Vacation Home Market on the Rebound

On the Rise

On the Rise

Here’s some good news for the real estate market…especially vacation destinations like the Outer Banks. Similar to a previous post we made commenting on a Wall St. Journal article, a recent market study by a real estate marketing firms shows growing consumer confidence in the second – or vacation – home market.

Over the past couple years most of the movement in the vacation home market has come from investors purchasing homes at a discount, often foreclosures and bank owned properties, but times may be changing. Reports are indicating a year-over-year increase of 800 percent of home-buyers interested in the purchase of a vacation home.

This good news comes from the third annual Cotton Report, which reports a polling of more than 800 participants on housing preferences, motivating factors, pricing levels and timelines for purchase. It included participants from 39 states, Canada, Europe and Latin America.

This trend is further supported by an increase in the number of buyers describing their transition as “a geographic relocation.”

With visitor spending in North Carolina rising over 9%, this is a great time to invest in a vacation home here in the Outer Banks.

Coldwell Banker Seaside Realty would love to help you find your dream vacation home. Please let us know if we can help with your search.

First “Green” Home on the Outer Banks

First Outer Banks LEED-certified Dwelling

First Outer Banks LEED-certified Dwelling

The essence of the Outer Banks is contained in its pristine, natural setting, and the goal of every OBX enthusiast is to keep the Outer Banks that way. Unfortunately, development does not always coincide with this goal. But there are an increasing about of building efforts that are making great strides toward working with nature rather than against it.

The Outer Banks is a relatively small community, and we can be behind the times a bit, but a recent OBX building project made a huge leap towards the forefront of “green” building efforts on the Outer Banks. The first “green” home on the Outer Banks… literally and figuratively.

The Virginia Pilot recently reported that this three-bedroom, two and a half-bath home in Southern Shores is setting the stage for earth-friendly building on the Outer Banks as the first and only LEED-certified dwelling.

Some of the “green” highlights include:

  • Strategic surface-water management and rain-water harvesting systems passively direct water away from the dwelling to various purposeful reservoirs. Including, a French drain, rain garden, landscaped berm and 1,500-gallon holding tank to collect water for irrigation.
  • Landscaping includes drought-tolerant native plants and a small grove of American hollies.
  • The home is heated and cooled geothermally, and lit easily by the sun through generous-sized low-E4 windows, which mitigate summer heat infiltration.
  • High-efficiency appliances, lighting and plumbing fixtures.
  • Well-sealed and double-insulated framing between 6-inch-thick walls.
  • A whole-house water filter and radiant-barrier roof sheathing.
  • Low-volatile organic compound, or VOC, paints, coatings, adhesives and carpets, as well as a central vacuum system and fresh air filtration/ventilation system

The homes estimated monthly energy-related cost to operate is $100. The Common Sense Green House is listed for $655,000. The builder explains “the whole point of green building is while we use less energy, water and materials, the quality of life is as good, if not better” than what we are accustomed to.

It’s great to see “green” building starting on the Outer Banks…and just in time for St. Patty’s Day!

Vacation Rental Market Growing 4 Times Faster than the U.S Economy

Outer Banks Vacation Rental Home

Outer Banks Vacation Rental Home

Vacation Home Rentals recently named the Outer Banks one of the top growth markets for vacation rentals in the United States. Studies show that the vacation rental market is expected to grow 13.1% in 2011, more than twice the rate of the travel market and four times faster than the U.S economy. About 85% of vacation rental property owners expect 2011 to be as good as, or better than 2010. The OBX is projected to have a 20% increase from last year alone!

Vacation rental property owners believe this growth may be attributed to the fact that vacationers are looking for small, reasonable destinations they can drive to, rather than fly.

With this news coming from one of the most visited vacation rental sites in North America, there is a lot to look forward to this year. Whether interested in buying a potential vacation home or searching for a weekend getaway Coldwell Banker Seaside Realty and Seaside Vacations can help you find your own beach oasis.

New Theme Parks in the Corolla?

Outer Banks - Whalehead Club

Outer Banks - Whalehead Club

The Outer Banks has always been known for its resistance to a true tourist destination, opposing anything similar to a Myrtle Beach feel. Nothing against Myrtle, but the OBX has always made it a priority to be a relaxing destination where everyone feels like a local and is here to appreciate the beach and other natural elements of the area.

The Virginia Pilot is reporting that Corolla residents recently opposed two proposed new fun parks and expansion at the Whalehead Club in Corolla, NC, including two new miniature golf courses and two amphitheaters directly across from each other.

Developer Rick Willis seeks a permit to build an amphitheater, a miniature golf course, a zip line and retail shops on 6.9 acres next to N.C. 12 across from the Whalehead Club.

For the second month in a row the county planning board has tabled its recommendation for the park , following new scaled down plans from developers.

In a separate fun park project, Israel Golasa of G. Holdings proposes to build a miniature golf course and a bumper car ride on two acres adjacent to TimBuck II shopping area.

This is another scaled-down version of an earlier 3.3-acre project proposed in 2009 that would have also included a go-cart track and an arcade. Previous proposals have been opposed by local residents.

Meanwhile, the historic Whalehead Club has asked the county for permits and funding to expand activities there over the next 10 to 15 years, including projects such as reconstructing a caretaker’s house that once sat on the property, a vendors area and an amphitheater on an open field currently being used as a wastewater spray field that would have to be relocated.

The citizens group opposing these developments sees them as out of character for the area. Noting they would create noisy distractions for residents and visitors.

“We’ve got two amphitheaters looking at each other,” said Bob Schultz, a board member with the Corolla Civic Association. “For some reason all these developers think people are looking for the Myrtle Beach atmosphere. That’s not why they come to Corolla.”

But the developers disagree.

“These residents reflect a small percentage of people who own property on the Currituck Outer Banks,” one said, adding that these attractions will add value for owners who chose to rent their homes for the season.

Corolla residents have often opposed new commercial developments over the years. Citizen committees influencing county laws have led to limitations on signs, lighting, noise and gaudy appearances seen at other resorts.

As for the Whalehead Club, which is owned and financed by the county and draws about 17,000 visitors a year, the hope is the proposed additions will bring more locals and visitors to the area and proposed the new caretaker’s house would be used for weddings, classrooms and meeting space.

The Board of Commissioners will have to approve all three projects, but what do you think?

Will Real Estate Turn Around in 2011?

Is relief finally on the way in 2011? The Wall St. Journal recently published an article indicating that 2011 could be the year real estate turns around. It’s hard to be sure, but there may be some good news in 2011 about the nation’s struggling housing market…or at least, the bad news could come to an end.

Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. Reasons to be optimistic have been sadly lacking since the housing bubble burst.

Last week we learned from the widely watched S&P/Case-Shiller that the home-price index fell 1% in December; its fifth straight decline. But what’s new? In this case, what goes down must come up. If forecasters are correct it might make sense to jump into real estate. The trick is avoiding getting burned again, and it doesn’t necessarily mean owning a home.

Let’s recap a few economic signs that seem to support the belief that a bottom is close.

Houses Are a Good Deal

Housing is the most affordable it has been in decades – analysts consider not only home prices but average family incomes. Nationally, the cost of a house is the equivalent of about 19 months of total pay, the lowest level in 35 years.

“Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own,” says Michael Larson, a real-estate analyst at Weiss Research in Jupiter, Fla.

In the end, it will be affordability that will drive people to buy homes. But what about timing?

Consider this: In some markets, home prices have fallen by half or more since 2006. Even if prices fall another 5%, it’s a small margin in the grand scheme.

Investors Stepping Up

One of the best indicators that the market is nearing a bottom is when investors are buying up houses and condos, in some instances paying entirely in cash.

Take Miami again. Last year, more than half of all transactions were made entirely in cash, according to a recent report in The Wall Street Journal. That compares with 13% of deals in the last quarter of 2006, the height of the bubble. Similarly, in Phoenix 42% of sales in 2010 went to all-cash buyers, up threefold since 2008. It seems like these investors are betting on a rebound in the near future.

Plan to Stay Put

Buy and hold. While the good news is that the worst of the housing crash might be over, the bad news is that the fast gains of the glory days of 2005 and 2006 won’t be back any time soon. To avoid heavy losses and driving down neighborhood values, plan to own for the long-term…10+ years is a good bet.

Below is a graph from AOL Real Estate showing home prices in the Kitty Hawk, NC real estate market. With Kitty Hawk home prices being sold far above state and national averages, the OBX may be more fortunate than we assume.

The OBX – a strong real estate market getting stronger in 2011?! The magic 8-ball seems to be pointing to yes.

AOL Real Estate - Kitty Hawk - 3.2.11

AOL Real Estate - Kitty Hawk - 3.2.11

Is It Time to Reduce Your Home Price?

Top dollar is the goal. But sometimes reality doesn’t cooperate. It is a challenging real estate market with an abundance of competition; as much as it may seem counterintuitive to decrease the price of your home on the market, there are times when a reduction makes the most sense.

Home Logic recently had a great article with six reasons to reduce the price…it’s worth considering:

1. You’re drawing few lookers
2. You’re drawing lots of lookers but have no offers
3. Your home’s been on the market longer than similar homes
4. You have a deadline
5. You can’t make upgrades
6. The competition has changed

Outer Banks Real Estate Update – January 2011

Sold

Sold

The traffic on the Outer Banks was busy compared to last January and pending sales are up. The OBX had 133 pending sales in January 2011 & 110 in January 2010.  The Outer Banks real estate market continues to improve.

Inventory is also declining slightly. Last year at this time there were 3,548 active listings and now there are 3,058 – this is a 14% decline.  Less inventory = more sense of urgency to BUY!

Distressed Sales: It’s important for sellers know where the buyers are spending their money and for buyers to understand current market values.  Pricing needs to be set competitively, even if the competition is a distressed property.

Here are the results for January:

Property Type

Total Units Sold Bank Owned Short Sales % Units Distressed
Residential 82 24 10 41%
Land 14 2 3 36%
Commercial 1 1 0 100%
Total 97 27 13 41%

Why Buy an Outer Banks Beach Vacation Rental Property NOW?

Seaside Vacations - Big Mama's

Seaside Vacations - Big Mama's

Editors Note: This is a guest post by Coldwell Banker Seaside Realty agent Hugh “Scooter” Willey.  Thanks for the great thoughts Hugh.

If you are considering buying a beach vacation rental investment on the Outer Banks, then NOW may be the best time of year to make that purchase.

  1. Prices on real estate are dramatically discounted! With the soft real estate market nationwide, right NOW you can get a real bargain on a home! Currently, vacation destinations are experiencing the dare before the dawn and there is going to be a short window of opportunity for smart investors to jump in and make their future fortunes. For the first time in years, vacation home prices have slipped enough in some regions for the math to work, including the Outer Banks of North Carolina.
  2. While price does play an important part in the buyer’s decision. The most important thing to most buyers is the cost – that is the mortgage payment they must pay every month. That payment is determined by the price of the home AND THE INTEREST RATE ON THE MORTGAGE. Interest rates are artificially low right NOW because of government intervention. This will not last forever.
  3. By buying NOW and closing before May, 2011 you will have the best opportunity to earn 100% of this year’s rental income while only paying for approximately 75% of this year’s operating costs!! Even better, if the house you are purchasing has weeks already booked for the summer vacation season you will get a check at closing for those monies already collected by the property management company. That’s right! You can close on a house and get a check given to you for the pro-rated amount of rental income already booked for 2011.

How does that work you ask?

Since many vacation renters pre-book their vacations for the next year while they are currently on vacation, they are generally required to put down a small deposit to hold the week they have selected. Then, the property management companies mail out the rental agreements in January/February to all the renters who have pre-booked weeks for the upcoming rental season. A deposit of 50% of the rental amount is required at the time this rental contact is signed. The second half of the rent is usually due 30 days before their vacation date. You as the new property owner get a percentage of the deposit money when the renters send in the signed rental contract and the remainder comes to you after the renters satisfy their weekly stay. Thus, if a property is sold during the rental year, then you as the buyer receive the pro-rated deposits/rents which have been collected for all the weeks that vacation renters have not yet used.

Naturally, you should be cautious and do your homework before you buy any property–but don’t be so cautious that you miss this window of opportunity!

You can find additional information about Hugh and contact him at:

The New York Times Loves Vacation Rentals Too!

Seaside Vacations - Sandy Oasis

Seaside Vacations - Sandy Oasis

The New York Times recently ran an article about the great amenities that vacation rental homes offer.  In the article, they mentioned that due diligence is a must with vacation rental homes.  Unlike hotels, there is no brand-standard that you can expect from individual vacation homes, so it’s important to make sure the end product is what you expect.  Renting from a well-established property management company is a great start, but it is always wise to ask a few questions to ensure the quality.

As a follow-up to the original article, the New York Times ran a second article highlighting questions you should consider when renting a vacation rental home, and speaking from experience on both sides of the vacation rental business (guest and renter), I can assure you that these questions are well worth the time and effort it will take to ponder the answers, and every homeowner and/or property manager should be happy to answer these questions for you.

Location: Be sure to ask for specifics about the location, including the kind of details you may not be able to tell just from looking at a map; view, distance to attractions and stores.

Configuration: You should ask for details about how the house sleeps the number of people it claims to sleep as well as where and how big the bedrooms and bathrooms are.

Child and Pet Friendly: If the house is described as “child friendly” or “pet friendly,” make sure to ask for the property’s definition of those terms since they may not necessarily line up with how you define them.

Surroundings/Activities: Be sure to ask the homeowner or property manager for recommendations of favorite places to eat and things to do so you can vacation like a local rather than as a tourist.

    • PS – Take a look at Seaside Vacations’ Club Seaside events…talk about living like a local!

Amenities: Ask about what kinds of household amenities are provided so you can determine whether you need to bring your own hair products, dishwashing detergent, seasonings for cooking, and whether you can just arrive and settle in or whether you’ll need to stop at the supermarket first.

Cleaning Fees: Ask for specifics about cleaning fees and surcharges and especially about if and when extra cleaning fees are charged.

Cancellation Policy, Keys and Problems: If the cancellation policy is not specified in the contract, be sure to ask about it, and how you’ll get the key. You should also be sure to ask for details about how far the property manager or emergency contact lives from the vacation rental should you need assistance.

2010 Outer Banks Real Estate Market Report – Year End

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

Outer Banks Real Estate Market Report - Q4 2010

2010 Year End Report

Total Property Sales – A total of 1672 units were sold in 2010 which is a 21% increase over 2009 sales with residential property leading the way (see below). Total Volume Sold for 2010 was also up by 19% over 2009 with a total volume of $504,568,644. For historical perspective, sales in 2010 were approximately 57% of what the sales were at their peak in 2004.

o Residential property - Sales in December were up 16% from November and up 22% for the year and the sales volume was up 18%.

o Land – Sales in December were down slightly (3%) from November but were up 19% for the year.

o Commercial – Sales were down 26% for the year; however the sales volume was up by $838,475 (12%)

How Sold – Buyers were looking for different / unique ways to finance their purchase. The data showed that the numbers of “Cash” sales were up 54%, “Other” sales are up 312%, “Conventional” loans are up 17%, “VA” loans are up 18% while the number of “FHA” loans were down 6.7%.

Distressed Properties – Distressed properties accounted for approximately 16% of residential property inventory while sales of distressed properties accounted for 38% of all sales in 2010.

Under Contracts – The number of listings placed under contract took a dramatic downturn in December (-46%) when compared with November 2010; however, this appears to be a seasonal trend. The number of listings placed under contract in 2010 was up by 19% from 2009.

Inventory – The total number of active listings declined 10% in December and 15% for the year. Overall, residential listings declined by 11%, land listing declined by 21% and commercial listings declined (23%). The majority of the current active residential listings fall in the following price ranges:

Price Range

Number of Listings Price Range Number of Listings
$1 – $99,999 58 $600K – $699K 140
$100K – $199K 252 $700K – $799K 69
$200K – $299K 309 $800K-$899K 64
$300K – $399K 323 $900K-$999K 49
$400K – $499K 233 >$1M 175
$500K – $599K 167