The state of housing on the Outer Banks: Part One

Published 4:44 pm Saturday, July 29, 2023

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There’s been a lot of talk about the housing crisis on the Outer Banks. Does that mean that there aren’t enough housing units, or that they’re too expensive? How much does it cost to live here? What is “affordable housing,” anyway? And is anybody doing anything about it?

This three-part series about the current housing situation on the Outer Banks will attempt to answer some of these questions. This article – the first of the three – will deal with the cost of housing and availability, and how we got here. Part Two will look at the attempts by our local government and private investors to provide housing, and Part Three will delve into the effects on individuals and commerce if we don’t solve this problem.

My family moved to the Outer Banks in the fall of 2020. Interest rates were low and houses were staying on the market for a mere few days, sometimes hours. With the prices people were willing to pay, those with long-term rentals were selling them and making a big profit.

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With five children, my husband and I needed to find a house with at least three or four bedrooms and a decent sized living area, and based primarily on just his income. A house with a big yard came on the market, and we jumped on it, closing in early spring 2021. Three months later, Zillow estimated our house was worth 25% more than when we’d bought it. It was a crazy time nationwide for the housing market. We were thankful we’d found our home when we did.

If a family of seven were looking for a house today, they would be facing a ticket price upwards of $600,000 for a 2000 square foot house anywhere on the Outer Banks. This would have been an impossibility for my family three years ago.

Even for young couples or small families, the very cheapest home available (excluding condos or manufactured homes) is about $375,000. This is for a 2-3 bedroom home with 1000 square feet. There are a few of these available on the Outer Banks, mostly in Colington Harbour.

Assuming a 7% interest rate, a $375,000 house would mean a monthly payment of $2,311. That might be feasible for some people, but that’s assuming you have 20% to put down (or $75,000). I don’t know how many young families have that kind of down payment.

If you only have a $5000 down payment, that payment bumps up to about $3000 per month including taxes and mortgage insurance.

How much do you have to make to be able to spend $3000 a month on mortgage?

For comparison, a starting teacher in North Carolina makes around $35,000. Nags Head currently has openings for a firefighter with a starting salary of $40,664, and a police officer with a starting salary of $53,802.

The conservative 28% debt-to-income ratio calculator assumes an income of $155,000 a year to purchase a $375,000 home. Some finance experts use 36%, so that would put an annual income of at least $120,000.

And that’s for the smallest, cheapest single-family home on the Outer Banks.

A slightly larger modest home (1500 square feet) starts at around a half of million dollars.

So if you’re a single person, young couple just starting out, or if you have children and are surviving on one income or paying exorbitant childcare costs, you might be thinking, “Ok. So, home ownership is out.”

Let’s look at rentals.

I scoured the internet and called rental companies and looked at Facebook housing groups.

The top of the Google search when I looked for long-term rentals was Sun Realty. They have a dedicated long-term rental manager. That’s a great sign!

I called up Chieftain Conant, who has been with Sun Realty for three years in that position, and asked about rental opportunities.

There was one year-round rental available. One. A three-bedroom house for $2825, plus utilities.

“We’ve only had five vacancies in the last two years,” he said. Conant said prior to peak season, he received about 20 calls per week from people looking for rentals.

And he’s had to stop taking names because there were just too many people looking.

Conant said an average monthly price for a two-bedroom rental is over $2000; but three years ago that price was about $1500.

When asked what I should do next, he referred me to Colony Realty or a local Facebook group.

I called up Colony Realty and spoke to co-owner Julia Head. They had zero rentals available. She said they’ve rented about six or seven properties in the last year. When a listing comes available, they put it on Zillow. “Depending on the price, we might get 50 inquiries about it,” she said.

Her advice to those seeking housing is: “Look elsewhere. And any property manager is going to tell you the same thing. There are just so many people looking for so few properties.”

She’s been renting properties for 12 years and said it’s always been challenging to find rentals on the Outer Banks, but since Covid, the situation has gotten worse.

“When the market turned, everybody started selling,” she said.

I asked her what she says to people who have accepted a job and are now looking for housing.

“Most the time we’re seeing employers that don’t offer them the job unless they already have a place to live,” she explained. “It’s easier to get the job than it is to get the house.”

I thanked her for her help and turned to the Facebook long term housing group. Maybe individual home owners would have additional options available.

Michelle Haber started the OBX Long Term/Annual Housing Facebook group four years ago during her family’s own experience trying to find a new rental after their landlord decided to sell.

“I started the site so I could find housing. I found that if I was going through this there have to be a lot of other people going through this, too.” It took her eight months to find a new place to live.

There are now over 6,500 members in the group. People post looking for a place to live, and others post when they have a rental available.

“You’ll see so many people desperate for housing, who have been posting for up to a year. Some people are coming back from college, some have been hired but can’t find a place to live, some people who want to retire. It’s a real crisis. It’s not event that you can’t find affordable housing, it’s that you can’t find any housing at all,” she said.

Some rentals do come up regularly, mostly small units like ground floor efficiencies, rooms to rent, or two-bedroom apartments.

“If you have pets, forget it. If you need a bigger place, they’re harder to come by. Any type of over-under rentals – they only want one to two people. The selection is not there,” Haber added.

Haber said Airbnb has contributed significantly to the rental shortage. Landlords realized they can make a lot more money by renting week to week. “It’s affecting a lot of long-term people, those who have been here for 20 or 25 years and have been renting.”

Haber was clear that she doesn’t think there is anything wrong with people converting their homes into Airbnbs. “They see it as a way to support their own families. At the end of the day, we’re all just trying to take care of our families,” she said.

Even still, there are a lot of people left in a lurch when they are given notice on their long-term rental, and there are no other options.

“A lot of people are moving away,” Haber said.

On the Facebook group, there are a lot of intense emotions. Some locals are frustrated when those from out of state are “taking” available rentals. Other people get animated and criticize landlords for asking what they see as exorbitant rates. It’s not uncommon to see a nice two-bedroom apartment go for close to $3000. More common are one bedroom units with utilities going for about $1750, or two bedroom apartments going for $2000 or $2500. Off the Outer Banks in Currituck mainland there are some larger homes with lower rent.

“It’s really bizarre time down here,” Haber said.

So is there a housing crisis? You decide.

Read on in Part Two, where we will look at what efforts have been made to solve the housing crisis, what has worked, what hasn’t, and why.