One of the cover stories in the December issue of Money Magazine is “Real Estate: Why it’s the year to buy”. This article caught the attention of many people because it’s been a while since the press has favored purchasing real estate. This article looks at that story from an Outer Banks perspective.
It states inventories are shrinking. Factoring in the seasonality of this market, the number of properties for sale in the Outer Banks MLS has decreased every year since 2006. Choices here are less than they used to be but there are still plenty of great values to choose from.
The article states even if properties depreciate in 2010 that the majority of the depreciation has already occurred. Sales of real estate in the last quarter of 2009 suggest that prices are getting down to the point where buyers feel comfortable purchasing. Vacation rental homes have dropped in value to where the numbers now make sense for many buyers. As a result we saw more sales this past fall than in any fall since 2005.
The article mentions interest rates should not get any better and may go up when the Federal Reserve stops buying mortgage backed securities this spring. Rates on the Outer Banks continue to stay around 5%. Just a 1% increase in this interest rate will increase the monthly payment by more than 10%.
It states demand is highest for entry level properties. This is certainly the case on the Outer Banks. Many locals have taken advantage of the first time home buyer tax credit and out of town folks are favoring the lower end properties so they don’t have to count on the rental income to afford it.
Keeping watch for additional signs of the market improving was also mentioned in this article. The author does not want her readers to miss out. Key indicators to watch include an uptick in interest rates and the local absorption rate in the area where you would like to purchase. Your local Realtor will be happy to keep you updated with this information.
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