The Role of Second Homes in OBX

Outer Banks Owner’s Alliance (OBXOA), 08/05/2025

OBXOA seeks only to set the record straight. Homeowners play an important role in sustaining OBX which is why OBXOA exists. Second-homeowner facts are obscured by insufficient public data. Information herein was sourced from primary and secondary sources believed to be credible and reasonably accurate. Definitive OBX data is scarce. 7 local jurisdictions make discovery complex, especially since two counties fail to separate mainland data from OBX. Only Dare provides meaningful tourism data. All reporting on full-time residents and second homes is lacking.

Visitors flock to OBX because they prefer its “island hometown” atmosphere. OBX’s relaxed pace and smaller less-commercial towns make it different than so-called boardwalk communities. Less densely populated venues comprised of small businesses and private residences characterize OBX. Single-family homes constitute most residential land. OBX would transform if this land were converted to high-density lodging (hotels, apartments, etc.), which is why the community raises a ruckus when a large development is proposed. Increased population density drives more commercial and infrastructure development. Homeowners serve as a stabilizing force pushing back on paving over OBX as has happened in so-called boardwalk beach communities. It is already happening but see how fast it accelerates without homeowners holding their ground.

Most vacationers rent single family secondary homes. OBX rental homes provide 90% of lodging, an estimated 20,000 units that may house over a half-million visitors annually. Hotels reportedly provide less than 10% of visitor lodging. A rental home provides visitors with a family-friendly environment and a sample of what it might be like to live in OBX. Most OBX homes are secondary homes, those where owners reside less than half the year. Full-time residents are estimated at less than 20% of peak occupancy. The ratio is typical for beach towns from New England to Florida where tourism defines the local economy.

An estimated 40% of the rent paid to OBX homeowners flows back into the local economy in the form of labor, materials, fees, and taxes. A wide range of products and services are locally procured, creating income for local workers and business owners. Locally procured products and services create a wide variety of jobs: construction, financial, HVAC, housekeeping, insurance, landscaping, legal, maintenance, pest control, pool, property management, retail, septic, utility, etc.

Rental homeowners drive OBX local tax revenue despite their inability to influence local spending and policymaking. Local (city and county) public services are funded from property, sales, and occupancy taxes since NC local governments do not levy income tax. Because second homeowners own an estimated 60% of homes, including many of the highest taxpaying residential properties, they generate a lot of property and sales tax. 80% of second-homeowners lodge 90% of OBX visitors, who spend over $2B annually including occupancy and sales tax. Yet many second-homeowners feel like second-class citizens because they cannot vote locally, don’t know the local influencers and decision-makers, and are excluded from local events due to their absence. There are also different laws for second homeowners and rental homeowners, often passed without their input.

The typical second homeowner is a small business owner and not particularly wealthy or influential. The average second-homeowner is over 50 years of age living in adjacent states, either retired or soon to be. Most second-homeowners cannot live in OBX year-round due to obligations elsewhere (work, family, etc.). They enjoy their OBX home when they can. Many used their life savings to buy the property and rely on rental income to offset the cost. Each rental home is a small business. Governments and associations rarely consider them when reaching out to local business owners. Property managers and realtors try to represent homeowners, but not all interests align.

OBX homes are expensive. Dare 2024 median home value was $622,000 and mid-2025 median home prices around $650,000. But most homes on the ocean side east of NC-12 were listed above $1,000,000, well over twice the national average. Owners need to retain their home for years or sell during a peak market to profit because appreciation rates and sales costs are average. The outlook remains positive but the market fluctuates. OBX saw a boom in 1985 – 1986 followed by a stagnant period until around 2000. Another boom occurred in 2004 – 2005 followed by a bust during the 2008 – 2009 recession. Post-recession saw an upturn due to lower home prices, low interest rates, and rising rental income. 2019 saw another brief surge caused primarily by media-driven popularity, peaking in 2023 and then falling back. Media hype about “homes falling into the water” puts a damper on sales.

OBX rental rates are attractive only for a few months each summer, dropping perhaps 75% in the remaining months when tourism dwindles. An OBX short-term rental home occupied 20 weeks per year is considered fortunate. The real estate industry estimates annual short-term rents at 10% of the home’s market value. For example, a $600,000 home might generate $60,000 per year if in a good location, in great condition, provides good service, and has strong marketing.

Many rental homeowners lose money each year. The mortgage, insurance, taxes, and expenses can easily exceed the rental income. Insurance rates for coastal homes across the USA skyrocketed in 2023 – 2024, doubling for many. Property taxes increase with rising property values. Local labor constraints drive labor costs above rural community averages because work is seasonal, and workers may commute 100 miles daily. And all this is on top of national economic trends (employment costs, consumer prices, bank rates, etc.).

Wear-and-tear on a weekly rental may be four times that of a yearly rental. Weekly renters stress a home by packing people in during the peak season and treating it more like a hotel than someone’s home. A four-bedroom private residence likely houses on average 3 – 6 people, whereas a weekly vacation rental may pack in 8 – 10 people, or more with a sleeper sofa. Security fees only pay for damages found during check-out but not wear-and-tear, theft, or unreported damage. Weekly renters are less likely to report damage. Furnishing and equipping (kitchenware, electronics, etc.) a weekly rental home can cost 10% of the home’s purchase price, all needing periodic replacement.

So why own a second home in OBX? Because monetary value is not the primary motive for realizing one’s heart’s desire. For the same reason full-timers and hundreds of thousands visit each year, homeowners want to live in OBX even if only for a brief time. For those with the means and savvy, a short-term rental can offset the cost. And if dabbling in a small business is the dream, what better place to dream than on the beach.