The number of vacation home sales inresort communities across BeaufortCounty rebounded last year, drivenby deeply discounted prices, cashpurchases and slow but growing confidencein the market, local real estate industry expertssay.
Sales statistics reflect a 13.6 percent increasein total number of real property sales in 2010compared to 2009 on Hilton Head Island,where many properties are vacation homes.On Jan. 10, The Wall Street Journal mentionedHilton Head as a star performer in an articleabout the rise in vacation home sales in manymarkets nationwide. The upturn is makinglocal real estate agents cautiously optimisticabout a recovery.
"Home inventory levels are beginning todrop," said Andy Twisdale, an agent withCharter I Realty North on Hilton Head Island."And the absorption rate of homes isimproving after dropping precipitously overthe past several years." Both of these trendsshould help stabilize prices, he said.
Data show fewer active listings in southernBeaufort County compared to 2009, makingthe market more competitive. At press timethere were 818 homes listed for sale, whichat current absorption rates equals about15.7 months of inventory, according to dataprovided by Charter I Realty North. Homesthat cost less than $499,000 might see someprice increases later this year, Twisdale said,in part because many baby boomers are delayingretirement but still want to own amore modest second residence in a coastalarea. Sales of homes that cost more than$1 million will remain slow this year, he predicted.
While some second homes have languishedon the market because sellers' priceexpectations were too high, data suggest thismight be changing. In general, sellers receivedabout 92 to 93 percent of their askingprices last year, which is an improvementover 2009 when double-digit discounts werecommon, Twisdale said.
However, prices still are going down inmany Lowcountry neighborhoods, so localRealtors believe it's too soon for sellers andreal estate agents to rejoice. Buyers are thebeneficiaries of the situation.
"Prices are down almost a third over thepast five years. The financing is very difficult.Banks are requiring up to 25 percentdown and crystal clean credit," Twisdalesaid.
For buyers who qualify for a mortgage orcan pay cash, now is the time to act, he said.
Buyers Bruce and Laurie Kienke agree.Last year they bought a second home in aprivate Okatie community - with cash.
"So many deals are falling through becauseof contingencies. Sellers are muchmore willing to negotiate when it's a cashdeal," said Bruce Kienke, who recently soldproperty in a cash-only transaction, too.
The Kienkes still own a home in Minnesota;they sold another vacation home beforebuying on Spring Island. Price was amajor factor in their decision to choose theLowcountry, Bruce Kienke said. The couplebought an existing home because it was lessexpensive and faster than building a newhome, he said.
"This is a fabulous area to live and vacationin," Bruce Kienke said.
Although some potential buyers are havinga hard time selling their homes in otherparts of the country to purchase propertyin the Lowcountry, Randy Smith, broker incharge and principal of Lancaster Real EstateSales on Hilton Head Island, believesattractive prices here are changing thisequation.
"At the peak of the market, rentals didn'tcome close to covering costs (of having asecond home)," he said.
At today's prices, "vacation rental incomestill doesn't translate into a positive cashflow, but it comes much closer, making secondhome properties much more attractive,"he said.
Prices for less expensive condos (underabout $163,000) will "see their bottom andstart to rise in 2011," Twisdale predicted, asbuyers wanting to purchase short term rentalproperties look for the lowest price pointpossible to get into the market.
Sun City Hilton Head, an affordable communitywhere some buyers purchase homesyears before they're ready to permanentlymove to the Lowcountry, had a 21 percent increasein sales last year.
Increasing demand also was behind HamptonLake's decision to offer a fractional luxuryhome ownership option at the greaterBluffton community.
"The desire to own a second home in ourarea is still high, but with financing difficultiesand tighter budgets, we saw a need to offera more sensible, practical way for peopleto enter the vacation market," said Rob Barber,project director at Hampton Lake's fractionalownership neighborhood called TheSanctuary.
FRIPP ISLANDIn the resort community of Fripp Island,the number of sales last year doubled - 34homes sold in 2010 compared to 17 in 2009.Dennis Robinson, broker in charge of FrippIsland Real Estate, said almost all the homeson the island are vacation properties, withprices averaging three to four times that ofmainland Beaufort.
"More people from Atlanta, Greenville-Spartanburg and Charlotte - what we callour we callour 'drive time market' - are discovering ourarea, and that is helping," Robinson said.Robinson said 20 percent of sales he brokeredlast year on Fripp were cash-only transactions.
WHAT'S IN STORE THIS YEAR?Will this improvement continue in theLowcountry in 2011? Some local agents sayyes.
"People still want to retire here and now is agreat time to buy given the marked correctionin pricing," said Bill Baldwin of Dunes MarketingGroup on Hilton Head Island. What hehears from buyers is encouraging. "Basically,they missed the run up several years ago andare not willing to risk waiting, even if theyaren't ready to relocate here," Baldwin said.