Hatteras Island Real Estate Blog

BEACH DRIVING UPDATE

Tom Hranicka — Mon, 03 Mar 2008 13:19:21 +0000

As you recall, on February 20^th two environmental groups filed a motion in federal court requesting a preliminary injunction to prevent driving on the beaches in six bird breeding and nesting areas within the Cape Hatteras National Seashore. Coincidentally, these areas are among the most popular for visitors and residents. They include the south end of Bodie Island at Oregon Inlet, Cape Point, part of South Beach, Hatteras Spit, and the northern and southern ends of Ocracoke Island. Pedestrian access to these areas would still be allowed.

Because of the way the process works, we will not have an immediate response to the injunction request. A hearing on the motion is scheduled to be held on April 3^rd. According to an in-depth article in the Island Free Press (www.islandfreepress.org), “Most observers expect a fairly speedy ruling by (judge) Boyle after the April 3 hearing since a major reason that the environmental groups asked for the preliminary injunction is that nesting season for shorebirds will begin in late March.” Judge Boyle, you might remember, is the same judge who issued a ruling last year that all driving on the beaches within the Cape Hatteras National Seashore was illegal since the National Park Service did not have an Off-road Vehicle Management Plan in place as required by law.

This is a very serious matter with significant implications for the economy of Hatteras Island. We will keep you informed as new developments occur.

ENVIRONMENTAL GROUPS SEEKING INJUNCTION TO STOP BEACH DRIVING

Tom Hranicka — Wed, 20 Feb 2008 13:35:06 +0000

The following article appeared on the Island Free Press web site (http://www.islandfreepress.com) yesterday.

The environmental groups that have sued the National Park Service over its interim protected species plan at Cape Hatteras National Seashore will ask a federal court judge on Wednesday, Feb. 20, for a temporary injunction to stop beach driving until the lawsuit is settled.

Members of a negotiated rulemaking committee that is working on a long-range plan to regulate ORV use on the seashore got the news Tuesday afternoon in an e-mail from Patrick Field of the Consensus Building Institute, one of the facilitators working with a committee to negotiate a long-range ORV plan.

“The plaintiffs in the lawsuit over the interim plan and those members of the Committee let us know this afternoon, Tuesday, that they plan to file a request for a preliminary injunction with the District Court tomorrow, Wednesday, February 20th.

“Once the document is filed with the court, they will provide a copy of that (request for a) preliminary injunction to us to forward to the Committee.”

The Defenders of Wildlife and the National Audubon Society, represented by the Southern Environmental Law Center (SELC), filed a lawsuit against the National Park Service on Oct. 18 in federal district court in Elizabeth City over its failure to adopt regulations to manage beach driving at the Cape Hatteras National Seashore.

The suit claims that the interim protected species management plan under which the Park Service has been operating does not do enough to protect species of shorebirds and sea turtles that nest on the seashore.

The groups also filed a 60-day notice of intent to sue over violations of the Endangered Species Act in connection with the interim management plan.

The lawsuit contends that the interim plan, which is intended to protect the birds and turtles until a long-range plan is adopted, does not go far enough.

The National Park Service is currently involved in two concurrent processes to formulate a long-range plan for ORV use on the seashore beaches.

They are:

An ORV Management Plan and Environmental Impact Statement (EIS). The Plan/EIS will guide the management of ORV use at Cape Hatteras for the next 10 to 15 years and is required by the National Environmental Policy Act. The first public scoping meetings were last year, and now the National Park Service has developed a list of preliminary options for ORV management. The Park Service hosted a series of public information meetings in January to answer questions about the options and will accepted public comment on the alternative options until Feb. 15.

A negotiated rulemaking advisory committee had its first meetings on Jan. 3 and 4 at the Avon Fire Hall. This committee is appointed under federal law by the Secretary of the Interior to assist the Park Service in developing rules for operating ORVs on the seashore. The next meeting of the committee will be Feb. 26 and 27 in Kill Devil Hills.

This is obviously a very important issue for Hatteras Island residents and visitors. We will continue to keep you informed.

THE OTHER SIDE OF THE STORY

Tom Hranicka — Wed, 02 Jan 2008 15:47:56 +0000

It doesn’t take a rocket scientist to know that 2007 was quite a year for both our local Hatteras Island market as well as real estate markets across the country. All of us have been inundated with reports of market declines, and we have been introduced to a new vocabulary of terms including sub-prime borrowers, Alt-A mortgages, and exotic loans. There is every indication that we will be hearing similar reports well into the New Year. As we are exposed to these reports, it is important to understand that there really is another (positive) side of the story that is not being heard. For perspective, here are some thoughts to keep in mind:

The difficulties facing the mortgage market are primarily related to “sub-prime” loans, and they are the most severe in a relatively few states. More specifically, sub-prime Adjustable Rate Mortgages (ARMs) are at the heart of the problem. It should also be noted that not all sub-prime loans were made to borrowers with poor credit. In our resort area, a substantial number of well-qualified applicants voluntarily chose sub-prime over traditional loans for a variety of reasons, including ease of underwriting.

A little over 13 percent of all mortgages are classified as sub-prime by the Mortgage Bankers Association. About 11 percent of the sub-prime loans are more than 90 days past due or are in the process of foreclosure. This means that roughly 89 percent of the sub-prime category of loans are being paid on time or are less than 90 days delinquent.

Looking at the broader mortgage market, the Mortgage Bankers Association recently reported that the delinquency rate for all outstanding loans during the 3^rd Quarter of this year was 5.59 percent. Loans in the process of foreclosure added another 1.69 percent for a total of 7.28 percent. In other words, 92.7 percent of all mortgage loans were not delinquent or in the process of foreclosure.

As a point of reference, at the end of September, only 29 out of an estimated 8,600 privately owned real estate parcels on Hatteras Island were in foreclosure – about three-tenths of one percent.

Foreclosure problems are most pronounced in seven states – California, Florida, Nevada, Arizona, Michigan, Ohio and Indiana. The foreclosure troubles appear to be greatest in states that had the highest levels of speculative activity during the boom years and those in the Midwest with significant unemployment related issues.

The relativities associated with the mortgage market issues also need to be appreciated. According to the Mortgage Bankers Association, “While subprime ARM delinquencies and foreclosures are climbing in all states, in most states the actual number of loans involved is fairly modest. For example, the number of subprime ARM foreclosure starts in California during the third quarter equaled the starts in 35 other states combined.”

According to the U.S. Census Bureau’s 2005 housing survey, there were 74,931,000 occupied residential units in the country. One-third of these properties (24,776,000) were owned free and clear with no mortgage debt.

With regard to the second home market, a survey conducted earlier this year by the National Association of Realtors estimated that 25 to 30 percent of vacation and investment properties did not have any mortgage debt.

We will be keeping a close watch on the real estate market reports that come out this year, and we will do our best to help you understand both sides of the story.

THE SIMPLE FACTS ABOUT THE REAL ESTATE MARKET

Tom Hranicka — Fri, 07 Dec 2007 15:17:49 +0000

With all of the recent news reports about the housing market decline and problems related to sub-prime mortgages, it is easy to fall into the trap of thinking that the real estate market on Hatteras Island is completely dormant. In reality, nothing could be more distant from the truth. Here are some simple facts:

· Properties are being bought and sold all of the time, regardless of market conditions.

· Based on a study of prices that we conducted earlier this year, the majority of residential properties that sold between January and June for which we could obtain data had a selling price that was higher than the purchase price.

· Interest rates remain near their historical low points, and financing is readily available for qualified borrowers.

· Buyers are value-shopping, searching for the homes that are the most attractively priced and in the best condition.

As you read the newspaper and watch television, keep two or three things in mind. First, real estate is cyclical, and it is a long-term investment. The reports that we are seeing and hearing focus on the short-term crisis du jour. Second, every real estate market is local. While there can be no denying that events in the outside world have some effect on the Hatteras Island market, the statistical profile for our resort environment is quite different from the national, primary residence market that is the basis for the reports. Third, as we have seen during the past few days, our government is not going to let an economic collapse occur, especially with elections less than a year away.

Whether you are a prospective buyer, a seller, or just an interested observer, the current real estate market is filled with opportunities if each of us will take the time to evaluate the facts rather than being swayed by hearing only one side of the story.

HATTERAS ISLAND 3RD QUARTER REAL ESTATE MARKET REVIEW

Tom Hranicka — Wed, 28 Nov 2007 22:26:25 +0000

Analyzing real estate market statistics is often like looking at the ocean after a storm. There are a lot of cross-currents, and rarely do all of the indicators point in the same direction. This seems to be the situation in the market today.

We think that a strong case can be made that the real estate market on Hatteras Island is stabilizing. A very cautiously optimistic evaluation might conclude that the market for unimproved lots reached a cyclical low point during the 1^st Quarter of the year, and the residential market looks like it is close to turning the corner.

At the same time, the strength of these observations and the reality of whether or not they will be validated as longer term trends are accompanied by a lot of potential uncertainties:

The statement that the market appears to be stabilizing means that while market statistics still reflect a decrease relative to the same periods last year, the rate of decline seems to be slowing.

The supply of residential properties and unimproved lots continues to exceed buyer demand by a wide margin, subjecting prices to ongoing downward pressure.

There are huge unknowns in the broader economic environment that could affect future results here on the island including – the threat of recession, increasing losses and dislocations in the mortgage market, an energy crisis precipitated by rising oil prices or supply disruptions in the Middle East, and slowing foreign economies.

With these comments and caveats as background, let’s take a look at the 3^rd Quarter market results.

Supply vs. Demand

Since the buyer’s market began on the island in the summer of 2005, the supply of properties for sale has risen dramatically, and demand for properties has simultaneously declined. At the end of September there were 519 residential properties for sale on the island. During the previous twelve months, 142 homes were sold. This equates to a 3.7 year inventory of unsold homes and condominiums.

The gap between supply and demand for unimproved properties is even larger. With 318 lots listed for sale and only 52 sold during the previous year, the statistics translate into a 6.1 year supply of unsold lots.

While the supply/demand relativities can be daunting, some basis for optimism can be found in the analysis of properties sold and properties under contract.

Property Sales

Comparing the 3^rd Quarter of this year with the same period in 2006, residential sales were down about 12 percent. However, when the pattern of sales is studied by quarter since 2005, the 2^nd Quarter of 2007 may emerge as the potential low point in the current market cycle.

A similar review of unimproved lot sales reveals that the number of unimproved properties sold in the 3^rd Quarter of this year was more than 8 percent lower than the same three month period in 2006. Examining the sales curve over a two-year period suggests that lot sales appear to have bottomed-out in the 1^st Quarter of 2007. As a side comment supporting this conclusion, it is hard to envision a worse time than the 1^st Quarter of this year when only six lots were sold on the entire island by all companies, and none were sold during the month of February!

Properties Under Contract

The Hatteras Island Pending Home Sales Index has been in a general downward trend over the past few years. This index, which reflects the level of ‘under contract’ activity on the island, is currently at about 32 percent of the average level during the base year of 2001, the first of the boom years. We thought that we were seeing a fairly solid upward trend beginning in May, but the November figures dampened our optimism.

Price Trends

With supply exceeding demand for the past 27 months, the median selling price of residential properties has declined about 31 percent since the buyer’s market began. The median selling price of homes was $407,500 during the 3^rd Quarter. The corresponding decline for unimproved lots has been 21 percent with the 3^rd Quarter median selling price being $215,000.

During the 3^rd Quarter, buyers purchased both homes and lots over a broader spectrum of prices than in the previous three months. Residential property sales under $500,000 and lot sales under $300,000 were the most prevalent.

When all is said and done, we are looking forward to improving conditions in the real estate market during 2008, although that improvement can be expected to occur at a gradual and measured pace. Despite the uncertainties associated with the various measures of the market’s performance, one thing is clear – conditions in the real estate market on Hatteras Island are very favorable for buyers at this time.

INTEREST RATES DROP BELOW 6.0% FOR HATTERAS ISLAND BUYERS !!!

Tom Hranicka — Tue, 27 Nov 2007 16:04:56 +0000

Prospective buyers of Cape Hatteras real estate received an early Christmas present today when interest rates dropped below 6.0 percent!

Interest rates on conventional 30-year fixed rate loans (those below $417,000) offered by a major lender are 5.875 percent with no points and 5.625 percent with the payment of one point (one percent of the loan amount). The interest rate on Jumbo loans, those with loan amounts in excess of $417,000, is 6.375 percent with the payment of one point.

This is good news for buyers since the interest rate reductions make properties more affordable. The interest rates on home mortgages track closely with the yields on 10-year Treasury notes. The yield on the 10-year Treasury notes have been falling recently as nervous investors shifted funds out of stocks into more conservative investments.

The current real estate market on Hatteras Island offers a wide choice of very attractive properties. The supply of homes significantly exceeds demand, and sellers are receptive to reasonable offers. When you combine this environment with lower interest rates, the inescapable conclusion is that it is great time to be a buyer on Hatteras Island.

We invite you to contact us by phone at 252.305.1556 or by e-mail at hranicka@hatterasisland.com to learn how easy it can be to make your dream of owning a place at the beach come true.

HATTERAS ISLAND FALL NEWS ROUND-UP

Tom Hranicka — Sat, 17 Nov 2007 17:58:23 +0000

Over the past few months, a variety of very interesting and important issues concerning Hatteras Island have been at the forefront of our local headlines. Some have been resolved, and others will probably be with us for the foreseeable future. Here is a summary:

On November 6^th, Hatteras Island voters defeated a referendum on whether liquor by the drink should be permitted in restaurants and other types of businesses. Currently, beer and wine are served in most restaurants and with the necessary permit “brown-bagging” is also allowed. The unofficial vote was 855 against the proposal and 657 in favor of the measure.

Hurricane Noel passed well east of Hatteras Island earlier this month. We experienced strong winds but no significant damage. The main impacts were that Highway 12 at the north end of Rodanthe was closed for a while, and the power was out for about three hours. Everyone breathed a sigh of relief that the island made it through another season without a major storm. If you would like to see some incredible kite surfing videos go to - http://www.youtube.com/watch?v=ajQrWFVqxz0

You may recall the anxiety that arose earlier this year when a federal judge ruled that because the National Park Service did not have an off-road vehicle plan, there was no legal basis for allowing anyone to drive on the beach. The National Park Service, which has been working on the necessary plan for some time, took no subsequent action to prevent or restrict beach driving except in areas where endangered species were nesting. The pace of progress was apparently not swift enough for some environmental groups, and the Southern Environmental Law Center (SELC) filed a suit in Federal Court on September 18^th, claiming that the National Park Service was not meeting its legal responsibilities to develop a beach driving management plan, and it was not doing enough to protect endangered species. The director of the SELC indicated that the groups involved in the lawsuit would not seek an injunction preventing beach driving “at this time”. Most recently, the Dare County Board Of Commissioners took action to be a party in the lawsuit. Driving on the beach has not been impacted, except for limited area closures, although a cloud of concern continues to hover over this important aspect of Hatteras Island’s unique appeal.

On Ocracoke, the North Carolina Department of Transportation (NCDOT) is getting ready to replace the seven bridges on Highway 12. Between January 2^nd and March 15^th, a portion of Highway 12 will be closed to traffic. Reportedly, only four-wheel drive vehicles will be permitted to use the 3 mile beach detour around the construction area. Other vehicles will be expected to use the Swan Quarter and Cedar Island Ferries to get to and from Ocracoke.

Discussions and meetings are still being held regarding the replacement of the Bonner Bridge over Oregon Inlet. The NCDOT has stated that with the proper repairs, the existing bridge should last another ten years. It appears that the “short bridge” alternative will be the favored option. Under this choice a new bridge would be built parallel to the Bonner Bridge. If the parties involved in the protracted negotiations can reach agreement, bids could be solicited in early 2009 with the completion of construction possible in 2013.

A Wings store is planned for Avon. The store will be located on an unimproved lot north of the Avon stop light between the Subway and the mobile home community across from the Ocean Isle subdivision. Since the property is relatively narrow, the exposure on Highway 12 may be less than the frontage that characterizes most of these stores.

Hatteras Island now has an online newspaper – the Island Free Press. We encourage you to visit the Island Free press web site at – http://www.islandfreepress.com where you can sign up for automatic e-mail notification when new articles are posted. We are certain that you will enjoy the wide range of content including, Local & Community News, Island History, Fishing, Real Estate & Business, Life & Lifestyles, Special Features, and Links. We will be writing the main real estate articles for the site. The Island Free Press fills a long-standing void in reporting news and events concerning the island, and we are pleased to be a part of this exciting new venture.

Please contact us at hranicka@hatterasisland.com if there are any topics or issues that you would like us to research or analyze.

MORTGAGE INTEREST RATES NOT A PROBLEM FOR OUTER BANKS

Tom Hranicka — Sat, 18 Aug 2007 18:37:20 +0000

With all of the recent news reports about the problems of the sub-prime mortgage market and wild swings in the stock market, it is easy to fall into the trap of thinking the “sky is falling.” In reality, the mortgage market relative to Hatteras Island properties is still quite attractive. Interest rates for mortgage amounts up to $417,000 are about 6.25 percent plus one point, and Jumbo loan rates for mortgages over $417,000 range from 7.0 to 7.125 percent plus one point. When we add in the Federal Reserve’s reduction in the discount rate and the probability of a reduction in the federal funds rate, there is every reason to continue to believe that it is a great time to be a buyer on Hatteras Island.

As you watch television and read the newspaper, keep in mind that you are hearing the ‘sensational’ news that generally applies to the national real estate and mortgage markets. Here on the Outer Banks, we are certainly influenced by outside events, but the reality of our markets and the financing of properties usually will have some unique local twists. It always pays to check the facts before forming a conclusion about how national events are playing out in our local market.

Please feel comfortable contacting us by e-mail at hranicka@hatterasisland.com or by phone at 252.305.1556 if we can help to clarify any aspect of your decision to buy or sell property on Hatteras Island.

OREGON INLET BRIDGE BECOMES FOCAL POINT OF ATTENTION

Tom Hranicka — Sun, 12 Aug 2007 16:16:53 +0000

The recent tragedy in Minnesota has served to focus renewed attention and generated an increased sense of urgency concerning the need to replace the bridge over Oregon Inlet. As you know, the Bonner Bridge is Hatteras Island’s only non-ferry, land link to get on and off the island. Here is a brief summary of the situation.

The Bonner Bridge is about 44 years old.
On a scale of 0 to 100, with 0 being the worst, the bridge has a sufficiency rating of 2!
The state of North Carolina has scheduled $40 million in repairs over the next two years.
State officials say that despite its low rating, the bridge is safe, and with the proper maintenance and repairs, it should last another 10 years.
Meetings and deliberations concerning construction of the new bridge have been going on for nearly 17 years without a decision authorizing the start of construction being reached.

Hatteras Island’s county commissioner, Allen Burrus, recently gave a very eloquent summary of islander’s feelings and the facts about the bridge situation. We recommend that you view Allen’s presentation on a YouTube video at - http://www.youtube.com/watch?v=q4SEQKYRR6c

If you would like to learn more about the issues and the status of efforts to get construction started on the new bridge, please visit - http://www.replacethebridgenow.com/

Any help that you might be able to give to support this vital project would be greatly appreciated.

BEACH DRIVING ISSUES TAKE CENTER STAGE !

Tom Hranicka — Sun, 22 Jul 2007 20:48:39 +0000

A variety of issues concerning driving on Hatteras Island beaches and a surprise ruling by a U.S. District judge have taken center stage in local news reports during the past week.

There are three main topics that are the focal points of the discussions:

On Friday, July 13^th, a new interim protected management plan for the Cape Hatteras National Seashore was completed. The plan identifies the Park Service’s strategy for managing piping plovers and other protected species. The piping plover is a species of shore bird that is protected under the Endangered Species Act. As we understand it, the management plan contains a proposed critical habitat designation for piping plover wintering areas that could result in the closure to beach driving during certain times of the year of areas at the south end of Bodie Island at Oregon Inlet, at Cape Point, at Hatteras Inlet, and in areas on Ocracoke Island. Several groups that are advocates of recreational beach driving have lobbied for the Cape Hatteras National seashore to be exempt from the proposed critical habitat designation. Public comments on the proposal can be made through the end of July. For further information on the plan and to submit comments, please go to - http://www.fws.gov/nc-es/piplch/piplch.html

In a separate action a few days later, the National Park Service temporarily closed the spit at the southern end of Bodie Island to off-road vehicular traffic in order to protect piping plover chicks that have recently hatched. Simultaneously, the Park Service opened an additional half mile beach north of Oregon Inlet to compensate for the closure. The temporary closure is expected to last about a month.

On Tuesday, July 17^th, while hearing a case involving reckless driving on the beach near Oregon Inlet, U.S. District Court Judge Terrence Boyle observed that the Cape Hatteras National Seashore “does not have regulations in place to govern ORV (off-road vehicle) traffic.” The judge’s order indicated that, in the absence of an off-road vehicle management plan and specific authority from the Department of the interior or its designee, it was a violation for anyone to be driving on the beach! It remains to be seen how the National Park Service will ultimately respond to the judge’s ruling. For now, the Park Service appears to be taking the position that the order is not an injunction against beach driving, and tickets will not be issued for responsible driving on the beach.

Driving on the beach is an important part of Hatteras Island’s attractiveness, and if the beaches were to be closed to off-road vehicle use, it would have a significant impact on the economy of the island. Our hope and our expectation is that compromise and reason will prevail, resulting in a solution that protects endangered species while allowing acceptable access to the beach for those who want to drive on it.