From January through April of this year, a total of 31 sales closed.

The local residential real estate market has seen better days.

Johnny Cameron, president of the Carteret County Association of Realtors, thinks the worst might be over, however, and some improvement can be expected in the second half of 2008 and early 2009.

Cameron, a broker-Realtor with Emerald Isle Realty and Carteret County Realtor of the Year in 2005, says the local real estate market has been in a slump since the third quarter of 2005, but not because of anything tied to mortgage lending problems and the credit crunch that have been in the news in recent months.

Instead, a combination of other factors seems to have put pressure on housing sales here—unrealistic expectations on the part of those trying to sell homes; a decrease in demand for vacation or second homes, brought on in part because of concerns over another devastating coastal hurricane such as Katrina; and rising gas prices that make it more expensive to travel to the Crystal Coast.

As a result, the area has about 4,000 houses on the market now, compared to a more typical total of about 1,500 a few years ago, Cameron says.

Other residential statistics from the first quarter this year offer examples of the slowdown, when compared to the first quarter of 2007, Cameron says: Housing sales on the island (Emerald Isle, Atlantic Beach, Indian Beach, Pine Knoll Shores) are about 50 percent lower than a year ago, and the selling price is about 10 percent below the listing price. One positive sign: The inventory of residential properties on the market is about 8 percent below last year.

On the mainland (Morehead City, Beaufort, Newport, Swansboro), housing sales are 25 percent lower than a year ago, and the sale price-vs.-listing price ratio is about 96 percent, vs. the normal 99 percent. The inventory of residences on the market is up about 8 percent from last year.

These figures take into account houses, condominiums, townhouses and duplexes.

Marian Goetzinger of Pine Knoll Shores Realty, president of the Crystal Coast chapter of the Women’s Council of Realtors, says in her 13 years of doing business in the area, “I’ve not seen as large an inventory of unsold houses as I see now.”

Two key factors help create the situation, she says: older owners trying to sell their houses and investors wanting to “unload” their property. “Plus, gas is costing so much, people can’t afford to get here like they used to,” she says.

She cites one particularly alarming example of a house that has been on the market for three years, and the owners have changed real estate agents three times. “The sellers started way too high,” Goetzinger says. “They’ve dropped the price, but it is still overpriced.”

Pricing seems to be a critical component of the current housing situation. “Part of our job as Realtors is to educate sellers as well as buyers, and unrealistic pricing doesn’t help anybody,” Cameron says. Sellers too often look at the current assessed value of the house and set their asking price above that, instead of considering what they paid for the house in the first place.

Selling a house for more than what you paid for it means a profit, Goetzinger adds, even if the price is not what you would like.

Cameron says one aspect of the current stagnant market that keeps it from sliding into desperation is that “many sellers didn’t have to buy, and they don’t have to sell. They can afford to hold out for their price.”

At the same time, buyers can afford to wait a bit, hoping that asking prices will come down. Instead of creating equilibrium in the market, however, the current situation is more of a standoff, Cameron says.

“Buyers are frustrated as a result,” he says, “and the problem is that the sellers are not willing to sell now.”

Even so, the Crystal Coast’s residential real estate market favors buyers these days, he says, citing the following factors:
• A larger selection of properties.
• Sellers becoming “more flexible” in setting their asking price.
• Low interest rates.
• Less competition from a smaller number of prospective buyers.

These factors are not permanent attributes of the marketplace, however, Cameron warns. “Even if prices are lower in the future, higher interest rates are likely,” he says. “The forecast is for higher interest rates by the end of the year and through 2009.”

Carteret County has a wide variety of residential properties in its inventory, each with its own peculiar market, such as mainly rental-investment oceanfront properties on Bogue Banks, second homes owned by out-of-state and non-county residents, historic properties in communities such as Beaufort and primary residences owned by people who live and work in the area.

This variety means that conditions are neither uniformly bad nor uniformly stable, Cameron says.

“Even with the Emerald Isle figures, in Morehead City we’ve seen about the same level of business as last year,” he says, mainly because the market is primary homes, those owned by people who live and work in the area.

Linda Rike of Linda Rike Real Estate in Morehead City says another factor affects market activity in primary residences: Prospective buyers from outside the area often are having difficulty selling their current home, and so they are more reluctant to seek housing in this area.

Because of geographical considerations, “people can’t sell their house, so they can’t consider buying property here,” she says.

One direct result of the slowdown is the negative impact on those in the real estate profession. Cameron says “a substantial minority” of Crystal Coast Association of Realtors members had no closings in the past year. Some local real estate professionals say the number might be as high as 300.

Not every real estate professional is full time, of course, but the slump is causing many members some serious financial difficulties, Cameron says. “Some have second jobs, and some are living off credit cards. Things are difficult for the whole profession.”

Goetzinger says, “People are dropping out. The numbers are down. In the past, it looked like all you had to do was hang a shingle, and you’d get rich. That’s not the case any more.”

She says she knows many who have taken “real” jobs, including waiting tables in local restaurants. Some have gone into property management. “And some folks have just quit.”

Housing slumps have occurred before, but even to a veteran real estate professional such as Jack Goldstein, this slump ranks as one of the most serious.

“I don’t know if it’s the worst it’s ever been, but it is different,” says Goldstein, who is 91 but still has clients with his Goldstein Second Wind Realty in Indian Beach. “The gas shortage, whether we’re facing a recession, and this being an election year—all are contributing.”

The national mortgage lending situation, with accompanying foreclosures, also has an impact, even if there are not many bankruptcies or foreclosures on the Crystal Coast.

“Foreclosures nationally make people a little afraid of the market. With the housing glut on a national scale, what it’s doing is making it harder for people to get loans. Our banks here are not necessarily tighter, but they are more cautious.”

Goldstein has been at the beach since 1973, “and I don’t remember having seen as big a glut as we have now.” But he also senses signals that conditions will improve a bit, though not until after the November election.

“I’ve always thought business is slower in an election year than in the other three years.”

Cameron says, “There will be a better market by the end of the year. I believe in a relatively constant demand, and if the market is in low demand for three years, then it will return to better demand in a substantial way.

“We are seeing increased interest in property here, both residential and commercial. Most forecasters expect the real estate market to improve this year.”

Goetzinger agrees that a modest turnaround should be on the way at the beginning of next year. “It won’t be a boom,” she says, “but it will be an improvement,”.