(Included in this e-Newsletter: Year End Market Report, Greater Hilton Head Area Statistics, Area Events, Area Improvements, A Look At Daufuskie Island, Interest Rates Analysis, My Personal Note)
2023 was a challenging year for much of the U.S. housing market: mortgage rates hit a 2-decade high, housing inventory remained at historic lows, and sales prices continued to climb nationwide, putting homeownership out of reach for many consumers. As a result, sales of previously owned homes remained sluggish throughout the year, while the shortage of existing-home inventory helped sales of new residential homes steadily increase from last year.
Higher mortgage rates haven't just affected buyers. Many current homeowners purchased or refinanced their homes in 2020 or 2021, when mortgage rates were several percentage points lower than today’s rates. And while those pandemic-era mortgages have been a blessing for many homeowners, they’ve also kept others from moving. Rather than give up their current mortgage rate for a higher rate and a more expensive monthly payment, some would-be sellers have chosen to put their moving plans on hold, further limiting the number of homes for sale and driving up home prices in the process.
Pending sales in the Lowcountry decreased 9.0 percent, finishing 2023 at 5,259. Closed sales were down 7.5 percent to end the year at 5,405.
Comparing 2023 to the prior year, the number of homes available for sale was up by 23.3 percent. There were 1,299 active listings at the end of 2023. New listings decreased by 7.3 percent to finish the year at 6,469. It's important to note that while there has been an increase in inventory, it still remains quite low compared to what we would consider "normal".
Home prices were up compared to last year. The overall median sales price increased 8.4 percent to $516,500 for the year. Detached home (single family) prices were up 4.5 percent compared to last year, and attached home (condo) prices were up 15.3 percent.
List Price Received: Sellers received, on average, 98.1 percent of their original list price at sale, a year-over-year decrease of 1.3 percent. This number is still approximately 3% greater than the 95% of list price we had become accustomed to over the past 30+ years.
With inflation showing signs of improvement, the Federal Reserve recently announced they are likely done raising interest rates for the time being and plan to make at least three cuts to their benchmark rate in 2024. Mortgage rates have been dropping in recent months, which should help bring buyers and sellers back to the market and could lead to an uptick in both home sales and housing supply. Affordability will still prove challenging for some homebuyers. As for home prices, opinions are mixed, with some analysts expecting prices will hold steady or continue rising in areas like Hilton Head/Bluffton and other coastal regions.
What to expect in 2024?
We are anticipating an active real estate year on Hilton Head and in The Lowcountry. With continued interest rate relief we expect buyers to rush back into the market, as well as see more sellers list their properties. Don't be surprised if we see multiple offer situations come back for a spell, since inventory will remain lower than what is typical, with the Months Supply of Inventory averaging approximately 3 months, compared to the 6 months supply in a "normal" market. Lastly, the demand to own property here is as strong as ever. In case you missed my recent blog, South Carolina ranked #3 in the US for inbound migration.
The long and short of it is simple. Hilton Head Island, Bluffton, and the surrounding markets remain stronger than the national averages and will continue to do so.
Here are several charts to help breakdown the activity and trends over the past several years.
Hilton Head Area Events:
Hilton Head Seafood Festival: February 19-25. Various locations.
Darius Rucker Intercollegiate Golf Tournament: March 4-6. Long Cove Club, HHI
St. Patrick's Day Parade: March 17. Pope Avenue, Hilton Head Island
Wingfest: March 23. Celebration Park, Hilton Head Island.
Hilton Head Wine & Food Festival: March 24-30. Celebration Park, Hilton Head Island
RBC Heritage Golf Classic: April 15-24. Sea Pines Resort, Hilton Head Island
Gullah Heritage Festival: June 6. Hilton Head Island
William Hilton Parkway Gateway Corridor Project: Here's what we know. A new bridge to Hilton Head Island is coming... eventually. There was an Advisory Committee meeting back in April of 2023 and again in May. The Advisory Committee will play an integral part in the Town’s comprehensive study of the William Hilton Parkway Gateway Corridor Project. For this review, the Town is hiring an independent specialist to conduct an end-to-end simulation of traffic flows and analyze the project, which includes areas from the mainland intersections at Moss Creek Drive and Buckingham Plantation Drive to the intersection of Indigo Run Drive/Whooping Crane Way with William Hilton Parkway business route and to Sea Pines Circle on the Cross Island Parkway route.
The Advisory Committee will work in conjunction with a technical review team designated by the Town Manager and focus on the following:
Review and assess the Town’s request for qualifications and all responses for an independent consultant.
Identify firms to be considered as a “Preferred Consultant” and review consultant proposals.
Recommend to Town Council which “Preferred Consultant” to pursue contract negotiations with.
Work with Town staff to guide the work of the selected consultant to complete the independent review, including delivery of findings and recommendations from the consultant and advisory committee through Town staff to Town Council.
The Beach House at Coligny Beach: Get ready for a greatly improved Tiki Hut and live music venue on the sand at Coligny beach. That's right... the long standing Tiki Hut is undergoing a major renovation. In addition to a new bar/restaurant plans include the addition of a covered event pavilion to replace the white-tented area, which hosted around 40 weddings last year. The resort is also replacing its pool and cabanas.
Bike trails are always expanding: Hilton Head continues its commitment to making all areas of the island safely accessible by bicycle. Presently there is construction getting underway to add bike trails in the Shelter area between Rt. 278 and Shelter Cove Park. There are presently over 100 miles of public bike trails and over 50 miles pf private trails.
Here's a Quick look at historic Daufuskie Island, located just a 10 minute ferry/boat ride from Hilton Head island. I highly recommend taking a day trip to this beautiful island that is rich with low-country history, if you get the chance.
Interest Rates- What might we expect?
Mortgage rates are coming down a little after peaking near 8%. 30-year fixed rates are just below 7.0%, and 15-year fixed rates are averaging about 6.3%. Mortgage rates typically move with the 10-year Treasury note’s yield, but they are higher than normal now, relative to the Treasury yield. The recent rise in short-term rates has crimped lenders’ profit margins on long-term loans. If the Fed cuts short-term rates this year, that should bring some extra reduction in mortgage rates, too.
The Federal Reserve’s newly released "Summary of Economic Projections" raised the possibility of three interest rate cuts this year. But the majority of bond investors expect the Fed to start cutting short-term interest rates by March, and then continue with regular cuts at almost every meeting after that, for a total of six cuts in 2024.
Fed Chair Powell has repeatedly stated that he is reluctant to start rate cuts until he is double-sure that inflation will hit its 2% target and stay there — Powell really, really, does not want to have to backtrack and raise rates again later.
The Fed will also likely continue cutting short-term rates through 2025, but will not return them to zero.
My Personal Note
Another year has come and gone. While real estate had its ups and downs, my family definitely had a great year. My daughter Celeste continued her world traveling, visiting Indonesia, Japan, Costa Rica, Mexico, and probably a few more places that I can't remember. Selena has been thriving as a pre-school teacher. She also spent over a month this past summer visiting Spain, Portugal, France, Italy, and Greece.
Mazzi , now a 5th grader, is preparing to star in her third production at Bluffton Youth theatre. She also performed with her school choir and a select group called "Singers" performing at various locations over the holidays.
As for Amy and me... we continue to stay busy. Amy is working closely with her mother at Kuwahi Dolls, helping her to launch their new line of collector dolls "Joy Forever". https://www.kuwahidolls.com/
My Hilton Head High School soccer season is about to begin, so coaching has started back up. I also managed to dust off my drums and play a few shows around town. We all had a wonderful holiday, spending Thanksgiving in The Great Smokey Mountains followed by a relaxing Christmas and New Year's at home.
I'm expecting a pretty busy year in real estate with an increase in sales activity on the horizon. I would love to hear from you and be of service however possible. And as always, I would greatly appreciate your referrals.
All the best!