We’re pleased to report the real estate market on Hilton Head Island is holding its own with continued price gains through the 3rd quarter of 2022. However, there’s no doubt about the change of attitude in our market with buyers expressing more caution and sellers looking to play ball.
Can the economic storm clouds gathering on the horizon promise better days ahead for buyers? Perhaps. It seems certain to blow the froth off the top in pricing, but without a significant increase in inventory, it’s hard to imagine market values declining by much.
In Sea Pines, even though the number of homes for sale is up a whopping 355% since the beginning of the year, only 41 are on the market, representing just 1% of the existing inventory. And out of approximately 2000 villas in Sea Pines, only 13 are listed for sale. This same narrative is playing out across the island, for homes and villas, at all price points.
In Q2 and much of Q3, inventory slowly grew on the island but September saw the first month-over-month decrease in the number of homes and villas listed for sale. After a lull in summertime activity, homes going under contract from August to September jumped 86% (29 to 54) and villas soared by 195% (24 to 71).
If inventory remains near these lows, any economic storm buffeting the island is unlikely to capsize our market. Our ballast is the good fortune of offering folks the lifestyle of their dreams surrounded by immense natural beauty. It’s an irresistible draw.
A Look at the Year-End Numbers
Homes sold Island-wide fell a steep 34.3% year over year but the median sales price increased 15.6% to $924,000.
Villas sold Island-wide decreased 25% year over year while the median sales price gained 20.1% to $430,000.
Homes sold in Sea Pines dropped 32.3% year over year but the median sales price appreciated 10.9% to $1,275,000.
Villas sold in Sea Pines sank 24.2% year over year while the median sales price climbed 25% to $710,000.
For a comprehensive review of the Hilton Head Island MLS sales data for 2022, including both on and off-island, please click the links below:
The Question on Top of Mind for 2023
Will the economy cause the real estate market to roll over on Hilton Head Island, or can the gains of the last three years be consolidated into a new pricing floor?
Consumer confidence is the key indicator to watch for which direction the Island’s real estate market will go this year.
If a hard recession takes hold, and consumer confidence is given time to stew in a pot of pessimism, buyers are likely to see favorable changes coming their way.
It’ll show up first as a general malaise settling over the market with turnkey properties languishing in search of a buyer. Weaker offers and seller concessions are sure to follow. This should cause the list-to-sales price ratio to return to its historical average of 95% on the Island. Inventories were so tight last year that homes and villas sold at an average of 99.4% of their asking price.
If these cascading events unfold over the course of the year, it’s likely to lead to an accumulation of inventory, and if inventories can approach 3% on the Island, we’ll be well on our way to restoring a balance between sellers and buyers.
It’s worth noting that over the years Hilton Head Island has shown a pattern of being the last to feel the pains of a recession and the first to bounce out of them.
There’s an equally good chance for a solid pricing floor to develop this year. Even in the darkest days of the Great Real Estate Recession, properties were still being purchased by folks eager to start living the good life on Hilton Head Island.
Demand remains ever-present with buyers patiently waiting for the right property to come along or for better conditions to materialize.
But with so little inventory for sale, and a history of buyers willing to purchase under any and all economic conditions, it’s likely that enough demand comes through to keep inventories persistently low and pricing elevated this year.
As a prelude, during the last four months of 2022, the median sales price for homes on the Island increased slightly by .54% while villas slipped 2.1%. During this same period, homes in Sea Pines gained 1.59% and villas rose 2.6%.
The Most Important Takeaway
Timing the market is more luck than skill but finding the right property, for all the right reasons, can be a priceless return on the experiences you’ll share with your family and friends.
As facilitators to dreams coming true, we welcome the opportunity to help you realize yours on Hilton Head Island.
Please call us today and let’s get started!
Thank you and Happy New Year,