Should Real Estate Be Part of Your Investment Strategy?

Many potential home buyers remain skeptical about the housing market and for that matter about any market they are considering for investment of their discretionary funds. What should a distributed investment plan today look like? Placing money in the banking market is generally secure but provides marginal rates of return. The bond market always deserves close scrutiny. The stock market has certainly improved though rates of return remain below desired levels and there is always a fear that it may tumble in value again based on circumstances the investor or maybe even the nation cannot influence sufficiently. What about the housing market? Is it showing the necessary signs of improvement for an investor’s distributed investment strategy to once again include a significant allocation to the housing market? How should I redistribute my investment portfolio today and does the housing market deserve a larger share? To provide one respected view, let’s examine the August 01, 2012 Wall Street Journal article, “Finally, It Is Time to Buy a House and Realtor Magazine’s Daily Real Estate News, August 06, 2012 summary of that Wall Street Journal article. Here is what was reported.

Some Americans are still jittery over the housing market, but here are eight positive signs that should quell some of their fears.

  1. Housing prices are on the rise across the country.
  2. Foreclosures have slowed. Analysts suggest that as the supply of distressed homes slows, buyers will be forced into higher-price properties too.
  3. Inventories of for-sale homes on the market are decreasing. In fact, inventories of for-sale homes have dropped 24 percent from a year ago.
  4. Mortgage rates are at ultra record level lows, for those who can qualify.
  5. Housing starts rose 6.9 percent in June. Also, existing-home sales were up 4.5 percent higher in June compared to one year ago.
  6. Home building stocks are on the rise.
  7. For investors who are buying homes, rents are soaring, allowing them to cash in on their investments. Rental prices are at a 10-year high as median units rent for $710 a month.
  8. Home affordability is at record highs for the median income family, due to falling home values and super low mortgage rates. In fact, a recent study found that it is cheaper to buy a home than rent in basically every major city in the U.S. For those who buy, you can save the cost of renting by owning the home for five years or less.

But while the signs point to a housing market on the mend, some Americans still remain hesitant. Many Americans are still underwater on their mortgage, owing more on their home than it is currently worth. Also, the economy continues to weigh on the recovery, particularly a dampening employment outlook, which analysts see as tied to housing.

Still, The Wall Street Journal concludes in a recent article that if you take into account all the positive signs lately in the housing market, “housing presents an attractive long-term investment that should hold steady or even have upside surprise in the short term.”

So this is what the Realtor Magazine and the Wall Street Journal have concluded very recently about the general US housing market. Does that apply to the Outer Banks (OBX)? The answer is a resounding yes. Housing prices have not yet begun to rise but they do not appear to be declining as they had over the last several years. Inventories are reducing, the number of foreclosures and short sales has decreased, interest rates for second homes have been available at or below 3.5% with no points, and rental income has been on the rise all while fixed income yields have fallen to an historic low. Therefore, this may be exactly the right time to invest in housing in the OBX.

It is my personal view that the market in the OBX has experienced most of the market corrections one would expect for these past 5-7 years in the form of a growth in inventory, a glut of foreclosure and short sales, and lowered prices. These trends are indeed reversing themselves along the lines described in the Wall Street Journal article. The Outer banks Association of Realtors (OBAR) monthly statistical report supports the new trends. Their July 2012 report states that active inventory has declined 24% over the last three years, and 2012 year-to-date sales are up 17%. During July 2012, Dare County foreclosure filings declined by 44% supporting an overall belief that there is a definite downward trend in the number of filings. Similarly, the OBAR reports that sales of distressed residential properties (short sales and bank owned sales) have also declined steeply. Meanwhile the overall rate of increase in sales year-to-date compared with one year ago has risen by 17% (40% for land and 12% for houses). This suggests that wise buyers in late 2011 and throughout 2012 are taking advantage of the buyer’s market. If the market trends reported above continue and other factors remain constant, housing prices may be in line for a gradual increase again.

I believe the OBX market is poised for a gradual resurgence that will afford investors with excellent bang-for-the-buck purchases that include affordable and very reasonable prices, excellent rental income, tax advantages of ownership, and a real opportunity for value appreciation again.

Following are four examples of exceptional houses, one that was recently sold and one rapidly under contract at prices that will allow the new owners to enjoy almost certain market appreciation while accruing rental income if desired, and two in Nags Head that are listed for sale and can provide new owners with a similar forecast for return on the investment. Each of these will grow in value as the housing market continues to recover.
 

  “SOLD” MLS# 73979 The first is a new construction 3 bedroom, 2 bath, 1500 sq ft house with lots of upgraded amenities on West Avalon Street that just sold below appraised value for under $250,000 with a 3.5% mortgage and seller contributions toward closing costs.



 

  “UNDER CONTRACT” MLS# 76011 (atlanticrealty-nc.com) ($415,000)
The second example is a previously owned exceptionally maintained property and great buy on Hallett Street between the highways, 3 lots from the ocean in Kitty Hawk. In less than 2 weeks, this 5 bedroom, 3.5 baths, house with pool and numerous other amenities was under contract with a backup offer.



 

  “FOR SALE” MLS# 74232 (atlanticrealty-nc.com and Coastalhaven.com) $599,000
This 6 bedroom with 4 masters, 5.5 baths, private pool, hot tub, abundant decking, fireplace, game room, large front and rear yards, ocean views, is in Nags Head. Well located in a quiet cul-de-sac between the highways 3 lots from the ocean, this dream house provides the total beach experience but is also close to outlet mall and grocery shopping, restaurants, and recreation spots; medical, police, and fire respondents; and Jennette’s Pier, Jockey’s Ridge, and avenues West to Manteo and South to Hatteras and beyond. Its immaculate condition, location, and abundant amenities have made it a favorite with 2012 rental income of $40,000- $50,000.



 

  “FOR SALE” MLS# 74153 (atlanticrealty-nc.com) $497,000
This 5 Bedroom, 4.5 baths, house with private pool, hot tub, sun decks, ocean view and other amenities is also in Nags Head. It has just undergone a make-over with fresh paint and all new flooring and enjoys good rental income. It too provides the privacy of a quiet cul-de-sac and is close to recreation, good food, shopping, Jockey’s Ridge, and Jennette’s Pier.

100 Free things to do on the Outer Banks

Looking to Save on your Outer Banks Vacation?  The OBX is a great place for family vacations because of the number of things you can do at little to no cost.  Check out the list below of the Top (almost) 100 Things to Do on the Outer Banks that are FREE!  This list has been compiled by our office staff as well as past Guests and our friends on Facebook.  Feel free to contact us with additional things you can think of to do on the OBX that are FREE!

  1. Earn a ranger patch at Jockeyâ??s Ridge   
  2. Search for beach glass in Corolla
  3. Fly a Kite on Jockeyâ??s Ridge
  4. See the Boats come in with their catch at Oregon Inlet
  5. Fish for trout off the causeway bridge
  6. Shell seek at Coquina Beach
  7. Bird Watch at Pea Island
  8. Look for Spanish Mustangs in Corova
  9. Story time at Roanoke Island Festival Park
  10. Visit the Cape Hatteras Lighthouse (climb it for a nominal fee)
  11. Watch the boat building process in downtown Manteo
  12. Explore the trails at Nags Head Woods
  13. Experience First Friday in Manteo
  14. Morning Yoga in Duck Town Park
  15. Drive on the Beach in Carova
  16. Movie Night at the Duck Town Park
  17. Ride the Bike Paths
  18. Feed the Turtles in Sandy Run Park in Kitty Hawk
  19. Walk the Soundfront Boardwalk in Duck
  20. Picnic on the Beach in Corova
  21. Hunt for Ghost Crabs on the Beach at night
  22. Visit the Currituck Lighthouse (nominal fee to climb)
  23. Explore the Whalehead Club
  24. Visit Bodie Island Light (nominal fee to climb)
  25. TAKE THE FERRY FROM HATTERAS TO OCRACOKE!
  26. Crab off the Colington Bridge
  27. Catch a sunrise over the ocean
  28. Watch the sunset over the Sound 
  29. Build Sand castles on the beach
  30. Watch pelicans dive for fish
  31. Catch sand fleas
  32. Look for dolphin
  33. Search for purple shells
  34. Search for beach glass
  35. Take a Kayak Tour with KH Surf School by using your Fun N Sun Pass!
  36. See the Lost Colony!  Free Adult admission with the Fun N Sun Pass
  37. Play on the Town Green and Playground in Duck
  38. Stroll the Manteo Waterfront
  39. Play mini golf at the DQ Family Fun Center â?? FREE with the Fun N Sun Pass
  40. Visit the Chicamacomico Lifesaving Station — Free with the FNS Pass
  41. Chase seagulls
  42. Skip rocks/shells in the ocean
  43. Stroll through the Elizabethan Gardens â?? FREE with the FNS Pass!
  44. Walk for miles on the public beaches
  45. Visit the Frisco Native American Museum â?? FREE admission with FNS Pass
  46. Check out the NC Aquarium â?? FREE with FNS Pass
  47. Fish on the Outer Banks Pier â?? FREE with the FNS Pass
  48. Visit the Laura Barnes Shipwreck (Coquina Beach)
  49. Sunset Dolphin Cruise with Capt Johnny â?? FREE with FNS Pass
  50. Play 18 holes of golf at The Pointeâ?? FREE with FNS Pass
  51. Pay a round of Golf at The Carolina Clubâ?? FREE with the FNS Pass
  52. Swim in the Ocean
  53. Float in the Sound
  54. Listen to Music at Duck Town Park
  55. Stroll the Art Galleries of Gallery Row
  56. Climb the Live Oaks at Hayman Street Park
  57. Go to the Beach at Night Under a Full Moon
  58. Follow the local Civil War Trail
  59. Geocaching — a real local treasure hunt!!
  60. Check out the Monument to a Century of Flight
  61. Visit Roanoke Island Festival Park — Free Ticket with the Fun N Sun Pass
  62. Try to Escape at Will You Escape the OBX — Free Admission with Fun N Sun Pass
  63. Check out Whalehead Junction Park (right across from Jennette’s Pier)
  64. Try to spot an alligator (safely) along Alligator River
  65. Find out where is Buffalo City?
  66. Watch the planes land at the Wright Memorial
  67. Grab your skateboard and “drop in” at the Kitty Hawk Skate Park
  68. Paint and Hide OBX Rocks and Shells
  69. Search around town for painted OBX Rocks and Shells
  70. Sign the notebook at the Little Red Mailbox (Glenmere Beach Access in Kill Devil Hills)
  71. Check out the brand New Dowdy’s Park in Nags Head
  72. Watch the bulldozers push sand on the beach during Beach Nourishment
  73. Check out Shelly Island (just be careful!)
  74. Watch the bridge construction on the new Bonner Bridge going to Hatteras. 

 

Can you think of something we missed?  Submit your ideas (and photos) on our Facebook Page. 

Holiday Shopping on the OBX

One advantage to visiting the Outer Banks in the Off Season besides the cooler temperatures and low crowds is the opportunity to browse the unique local boutique shops scattered throughout the area.  From Corolla to Roanoke Island, you’re sure to find a unique gift for friends and family members — perfect for the holidays!

Corolla

The Cotton Gin — A unique blend of country and coastal living.  Gifts, clothing, and collectibles. 

789 Sunset Blvd

Timbuk II Shopping Center

Corolla, NC   27927

252-453-4446

 

Duck

Plum Crazy Boutique — Clothing, Accessories, Jewelry, and Art

1180 Duck Road

Duck Soundside Shops

Duck, NC   27949

252-261-1125

 

OBX Artspacea working gallery featuring many local artists. 

Scarborough Faire Shopping Center

1171 Duck Road Unit D3

Duck, NC  27949

252-261-2787

 

Kitty Hawk

Miss Lizzie’s — Fashion for the fun of it!

3720 N. Croatan Hwy

Milepost 4.5

Kitty Hawk, NC 27949

(252) 261-6810

 

Puzzles, Pranks and GamesThe name says it all!  Beach Puzzles, Toys including the popular Loom Bands, Hard to find games, or Create a unique keepsake of a jigsaw puzzle made from any photo. 

Buccaneer’s Walk Shopping Center

3810 N. Croatan Hwy MP 4.5

Kitty Hawk, NC   27949

252-261-4323

 

Kill Devil Hills

Natural Creations — Unique Custom Jewelry including Outer Banks beads and charms. 

2501 N. Croatan Hwy

Kill Devil Hills, NC  27948

252-255-2015

 

Nags Head

The French Door — Home Decor, Jewelry, Clothing, Handbags, and more!

2921 South Croatan Highway

MP 11

Nags Head, NC 27959

252-441-4042

 

Kitty Hawk Kites — Kites (of course), Toys, Clothing, Watersports Equipment and more!

Jockey’s Ridge Crossing

Across from Jockey’s Ridge (MP 13)

Nags Head, NC   27954

877-359-8447
 

Manteo/Roanoke Island

Duck’s Cottage Downtown Books — Books on the Outer Banks make a unique gift. 

105 Sir Walter Raleigh Street

Manteo Waterfront

Manteo, NC  27954

252-473-1056