple filings for a single household, the commissioner of banks’ office counts each household only once, no matter how many filings it has received. By that method, the commissioner of banks’ office said that North Carolina foreclosures increased by 10 percent in 2007, while RealtyTrac reported that foreclosures rose by almost 67 percent.

I would tend to think the Commissioner of Banks would be a little closer to the truth - but maybe not entirely.  I believe timeshare foreclosures are probably added to the mix - I don't see a foreclosure on a time share unit the same thing as your beach house in Duck.  Maybe since the government is now in the banking business big time - we might actually get some type of clear reporting in the future.  I am not holding my breath...

Outer Banks Real Estate Stats

I like statistics.  Always have.  Jeff Scott from Scott Team Realty is great about posting Outer Banks Real Estate Sales Statistics (follow link for full report).  They might not be pretty but I admire him for posting the truth.

Thanks to Jeff for sharing the data.  Based on the graph - the slowdown really did start in late 2005. 

Foreclosures on the Outer Banks vs. Weekly Rentals

I received a question from Bill today about what happens with foreclosures in the rental programs on the Outer Banks. 

Why do the OBX beach houses go to foreclosure if they are in rental programs? Seems like the rental incomes would produce the income for mortgage payments.

Good question Bill.  Most rental properties on the Outer Banks are rented weekly during the hot season.   Most companies require a 50% deposit at booking and the balance is due 30 days before your vacation starts.  The owner receives a portion of the deposit which could be a year in advance of the rental. 

The rental companies try to communicate regularly with their owners.  If an owner is having trouble paying the mortgage, they might not be willing to share that information with the rental company.  The rental agency is promoting the property while the owner is hoping to win the lottery to get them out of a jam.  Once the bank forecloses on the property - all bets are off.  There are times when the rental companies are the last to know.  This can create a real challenge for everyone - the owner is losing their home, the renter has a deposit on a home that can't be rented and the rental company is dealt with trying to find a suitable substitution home at the last minute. 

Many of the rental companies are subscribing to a service that lets them know about homes about to enter the foreclosure process.  It at least gives the rental agency 30 days notice - which is not much for those who's deposit checks were cashed six months ago. 

As for the banks (the ones that are buying the majority of properties back at the courthouse steps), they could care less about renting a property.  They want to cut their loss and sell the property ASAP.  In most cases, they are already in the hole and my momma always said - when you are in a hole - stop digging. 

Outer Banks Real Estate Market Conditions - Hatteras Island Style

There are a lot of searches and inquiries as to the Outer Banks Real Estate market conditions.  Tom Hranicka from Outer Beaches Realty published a newsletter this week with some interesting statistics for Hatteras Island.   

Perhaps the broadest summary statement that could be made about first quarter results is that some segments of the market appeared to be stabilizing while other areas continued to deteriorate. More specifically, the gap between the supplies of cottages and lots that are for sale and the corresponding buyer demand for these properties has remained relatively stable.  The median selling price of residential properties increased over the same period last year, while the selling price of unimproved lots trended downward.   Let's take a closer look
at the various dimensions that defined the real estate market during the first
three months of the year compared to the first quarter of 2007.

·       Residential properties for sale - +1.5%
·       Residential sales volume - (-26.7%)
·       # of residential sales - (-18.8%)
·       Median residential selling price - +5.5%
·       Unimproved lots for sale - (-4.3%)
·       Unimproved lot sales volume - +3.2%
·       # of unimproved lot sales - +16.7%
·       Median lot selling price - (-21.3%)

As you evaluate the percentage changes in these statistics, please keep in mind
that we are dealing with very subdued sales numbers, i.e., 26 residential sales
and 7 lot sales. This can magnify the percentage changes.

Looking over a longer time frame at the changes that have occurred in these indicators since the buyer's market began in the summer of 2005, the magnitude of the shift that has occurred is quite evident.

·       Residential properties for sale - +45.5%
·       Residential sales volume - (-79.3%)
·       # of residential sales - (-75.9%)
·       Median residential selling price - (-25.1%)
·       Unimproved lots for sale - +29.2%
·       Unimproved lot sales volume - (-93.6%)
·       # of unimproved lot sales - (-88.7%)
·       Median lot selling price - (-54.0%)

Evaluating these historical statistics together with trends that we are seeing
on a real time basis, we believe that reasons for cautious optimism about the
future are starting to appear.

I appreciate his time and effort in putting this information together - plus I really like statistics.  We have seen some increased activity on the mortgage lending side.  There are quite a few looking to take advantage of reduced prices in our market.   

 

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". 

Forclosures on the Outer Banks affects all of us

I was asked to speak today at the Outer Banks Association of Realtors Property Managment monthly meeting about the state of foreclosures on the Outer Banks.

The property management folks are the ones that deal with the property owners, renters and headaches.  They are a good group of people and I get the sense they are truly looking out for the best interest of the owner.  The concern is two fold - how do they protect the customer (this was the primary focus of the meeting) and how do they protect themselves. 

When a family rents a home on the Outer Banks, a deposit is required to reserve the cottage and the balance is due typically 30 days before arrival. 

The problem is pretty complicated.  An owner signs their property with a company to rent to vacationers.  The rental company spends money on promoting the home to the public.  Owner start having trouble making mortgage payments and the property goes into default.  All the while - the rental company continues to collect deposits on summer rentals and sends a share of the proceeds to the owner.  The home goes into foreclosure and is sold on the Dare County Courthouse steps.  The renter has given a large deposit, the owner has the renters money (and not the home) and the rental company has the obligation to serve the customer.  The banks that typically are purchasing the property won't honor the rental contracts - their goal is to sell the property as soon as possilbe - they don't want to get into the rental business.  Who is responsible for the loss?  Can you get the money back from the owner?  They are going through a foreclosure so things are probably not too rosy at home.  In most cases, the rental companies will have to absorb the cost in the short term and that expense will be passed on to the consumer - the vacation renter in the long run.

If you are an owner that needs to re-structure your debt, contact your lender to see if they are willing to help.  If you would like to look at additional options or a second opinion, please feel free to contact me at your convenience.

The silver lining - the rental market looks very strong this year.  Most felt that 2008 will be the best year yet for rentals on the Outer Banks.  Hopefully this influx of cash will help eliminate the foreclosure process for those in trouble.