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From The Broker...
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The real estate market in the Hilton Head area continues to strengthen at a faster pace than expected. In fact, its ranked number one in the entire state of South Carolina, and is out performing many areas across the country. According to local MLS statistics, we finished 2012 with over 3,300 sales. With the number of properties for sale dropping to under 2,400, we now have 600 fewer listings than we had a year ago. The numbers show 22% more sales, and 19% less inventory, indicating a transition from a buyers market to a sellers market is underway. This transition also signals the turning point from declining prices toward the stabilization of values buyers have been waiting for. According to local market data, some segments of our market are now experiencing appreciation, and this trend is beginning to show signs of spreading. What is driving this turnaround? The great recession caused home prices to spiral 40% or more from the peak levels in 2005. Todays historically low interest rates means a qualified borrower is now looking in the range of $450.00 per month payment, per $100,000 borrowed on a 30 year fixed mortgage. Lower prices combined with low mortgage rates has greatly expanded the number of prospective buyers with growing confidence that values may have finally hit bottom. If you can, imagine Lexus suddenly offering a 40% off sale with attractive financing, thats exactly whats happening with Hilton Head real estate. Hilton Head is a luxury market that excites people who understand the unique quality of life it offers. So far, 2013 is off to a rapid start, sales are brisk and listings being shown at a pace far exceeding what we would normally expect this time of year. For the first time in years, we are seeing multiple offers and even full price being paid for certain properties. The improving nationwide housing market is also a major factor because it means countless baby boomers, which have been stuck in the snow belt, are finally able to sell their homes and migrate to the sun belt. This will play an ongoing role in fulfilling the pent up demand of buyers and sellers on both sides of the equation. The message is loud and clear, the real estate market in the Hilton Head area is alive with renewed buyer confidence. Its irresistible to those who understand Hilton Head real estate. If you are one of those people, dont miss this opportunity, the best bargains are going fast!
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The election is over, and it's fair to say the overwhelming favorite here on Hilton Head Island did not win the White House. With some people worried about the future, the looming question is: What effect will this have on our local real estate market? Will buyers of high end resort properties move past their economic fears, or remain on the sidelines? According to the numbers, we have a healthy recovery underway. This is largely driven by the lower price ranges, while the upper ranges still remain somewhat soft. If Washington reaches a deal to avoid the"fiscal cliff" by increasing tax rates on those earning over $250,000, this could be good for the real estate market. However, if they include the elimination of the mortgage interest deduction, as part of the bargain, the incentive will be lost, and all bets will be off. It is also possible a limit could be placed on the amount of mortgage deductions, which would clearly benefit mid-range properties. The months ahead will be interesting, Regardless, I'm remaining confident that today's low prices, low rates, and skyrocketing rents will carry the market forward. We have too many people who want to spend their golden years in the place of their dreams, which for many is Hilton Head Island, and tax issues will not stop them.
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Its amazing, people really dont seem to know whats going on with the real estate market. Have we hit bottom? Is this a good time to buy? Watching the news media leaves us even more confused. One day its down, the next day its up, and we keep hearing about nationwide housing numbers, which doesn't help since we dont live nationwide. Unlike the stock market which can accelerate, slow down, and turn on a dime, real estate makes slow subtle turns and requires months or even years to gain momentum. So how can we predict what direction the real estate market will go in the months ahead? I suggest looking from the mountain tops rather then the tree tops. Take a long view with an eye on the big picture. Here are a few of the major factors to consider: affordability, availability of mortgages, tax advantages, demographic trends, baby boomer migration, cost of rents, and do we believe home ownership will remain primary to the American dream. But, lets not over heat our crystal ball. Lets apply facts along with a heavy dose of common sense. First, there was the real estate bubble burst around 2007. This happened after prices had skyrocketed into the hemisphere and lenders suddenly realized the big party was about to become a bad hangover. Then over the next 2-3 years lending froze, and real estate plummeted, resulting in a tidal wave of defaults and foreclosures that ravaged the market. Today we have home values cut in half, smiling lenders returning with rates lower then we ever imagined, and short sales have cut down the wave of foreclosures. Here is another key factor to consider: because of the aftermath of the bust, the demand for rental properties has escalated dramatically. We are now seeing middle class families paying $1500 to rent a home, when $1500 will cover a $250,00 mortgage, which in many cases is more than the value of the house they are renting! For the first time in many years, the ratio of middle class incomes, combined with todays mortgage rates, now lines up with the price of an attractive middle class home. With the Dow back over 13,000, we have to wonder how many mid to high end buyers are looking back towards real estate with prices this attractive. So get out that crystal ball and decide for yourself which way it will go in the next few years. Let us know your thoughts, wed enjoy hearing your perspective.
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A full blown real estate recovery is now underway. Its no longer a few isolated markets showing improvement, real estate is gaining momentum nationwide. The Hilton Head market is benefiting substantially as more sales outside our area are turning into buyers here in the lowcountry. Statics tell the story. Last year at this time, we were selling 230 properties a month. This year we have sold 330, thats 100 more sales per month, which is up 43%. We now have 700 fewer properties on the market than we did last year. Its the strongest market weve seen in years.
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It seems real estate is becoming the hot topic again. As we often do, my wife and I spent last Friday night aboard our sailboat for a quiet evening. A dear friend and prominent residential broker, who keeps his sailboat nearby, stopped by to have a beer. Normally we talk 10% business and 90% sailing, especially around the marina, but this time our discussion centered around the state of the market. I respect his opinion, and after hearing his positive outlook, I couldn't help thinking that opening a new real estate company at this time may have been a smart move after all. Next morning, while doing routine boat maintenance, another (top commercial) real estate broker, who also keeps his boat a few slips away, came by to chat. Since he owns a powerboat, we usually talk 98% real estate and 2% boating! He was explaining to me how commercial real estate activity is going gangbusters, and how his pipeline is getting filled for the first time in years. He was bubbling with enthusiasm and it was rubbing off. If the commercial market is heating up, guess what will follow? We all agreed that the signs are all pointing to a significant increase in activity in the months ahead. With rates under 4%, banks loosening up, and baby boomers looking at crazy good bargains, the spring market will be HOT!
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All signs point in this direction. Historically, as the weather cools the market cools, but this year is different! The
two most important statistics to look at are: the number of pending sales, which has increased by 36.4% and the
amount of inventory, which has shrunk by 16.2% (526 less properties). More sales and less properties means prices
are stabilizing. With a promising spring market just around the corner, we are optimistic that even more buyers are
lining up to take advantage of the situation. The trend we are seeing indicates we have turned the corner and are
headed toward a slow but steady recovery. With interest rates at record lows, now is a great time to buy a home in
the Hilton Head area.
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As we head toward the spring market, many people are wondering if the rise in Hilton Head real estate sales will sustain. The underlying questions include: Is this a good time to buy? Have prices hit bottom? and, Can I get a mortgage? Key factors for predicting any housing market include: affordability, availability, demand, migration, interest rates, and overall economic conditions. Right now we have properties on the market for less then half of what they sold for 5 years ago. Our inventory is shrinking, and sales have increased 20%. Hilton Head is a world renowned blue chip destination perfectly positioned for aging baby boomers migrating from the northern latitudes. The stock market recovery has replenished retirement funds. And, mortgages are available at record low rates with excellent terms. All of the key factors involved in predicting a housing recovery are pointing in the right direction for the first time in several years. I predict, it will not only sustain, but it will strengthen and gain momentum in the months ahead.
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Equal Housing Opporunity.
