‘It’s beyond crazy’: Hilton Head’s real estate market is a ‘frenzy.’ What that means
Buyers purchasing houses for over $500,000 — sight unseen. High-stakes bidding wars. A 75% drop in the number of homes for sale.
Welcome to Hilton Head Island’s real estate market. It’s a “frenzy” in 2021.
The Island Packet and Beaufort Gazette spoke to local real estate agents over a year ago about an upswing in home sales after South Carolina’s first surge of COVID-19 cases.
What’s changed since then?
“It’s beyond crazy,” said Lea Smith, an associate broker at RE/MAX Island Realty.
Hilton Head’s market is red hot. People from around the country are flocking south, real estate agents say. Taxes are lower here, it’s beautiful, and the pandemic has upended work culture, with more residents able to attend virtual meetings, agents say.
“It’s, ‘Honey, why wait? Let’s do this. Honey, we can work from anywhere. Let’s do this,’” said Smith, who’s had $13 million in closed or pending sales since Jan. 1.
The market is now reshaping Hilton Head’s demographics, Smith said.
Instead of buying vacation homes, more people are moving to the island permanently, said Smith and Robert “Moose” Rini, broker-in-charge at RE/MAX Island Realty.
“We have a long, long line of people trying to come down here,” Rini said. “This is not the bubble of ‘05, ‘06. This is the migration, throughout our country, of 2020-2021.”
Examining the data
The median sales price for detached homes on Hilton Head was $775,000 last month. That’s a 40.9% increase from the $550,000 median price in May 2020, according to data from the Multiple Listing Service of Hilton Head Island.
Closed sales for detached homes, though, have still spiked 64.9% this year, in comparison to closed sales on the island between January and late May of 2020, according to HHIMLS data in a market report from the Hilton Head Area Association of Realtors. (That’s 399 sales in 2020 to 658 sales in 2021.)
Inventory, meanwhile, has continued to plummet. The number of detached homes for sale last month dropped 75.3% year over year, HHIMLS data show.
Similar trends have been reported for condos and villas.
“As the weather warms and pandemic restrictions ease across much of the country, the U.S. housing market shows little sign of cooling. Robust buyer demand, fueled by low mortgage rates, continues to outpace supply, which remains near historic lows,” the local report reads.
Andy Twisdale, a Realtor at Charter One Realty, said there were 647 island homes for sale in March 2020, citing HHIMLS data.
In comparison, there were just 117 homes on the market as of Thursday, he said.
That’s an 81.9% decrease in inventory, which has ultimately pushed prices up, emboldened sellers and spurred bidding wars, with some properties getting five offers immediately and then going under contact within a day, Smith said.
Smith in a Wednesday interview said she had lost three bidding wars in the past 10 days.
“If your buyers aren’t paying cash, and they aren’t willing to let go of appraisal contingencies and inspection contingencies, they’re most likely not going to win. So they all stand in line for the next one,” Smith said.
“Every time I look at a new property coming on the market, and the new price, it almost seems like it’s bumped up $100,000 just willy-nilly, just for the heck of it,” she said. “It’s just becoming ridiculous.”
The high demand for homes is evident across the island, Twisdale added.
There were only 26 homes listed in Sea Pines on Thursday, he said. Just four of those were under $1 million. Rini, of RE/MAX Island Realty, added that Shipyard has seen a dearth of available homes. Hilton Head Plantation, too.
Homes listed between $500,000 and $800,000 are no longer found in the Long Cove Club and Wexford, Rini said.
“You think about those numbers, it’s just astounding,” Twisdale said. “It’s all supply and demand. People don’t have to move to Hilton Head. They want to move here.”
‘It’s pretty tough’
The market is driving more prospective buyers to make cash offers, Rini said.
“It’s pretty tough for a first-time buyer out there,” he said. “We’re getting a lot more people who have a lot more money. And not only are they paying cash, putting major money down, they’re buying in the high-dollar communities.”
Some buyers, Rini added, are offering $2 million for $1.8 million properties, or purchasing homes sight unseen after a FaceTime showing.
There’s been a surge of people moving to Hilton Head from states across the country, real estate agents say, including from New York, New Jersey, Connecticut, Illinois, Ohio and North Carolina, among other places.
Some of those buyers previously vacationed on the island and enjoyed it, Twisdale said.
Where do we go from here?
It’s unclear when the supercharged seller’s market will end.
“At some point, they’re going to cry uncle,” Smith said of prospective buyers. “Homes are going to start sitting a little longer. ... Whether it’s six months or six years, only at that point will the buyers tell us that this is over.”
Rini thinks the local trends will last for another two to three years, he said. “I don’t see any let up of this any time soon.”
One of his agents recently put a three-bedroom villa on the market for $540,000, Rini said. It got 17 offers.
“Until we see more inventory, it’ll be a seller’s market,” Twisdale said.
This story was originally published June 25, 2021 at 4:55 AM.
