Posts from — February 2010

Economic growth in America has risen at the quickest rate in six years according to a statement that the Commerce Department realesed Friday after revising its fourth quater estimates. Businesses slowed inventory reduction and boosted spending, but consumers spent less than first thought. GDP also rose 5.9% annual rate October through September, the fastest rate since 2003.  

Another positive is the fact that consumer spending rose 1.7% annual rate for the fourth quater.  The spike in spending contribited 1.2 percent to the total GDP.

"The Good Life"

The Outer Banks of North Carolina has become the prime east coast destination for vacationers to escape to the beach and relax. The OBX offers unique local appeal with historic relevence like the legends of Blackbeard the Pirate to the birth of aviation.  The east coast is covered with resort towns that have become heavily populated, and most beach towns on the east coast are covered with shopping, high rise developements, parks and  huge condo units.  The Outer Banks has preserved its quaint charm throughout the years, and its unique feel attracts hundreds of thousands of visitors each year. 

Starting at the Virginia Border, the Outer Banks spans three counties and runs south along the North Carolina coast for about 130 miles.  One reason for underdevelopment on the OBX is the thinness of the islands.  Most homes are either oceanfront or within short walking distance to the ocean.  Towns such as Duck and Corolla have become very popular for second home owners because these are popular rental markets.

In a recent USA Today article the Outer Banks was classified into three different areas.  They are as follows:

• Northern beaches: This area includes the towns of Duck, Corolla, Southern Shores, Kitty Hawk, Nags Head and Kill Devil Hills. “Favorites include Duck and Corolla, and it’s mostly single-family homes, though at the low end you can get a one-bedroom waterfront condo for under $200,000. Most homes are in the $400,000-$800,000 range, though Corolla is known for larger oceanfront homes up to $5 million,” a local Outer Banks realtor notes. North of Corolla, where Highway 12 ends, nearly 15 miles of dunes stretch to the Virginia border, dotted with vacation homes accessible only by four-wheel-drive vehicles: “That’s a whole different buyer seeking remote privacy.”

• Southern beaches: Hatteras Island is even less developed than the Northern beaches, and it is well-known for its excellent fishing, windsurfing, kiteboarding, and surfing. It is also at least another 30 minutes farther from the mainland bridges and includes more protected lands. Avon, Hatteras Village and Rodanthe, where the Richard Gere romance Nights in Rodanthe was set, are the most popular towns, and prices are lower than farther north. “Low-end one-bedroom condos start around $100,000, and the high end would be a seven-bedroom oceanfront home for about $2.5 million,” a local Outer Banks realtor notes.

• Mainland: The main bridge from the Outer Banks connects to a peninsula jutting into Albemarle Sound, including the town of Powell’s Point 4 miles from the bridge. “We consider it part of the Outer Banks even though it’s on the mainland,” notes a local Outer Banks realtor, who mentions that the Kilmarlic Club is popular with second-home owners. A master planned golf community with amenities like tennis and health club “started less than 10 years ago. All are single-family homes, from the mid-$300,000s to the $600,000s.”

Continually increasing in popularity, there is enormous opportunity in these rental markets.  If you are interested in owning a second home on the Outer Banks, contact sales@seasiderealty.com or visit www.coldwellbankerobx.com.

Some good news from the housing market in the past few weeks:

• Groundbreaking for new homes rose 2.8% to an annual rate of 591,000 units, reversing the prior month’s drop, a report from the Commerce Department showed on Wednesday.
• Over the past 12 months, housing starts have surged 21.1%, the largest increase since April 2004, the Commerce Department report showed.
• In summer 2009, the seasonally adjusted S&P/Case-Shiller Home Price Index rose for the first time in almost two years. Since May 2009, the index has risen by over 3%, suggesting that the necessary correction to U.S. residential home prices is nearing an end.
• The national median existing-home price for all housing types was $178,300 in December 2009, which is 1.5% higher than December 2008, according to the National Association of Realtors.
• For all of 2009, there were 5,156,000 existing-home sales, which was 4.9% higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005, according to the National Association of Realtors.

Housing starts have risen 2.8% to the annual rate of 591,000.  This is the highest level since July. These starts were consistent with forecasts by economists that were surveyed by marketwatch.

The number of building permits, which is a seperate measure for construction, has also risen in turn with housing starts 17.8% over the last two months.

The government has stepped in an extended the first-time home buyers’ tax credit, which has directly affected the rise of this key index number. Analysts believe this should boost housing starts as spring arrives.

“It is a matter of time before the tax credit drives starts to new highs,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in a note to clients.  The National Association of Home Builders said Tuesday that its builder sentiment index rose to a three-month high in February.

The OBX Team recently offered a great recap of the January 2010 real estate market on the Outer Banks. 

Posted by The OBX Team on Wednesday, February 17th, 2010. 

The OBX real estate market saw an increase of 102% for residential sales in January 2010 compared to January 2009; 82 sales in 2010 to 40 sales in January 2009.  Distress sales, bank owned homes and short sales made up 40% of all sales.  If January is any indicator of the coming spring, we are looking at a much improving real estate market on the Outer Banks.

OBX January Real Estate Highlights

• 22 homes sold in the $300,000 – $399,000 price range 
• $100,000 increase in residential median sold price
• An 11 percent decline in total inventory of homes
• Residential Sales doubled January 2009 to January 2010

As I approach my 25^th year in Vacation Rental Management I reflect back over all the many changes that have taken place in the travel industry and the many specific ways vacation rentals have changed. I am also stuck, however, by all of the many things that have stayed the same. Unlike other sectors of the hospitality industry where is only two sides to the equation- management and guests, the vacation rentals sector has three- the owner, the owner’s manager and the guest. This is where some fundamental problems can occur. And, it is really a question of mindset.

How do you view your rental guests? It is amazing how many owners take their rental guests for granted. Most guests, who come to the Outer Banks year after year, would love to find a home that works for them and just keep coming back to that same house. However, it’s amazing how many owners fail to appreciate this loyalty and the monetary benefits of having a regular repeat following. By jacking up rental rates; failing to fix and replace items as needed; not providing the basics in your kitchen; not providing basic services like Wi-Fi; by not upgrading décor and electronics, owners send a signal that they just don’t care about the vacation experience of their guests. Guests, by and large, respond by taking their business elsewhere. Remember, that the things you may be willing to live with when you stay in your own vacation home, are unacceptable to most guests. They are paying good money and have the right to expect a good value and for things to be in good working order. You may not hear a complaint, but they will speak load and clear by not returning to your home. Remember, your home may be one of a kind, but it is not irreplaceable as a place to vacation. Make sure you are showing your gratitude by making your guest’s vacation as comfortable, fun and relaxing as possible. They will reward you with their loyalty.                               

Another mindset to explore is how you see your property manager. Do you see your property manager as your agent, partnering with you to care for your home and serve your guests?  Or, do you see your property manager as a separate outside entity with an agenda different than yours? If so, it may be time to sit down and have a heart to heart and make sure you and your property manager are on the same page. When an owner and his or her manager have the same mindset regarding guest service and property upkeep, it is a beautiful thing. Conversely, when mindsets are at odds, it can be extremely frustrating for both sides. There are many firms on the Outer Banks and they vary in their approaches- make sure you and your management team are a good fit.

This past season has shown us that the Outer Banks has extreme resiliency to economic downturn. While we got off to a slow start, the demand and desire for the Outer Banks remains high. Pre-reservations for 2010 are strong and the economic outlook continues to improve. However, the rental home inventory on the Outer Banks is aging and it is important that we all take the needed steps to work together to provide the vacationing public with clean, well keep homes and work hard to show them our passion for hospitality and our appreciation for their business.

Been on the fence about buying a home in the Outer Banks?

Enjoy a day on the Outer Banks and explore the potentials of vacation home ownership.  The OBX Team will hold a foreclosure tour  on March 20th.  It will include breakfast, a tour of available foreclosures, and the opportunity to talk with local insurance, mortgage, and property management representatives about the unique opportunities of purchasing a foreclosed home.  

More Information on OBX Foreclosure Tour

Info from Dare County Schools…

According to the recently mailed Dare County Schools Ninth Annual Report Card 2008-2009, Dare County Schools ranked:

#1 in the state for on-time graduation rate,

#2 in the state for low dropout rate,

#2 in the state for SAT participation and scores, and

in the top 6% of high schools in the nation for the number of AP examinations taken compared to the number of graduates.

The Pending Home Sales Index, which is an indicator based on contracts signed in a given month, increased 1 percent and remains 10.9 percent higher than December 2008. 

Lawrence Yun, NAR chief economist, said it’s important to recognize how the tax credit is skewing market data. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.”

The index has risen in several different areas.  In the Northeast, the numbers rose 2.3 percent to 76.1 in December.  The Mid-west showed an increase of 5.2 percent to 86.9.  The South rose 2.2 percent to an index of 98.4. 

The US economy grew at the fastest pace in six years to close out 2009. 

The gross domestic product expanded at an annual rate of 5.7 percent increase the fourth quarter.  This is great news, but experts are a little skeptical on the economies’ long term pace of growth.  The growth rate in this quarter was the fastest growth since the third quarter of 2003. 

The Obama administration seized on news of the latest upturn as an opportunity to push its proposal to encourage hiring.  Companies would receive a tax credit of up to $5,000 for each new hire, and an additional credit on Social Security payroll taxes for raising wages — by increasing hourly pay or work hours, for example — in excess of inflation.  “Now’s the perfect time for this kind of incentive because the economy is growing, but businesses are still hesitant to start hiring again,” President Obama said in Baltimore.  

Up to this point, the economy has still been able to grow despite substantial job cutbacks across the nation.  Productivity of employees has increased 8.1% in the third quarter of 2009. It was also evident that businesses are spending more on technology in order to increase employee productivity.