Tuesday, July 25, 2006

Both locally and in many real estate markets nationally, similar patterns have emerged over the past twelve months. Inventories of properties for sale have skyrocketed. Sales have significantly declined, and price appreciation has moderated. The real estate market on Hatteras Island is off about 50 to 60 percent for the first six months of the year compared to the same period in 2005.

While virtually everyone would agree that the current real estate market on the island is weak, there are some signs that the market may be stabilizing.
• Media speculation about a “real estate bubble” is no longer being seen or heard.
• The Fed appears to be at or near the end of its interest rate increases.
• Nationally, second home sales now account for about 40 percent of all residential transactions.
• Over half of all baby boomers are still under 50 years of age, suggesting strong pent-up demand.
• The Hatteras Island Pending Home Sales Index, a leading indicator of future sales, has shown a slight upward trend over the past eight months.

No one expects a return to the days of double-digit appreciation any time soon, but, as long as the economy remains vibrant, there is reason for optimism that better times may be ahead for the Hatteras Island real estate market. Anecdotal comments from a variety of sources look for positive changes toward the end of the year.

Wise buyers will recognize that all markets run in cycles and that the best time to buy is when everyone else is sitting on the sidelines.