Hilton Head / Bluffton Annual Market Analysis | 2024 Edition
Real Estate Market Analysis | 2024 Edition
In this Market Analysis, you’ll find:
- Video Summary of the 2023 Market
- Market Stats, Perspective, and Insights
- Steering Factors for the 2024 Housing Market
- BONUS: Little Known Fun Facts About our Team
Market Stats, Perspectives, and Insights
by Chip Collins
2023… The market year highlighted by three I’s: Inventory, Interest Rates, and Insurance, all of which shaped client discussions, decisions, and directives over the course of the year.
Despite these challenging elements, the Lowcountry experienced a strong overall market, yielding year-over-year increases in both Median and Average Sales Prices. In fact, with a strong finish month in December, the market-wide Average Sales Price jumped to $696,294 (a 3% gain over 2022), while the Median Sales Price crested nicely over $500,000, settling in at $516,500, posting an impressive 8.4% increase from 2022.
While single-digit price gains might not seem like much to highlight, the reality is that a certain segment of the market was expecting prices to fall off after the stunning jump in values that occurred during the pandemic market. But that simply didn’t happen… And, we even saw a couple of historically high $9 Million+ sales that further highlighted the value-confidence in the Lowcountry that persisted throughout 2023.
This strong value-confidence, coupled with a steady presence of buyer demand from a vastly growing audience, led to continued “inventory frustration” as the number of New Listings to hit the market dropped 7.3% in 2023.
In turn, the number of Pending Sales dropped 9%, while the number of Closed Sales dropped 7.5% for the year compared to 2022.
With the continued leveling-out of seasonality in our year-round marketplace, we saw a pretty steady pattern of both New Listings and Pending Sales as shown on the graph below. The two trend lines maintained a strong correlation throughout the year, which demonstrates an overall healthy market.
At the end of December, the total Inventory of Homes for Sale was UP 23% from the end of 2022. So, despite a decline in the number of new listings hitting the market amid steady demand, the year ended with a higher surplus of inventory that hadn’t yet sold. This surplus grew throughout the 2023 calendar year – not all at once – reflecting the gradual effect of buyer discernment, interest rate affordability, and the decline in overall sales.
Related, the Days on Market Until Sale jumped 33% over what we saw in 2022, which means that the market took, on average, considerably longer for inventory to get purchased than in the previous year. We expect this stat to continue to grow in 2024 as it takes longer for some inventory types to get absorbed.
The net result of a growing overall inventory with longer time on market resulted in more negotiability between Buyers and Sellers. On average, the Percent of List Price Received on deals that closed in 2023 dropped to 98.1%. Because we are seeing a growing number of price adjustments in the market (especially compared to the pandemic market, when a “price drop” was basically unheard of), the Percent of ORIGINAL List Price for 2023 closed deals was closer to around 96%.
Buyers in 2023 regained some footing as they experienced more negotiating leverage amid a growing overall inventory… and they turned more selective last year as well. Buyers were more reliant on “supportive data” when it came to considering a property’s fair market value, and they were increasingly discerning about the condition of properties they considered. The net result was that over-priced properties and properties that needed significant updates tended to be overlooked, and those properties either sat on the market until they were repositioned, at a different price, or they remain on the market today.
Meanwhile, Sellers in 2023 realized that Buyers weren’t as willing to pay “just any price,” requiring them to be more diligent and focused on their pricing strategy and/or condition strategy. Those who launched a good property at a good price often found themselves benefiting from strong interest right away, many times resulting in multiple interest/offers, much like we saw in 2021 and 2022. Sellers also found themselves getting reaccustomed to a more traditional real estate contract, which often affords Buyers contingencies for inspection, financing, and appraisal.
At Collins Group Realty, we ushered 285 clients through the ins and outs of varied terms, transitions, and transactions, learning and guiding all the way. The year presented as many opportunities as it did challenges, a good many of which we address in our Steering Factors section of this market analysis.
Starting right away in the first few weeks of January, we have been encouraged by the high level of activity that kicked off the new year, which, through time, has often served as a bellwether for what we can expect in the year ahead. Buyers and Sellers alike are steadily entering the market with confidence, and we feel optimistic about how 2024 will unfold.
To see how each community performed in the 2023 market, including price trends, average days on market, etc., take a look at the 2023 Year-End Housing Report below.
2024 Real Estate Market Steering Factors
Interest Rates
Interest rates climbed throughout most of 2023, peaking in October at over 8%, and then began to settle closer to 7% in January 2024. While 7-8% is pretty compelling historically speaking, it doesn’t hold a candle to the 3-4% rates that so many people purchased or refinanced to a couple of years ago. This gap presents two distinct challenges in the market, including affordability for Buyers, and an anchoring effect for Sellers. We’re watching key metrics in the economy with great interest as they show promise about what lies ahead for interest rates in 2024.
To learn more about this important steering factor, watch our interview with local lending expert Matt Webster of TD Bank.
Inventory
Back in November, we talked in a video about how the holiday season (November and December) could be surprisingly busy, and that pretty much proved out, demonstrating that our local market is more “year-round” than ever before. As such, we don’t expect Sellers to “wait for Spring” as much as they typically have in prior years, and we are already seeing New Listings pick up in January, which has led to a flurry of sales activity. Buyers are poised to jump on the right opportunity when they see it, and Sellers who are getting ahead of that curve are seeing the benefits. We expect that more Sellers will enter the market in 2024 than they did in 2023, especially if interest rates cycle down closer to 5.5-6%, which should probably be attractive enough for some Sellers to give up their current 3-4% rate in exchange for getting into the next property they want or need.
Insurance
There’s truly nothing gentle or soft about a “hard insurance market,” and anyone who experienced a premium renewal in 2023 can attest to that! The cost of insurance is at a record high, and this heightened expense of ownership is on everyone’s mind. That’s why we sat down with local expert Meg Herman of Goosehead Insurance to explain what happened in 2023, what the forecast is for 2024, and what homeowners can do to help control their overall insurance costs.
Check out this incredibly insightful conversation about all the current insurance market…
Rentals and Cash Flow
The rental market goes hand-in-hand with the local real estate market, whether an owner is seeking a long-term rental or seasonal vacation rentals. Both rental arenas spiked sharply during the pandemic market, yet 2023 showed some signs of shifting, making it a little challenging to fully pin down what to expect in 2024. Amid rising insurance expenses (and property taxes due to the reassessment in 2023), more and more owners (and Buyers) are paying closer attention to cash-flow scenarios as they look into the new year. National and international travel trends are as much at play for short-term rentals as interest rates are for long-term rentals, so we’ve gone right to the source in both arenas to get perspective and insights from local experts Dru Brown of Island Time Vacation Rentals and Henri Kirsten of Miller Long Term Rentals.
Watch our sit-down conversations with these local experts to see what they expect in 2024…
Buyer Demand
Always a critical steering factor to any market, we can confidently say that this one is “in the bag.” The reality is that the Lowcountry of South Carolina is wildly popular and highly desired. The pandemic opened people’s eyes as to what’s important in life, and it turns out that location and lifestyle sit right up toward the top of that list, lending the beauty, climate and culture of our area to appeal to a whole new audience of Buyers. The key now is to keep up with that demand, which has developers and planners laying out an impressive array of future developments, resources, and attractions (especially on the mainland) amid a promising future for this bustling corner of the country.
Infrastructure
While the term “traffic” may be subjective, it’s nonetheless an issue wherever a population is growing, and Hilton Head/Bluffton is no exception. Our expanding market area is putting strains on our existing resources, roadways, bridges, and infrastructure, requiring the Towns of Bluffton and Hilton Head Island to pay sharp attention to how things play out in the coming years.
Both Towns are under new leadership, and we had the opportunity to sit down with Hilton Head Mayor Alan Perry to learn more about his take and vision on a few of the most pressing issues in his arena, including traffic, workforce housing, the Town’s short-term rental policy, and more.
Watch our interview with the Mayor to hear what we learned…
The Kitchen Sink
The reality is that we live, work, and play in a very dynamic and sophisticated marketplace that is subject to a myriad of Steering Factors in addition to those highlighted above. As we work our way into 2024, here are a few additional topics that we are expecting to shape how the market year progresses.
- Presidential election years usually introduce a factor of uncertainty and anxiety into the market, though the last election year demonstrated that business as usual was still possible amid the hype of the elections
- Global events capture our collective attention and concern, and yet it’s anyone’s guess at this time just how far those will impact Buyer and Seller behavior
- Generation shifts are afoot as we watch the “Silver Tsunami” of baby boomers prepare to downsize while Millennials make decisions on where to live, where to work, rightsizing their homes, etc.
- The stock market performance in 2023 bolstered an overall sense of wealth, begging the question of just how much of that equity and wealth will be shifted into real estate investments in 2024
- The real estate industry is grappling with some foundational topics that may ultimately adjust how Agents, Sellers, Buyers, and even lenders make their way to the closing table
As always, we’re doing our best to stay at the forefront of these Steering Factors daily, and we welcome your comments, questions, and concerns to be shared at any time.
Feel free to email us directly at info@collinsgrouprealty.com, and we look forward to hearing from you!
Thanks for your time and interest in our 2024 Annual Market Analysis and thank you for your business with Collins Group Realty! We are greatly appreciative of your support!! Have a fantastic year ahead!
