Are home prices dropping on the Outer Banks? Opinions vary on this and it’s difficult to quantify. However, it’s clear that the number of real estate transactions has gone down significantly compared to the same period of 2022. Just because the number of sales is down does not mean values have gone down. On the other hand, fewer transactions often help cause lower values. This post will outline some recent statistics and OBX Market Info for the spring of 2023.
The indicator that Realtors are discussing first is the amount of inventory. On the 15th of each month, Scott Team Realty checks the local MLS system to see how many properties are currently for sale. We’ve been tracking that indicator for close to 20 years. March of 2023 is 797 properties for sale. That’s almost 10% more than March of 2022. This number is still historically low. In March of 2019 there were almost 2500 active listings in our MLS. That’s three times our current supply! Values were creeping up in March of 2019 even with that much supply.
Comparing the first 12 weeks of 2023 to the same 12 weeks of 2022, there are a few indicators that point towards lower prices. Both average sales prices and median sales prices are lower. According to the numbers pulled on March 22, 2023 from the Outer Banks Association of Realtor’s MLS system, The average sales price for all single family residences was $650,886 for the year up to that date. The average was almost $100,000 more in 2022.
Also, it takes longer for houses to sell. During the first 12 weeks of 2022 the average days on the market was 43 days. That’s gone up to 60 days in 2023. 60 days is still a relatively short period of time. The average days on the market was 110 for that same first 12 weeks of calendar year 2019. You can see many of these statistics from the Outer Banks Realtors here.
Using this same time period in the local MLS, this year’s average sold price per square foot is slightly above where it was in 2022. In 2022 the sold price per square foot was $320.14. 2023’s number was $330.53. That’s an increase of a little over 3%.
So if we have these conflicting indicators what’s really happening with home values? An argument could be made that people were buying less expensive homes and that was the reason why average and median sales prices were down. They could also make an argument that the average sold price per square foot was more because people were buying newer homes or homes closer to the water. Both would result in a higher sold price per square foot.
In this market where we don’t have thousand parcel subdivisions and proximity to water greatly affects value, it’s very difficult to prove which way values are going. The only way I could think of to get an accurate picture was to see if any specific homes sold during or near the first 12 weeks of both 2022 and 2023. I did not search the entire Realtor MLS system but I did find five houses that sold in or about both years. According to the listing agents, most of these homes had minimal or no improvements and none of them sold for less than they did in late 2021 or 2022. This is not a perfect comparison but it does still point towards values holding. Here’s a little about those five homes.
OBX Market Pressures
It goes without saying that interest rates have greatly affected the affordability of Outer Banks property. Rates are close to double what they were just a year ago. Buyers purchasing with cash have not changed that much either. It is still just about one out of every five buyers purchase a home with cash here. As a result, we should see some impact on prices because of these higher rates.
The public’s ability to work remotely also has had a significant impact on this real estate market. If you love the Outer Banks and don’t have to commute, then why not work here? Since the pandemic started, we’ve seen a large increase of people here when they are usually on the mainland. They’ve impacted home values and rental income. Will these work from home people continue to impact our market? I believe they will. A paper was published by professors from Stanford University, the University of Chicago School of Business and other prestigious institutions. They predict that the portion of our workforce who can work from home will remain close to four times what it was prior to the pandemic. You can see that prediction on page two here. I call this phenomenon “The Suburbanization of the Outer Banks.”
What can we expect in this market? Historically speaking, buyers want to purchase an Outer Banks home in the spring. That way they can use it during the summer and collect the main portion of the summer rental income. Also, there are still many people who want a home here that did not get one over the last few years. We can expect demand to remain strong through Memorial Day. You are welcome to contact Scott Team Realty anytime for OBX Market Info. Also, if you want an idea of what a buyer will pay today for a specific Outer Banks parcel, then please feel free to contact us. We’d be happy to help you.