Economic Outlook for the Outer Banks, NC

By: Dr. James Kleckley, East Carolina University

Here's the 2012 Outer Banks Forecast as presented by Dr. James Kleckley on April 3, 2012 at the Hilton Garden Inn.       

 Since the early 1990s, the Outer Banks economy, a two county area on North Carolina’s northeast coast, has been one of the healthiest and fastest growing in North Carolina – even though both counties are relatively small by statewide population standards. The latest population estimates from the Census Bureau1 showed that Currituck had an estimated 23,502 residents in July 2009. This made Currituck only the 77th largest county in the state (out of 100), but since July 2000 Currituck had grown faster (2.9 percent annual average) than all the counties in the state, except eight. Dare, at 34,253 permanent residents in July 2009, was the state’s 68th most populous county and had grown by 1.1 percent since July 2000. Over this seven-year period Dare was the 30th fastest growing county in the North Carolina.

Obviously, the 57,755 permanent residents of the Outer Banks comprise only a small portion of the 9.5 million North Carolinians. While we cite these statistics, one must note that the published population estimates do not give a complete or adequate picture of the number of persons that constitute the peak population for these two coastal counties. Both counties are largely tourist-oriented in nature. In a 2005 study for Dare County2, it was estimated that the effective seasonal daytime population of the county surpassed 220,000. In effect, Dare County supports services for a population that is nearly six and one-half times the size of its resident population. While many of these visitors pass through Currituck County to take advantage of the Dare County hotels and houses, Currituck also experiences a similar, but relatively smaller visitor impact – although this latter impact is continuing to grow.

When one goes behind these totals and looks at the distribution of jobs, you will quickly see that this coastal economy differs from the traditional economy found in the populous parts of North Carolina – in that the Outer Banks is structured to support a tourist community and its associated demand. Specifically, there are three sectors that that provide fifty percent of the jobs in the two county area and thereby show this orientation3:

• Accommodation and Food Services, which encompass the hotels, motels, and restaurants (20.7 percent of the jobs in the Outer Banks to 8.9 percent statewide);
• Retail Trade, from souvenir shops to grocery stores (18.3 percent on the Outer Banks to 11.7 percent in North Carolina); and,
• Real Estate, Rental and Leasing, to sell the second homes and to rent the beach houses (11.7 percent in Dare and Currituck Counties to 1.3 percent statewide).

   

  The Outer Banks was not immune to the 2008-2009 recession, but visitors continued to come to the area to enjoy its amenities. For example, a look at a major occupancy measure in Dare County (the Outer Bank jurisdiction that currently shoulders the bulk of the tourism hotels and restaurants) showed essentially flat visitation activity from the summer of 2008 to the beginning of 2010. However, the results showed that the year-to-year activity increased in the summer of 2010. Retail sales estimates support this upturn. So, while businesses in the area suffered like many in the rest of the nation, the regional downturn was not as severe. Tourists continued to come.

  The largest negative impact to the Outer Banks economy was felt in real estate and construction. The region experienced a dramatic slowdown in the demand for second homes, retirement homes, and resort investment property – and this sector of the economy (which includes construction) is not expected to recover in the near future. However, the national economy improves, the demand for retirement homes and second homes should recover and buyers should once again begin taking advantage of the opportunities found in the local housing market.