Hilton Head/Bluffton 1st Quarter 2022 Real Estate Market Update
2022 Real Estate Steering Factors Update
Following our annual report in January, we are pleased to present our market update through Q1 2022, addressing the Steering Factors we see shaping the marketplace:
In 2022, the buzz word of real estate in the Lowcountry (and around the entire country) is INVENTORY.
The lack of static/available inventory amid continued strong demand has perpetuated a strong seller’s market, yielding the following key impacts on the market through Q1 of 2022 (as compared to Q1 of 2021):
- 14% decline in New Listings
- 27% decline in New Sales
- 22% decline in Closed Sales
- 22% increase in Average and Median Prices
- 100.1% sales price to list price ratio
Importantly, the decline in New and Closed Sales is NOT due to a lack of demand, rather simply a lack of available properties to sell. In many cases, for each property that has sold, there have been several additional buyers that would have also purchased if similar properties were also available at that same time.
With rising values as well as the natural timeline of real estate turnover, we are beginning to see a slight increase in available inventory here in April, and we look forward to seeing/reporting on how that develops in Q2.
With COVID levels having settled significantly, the drive for relocation associated with COVID has declined. The “musical chairs” national relocation phenomenon that we experienced over the last 2 years has positioned many people exactly where they want to be, which, in turn, exacerbates the inventory/turn-over challenge mentioned above. Of course, migration to the Southeast from the North and West is now an established trend that promises to continue for years to come, but it’s fueled less by COVID at this point and more by lifestyle, remote-workplace, climate, and other key factors as people focus on their quality of life.
As expected, in April interest rates began to increase, impacting the affordability of real estate for certain segments of the buying audience. Of course, interest rates in the 5%+ range are still historically low and provide great opportunities for borrowed/leveraged money, but as they climb they threaten to pull some buyers out of the market.
We expect lenders to get more and more creative with their lending programs, including the reemergence of the popular ARM (Adjustable Rate Mortgage) loans that dominated the landscape back in the 2000-2008 market.
How high rates will climb in 2022 remains to be seen, but we’ll be tracking and reporting on their impact throughout the year.
Many businesses that have the ability to conduct business remotely have abandoned the classic work/office model, affording employees to work remotely from the comfort of their homes, wherever they may be. This sea-change has triggered a whole new model of employment, allowing people to live where they’ve always wanted to live versus being anchored where their business is located.
Locally, we are feeling the impact of this evolution of the workplace as the Lowcountry is a very desirable place to call home. Travel through our two airports offers vastly expanded routes, enables hassle-free commuting, and the infrastructure of schools, supporting businesses, and, of course, our amazing natural resources/amenities have all put our area squarely on the map for a growing audience of buyers.
Consider this: in 2021, Collins Group Realty represented buyers from 29 different states, putting to bed the old adage that everyone here came from Ohio!
One of the contributing factors to rising real estate prices in the Lowcountry continues to be our relative value when compared to other Southeast coastal destinations. Shopping up and down the coast (as buyers often do) has yielded a growing conclusion that our area offers a solid relative-value in consideration of all that we have to offer. Many believe that our area has been undervalued over time; and there we are now coming into our own as a function of increased exposure to a growing audience of buyers.
Further, when we see buyers relocate to our area, many of them are coming from locations where the average price-point is significantly higher than here. As a result, it’s not uncommon to have a cash buyer who just sold their home for twice what they are paying here, and when they consider the climate, community, natural beauty, cultural offerings, and overall lifestyle of the Lowcountry, it’s often a slam-dunk decision for them.
COVID had a way of breaking the mold on many fronts, and for the local market that meant seeing new levels of activity that we wouldn’t ordinarily experience. Especially, our vacation-rental market has become nearly year round. October 2020 was record breaking, while Easter week 2021 had everyone impressed with just how busy the area was. And, rental companies are proclaiming that they are facing a booked-out Summer like they’ve never experienced.
Much the same, sales seasonality is in flux, as we just experienced one of the busiest first quarters ever… all on top of a record sales year in 2020 that left most agents pining for a single day off just to catch their breaths.
As we work our way through Q2, which usually sees an upswing in both listing and buyer activity, we expect the only factor that may hold back another record quarter to be the overall listing shortage in the market.
Inflation, talk of a 2023 recession, the war in Ukraine, rising interest rates, short term rental restrictions, low inventory…. we are keeping our ear to the ground on how these (and other) topics are shaping the current and near term real estate market. As we look through Q2, we expect to see a subtle increase in inventory, a slight drop in demand (due in part to some buyers falling out over rising interest rates), and a reduction in the number of multiple-offer scenarios that have predominated local transactions over the past 12-18 months.
If you’d like more stats, head over to the March 2022 Market Report