Hilton Head/Bluffton Real Estate Market Update | 1st Quarter 2021
It’s not news that the nationwide real estate market continues to perform at historic levels, nor is it surprising that the Lowcountry is following suit.
But, what is new is the increasing challenge of predicting exactly where the market is headed both in the near term and the long term. That said, we did our level best back in January to give it a shot, and we are excited to bring things forward for this Q1 Market Update
Buyer activity was robust in the first quarter, yielding a 65% increase in the number of new pending sales over Q1-20. New listings were also up, but disproportionately at only a 7% increase. Successfully closed sales hit a 50% increase over Q1-20, while the average price of those sales increased 30% over the same period last year.
2021 Real Estate Steering Factors Update
We knew this would be the headline news for 2021, and it certainly has been the “talk of the town.” Historically-low single-family inventory levels are now at single digit counts for most of the gated communities on the Island, which pretty much has everyone amazed.
The story we hear over and over is that plenty of property owners would love to sell right now to take advantage of strong market conditions… BUT, they have nothing to buy when they sell! So, a large segment of the market is “stalled” until we can start to see supply and demand level out some.
That said, we do expect to see more inventory enter into the marketplace in the coming few months.
During 2020, we observed basically a doubling of buyer inquiries through our office as we saw in 2019, which made it hard to imagine that those numbers would continue to climb aggressively in 2021. However, that’s exactly what has happened. In fact, the volume of buyer inquiries we fielded in Q1-21 was up another 50% from Q1-20, demonstrating that the Lowcountry is in the highest demand we’ve ever seen! Our expectation is that this trend will continue well through Q2, if not the entirety of 2021.
While the market still commands and pays a premium for new, newer, and renovated homes, the low supply of inventory amid sharply appreciating values has put fixer-upper properties back in vogue. While some are purchased by end-users, others are purchased for renovation “flips” with good success. The main challenge in this arena is the availability of contractors who are otherwise spread thin among the construction/renovation boom we are experiencing around the entire marketplace. That said, we expect the market to continue to find appeal in fixer-upper properties, cautiously being mindful of the price point along the way.
It’s the perfect storm for new construction developers in our market area as they are filling the nearly desperate need for inventory. The lack of resale homes has turned attention to new product in an unprecedented fashion.
Margaritaville is a prime example of this market dynamic. In the first quarter of 2021, 183 new home sales took place in this new mainland development, including 93 in March alone! This brings the 2021-year total (as of 4/20/21) to 212, with about 400 homes under construction in this development alone.
With this kind of demand, it’s no surprise that building completion timelines are inching out, while overall costs are inching up. That said, as long as the developers have land, materials, and labor, we expect to see new home construction to be a hot corner of the marketplace through 2021.
Swimming pools were all the rage in 2020, and that trend continues strongly into 2021. Many pool companies are stating that the timeline for new pool construction is in the 9 to12 month period, so homes with existing pools are in high demand.
Golf, tennis, boating, pickleball and other outdoor recreational activities are also in high demand, so much so, that we’ve seen a dramatic reversal in the outlook on club-based communities with substantial annual dues. Buyers now see a high value in these “bundled” communities where membership is tied to ownership, and where private amenities are the perfect complement to their individual real estate.
We expect that amenities (private, club, and public alike) will continue to be a driving factor in where buyers focus their searches throughout 2021.
While interest rates have shifted slightly over Q1, the overall outlook is that interest rates are at an incredibly attractive level right now, creating greater housing affordability and compelling financial conditions.
Recent reports by the Fed indicate that they expect interest rates to say low and steady throughout 2021 as their economic forecast turns rosier and rosier with each passing week/month.
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.
The first quarter of the year performed even better than expected, despite the low level of resale inventory in the market. Demand is high, as is market confidence, leaving inventory as the only thing left to be desired in this robust time in the market. We look forward to tracking trends across May and June and repeating back how the first half of the year took shape.
If you’d like more stats, head over to the March 2021 Market Report