If you recall, the real estate crash of 2008 resulted in approximately a 30-35% reduction in housing value across all of the gated communities in the Lowcountry. There had been a “run up” of prices built on a panic buying of “flip” buyers owning many properties outside their financial capabilities. Banks were lending money like it was water, and when the world stopped in September 2008 banks and locals were caught with an enormous amount of useless debt and foreclosures were everywhere. The irresponsible buying and lending resulted in the collapse of a glass house of poor real estate decisions. Fortunately, most communities recovered their value over the years and recently escalation has been through the roof. What’s different this time as the real estate market starts to normalize?
As we flirt with recession and more inventory becomes available, I am forecasting a reduction in prices but not anywhere near the impact or levels of 2008. We continue to be focused on local not national markets. Banks have been far more responsible in lending and “flipping” represents a very low amount of buying activity. In other words, all of us have lowered the risk of investing in residential real estate. The lessons of 2008 did not go unnoticed.
In addition, during the pandemic, The Lowcountry was discovered by many potential buyers who were not previously aware of the paradise of the Lowcountry. Family members and workers who could live and work outside their traditional area found a very surprising and exciting lifestyle in the Lowcountry. Many people decided to invest in property now even though retirement may be years away to make sure they didn’t get priced out of the market. Furthermore, the practice of villa owners promoting themselves to homeowners took off in 2017-2018, and an increasing number of homeowners upgraded during the same period. Having business owners allowing employees to work from their homes has opened up a whole new category of owners.
What has contributed to a stronger base market? The enormous flight availability expansions of the Savannah and Hilton Head airports have had a significant impact on the thinking of buyers who find it more and more convenient to travel to the Lowcountry. Traditionally most of our buyers came from 11 states, focused on the east coast and the Midwest. Although we now have many people moving here from California and Texas too. The Lowcountry is open to the world and real estate sales confirm these changes in demographics.
Yes, prices will normalize some with higher inventory but we will have a much softer landing than in 2008. Price may not continue to raise in the short term with the vigor of the past few years but it will not be coming down significantly as we have a much stronger financial base with dramatically improved local strength factors.
Hilton Head Island and Bluffton are hot, hot, hot. We live in a very highly desirable area. I hope you agree.
Written by Allison Cobb
The author assumes no responsibility or liability for any errors or emissions in the content of this blog. The information provided on is an “as is” basis with no guarantee of completeness, accuracy, usefulness, or timeliness.
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