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Market ‘frenzy’ cooling

Real Estate

SCARE INVENTORY EXPECTED TO SHAPE FUTURE OF HOME SALES

As a veteran real estate pro and farmer, James Wedgeworth knows this to be true: “You can’t sell from an empty wagon.”

Which is his way of saying scarce inventory will shape the market for home sales — nationally and in Hilton Head — in the months ahead.

“It’s about a lack of inventory,” said Wedgeworth, co-founder of Charter One Realty and Marketing, noting that the number of homes available for sale has declined monthly for most of this year.

Real estate sales have been red-hot for a year as buyers and sellers nationwide got busy in the aftermath of the pandemic’s early days of lockdowns, stay-at-home orders and quarantines.

The frenzy triggered higher prices as multiple buyers descended on a dwindling supply of homes for sale. With prices climbing at a fastest-ever rate, words like “crazy” and “insane” were commonly used to describe the superheated housing market.

Now national market watchers and real estate experts say the wild ride is downshifting as families wind up summer vacations, kids prepare to return to school and more workers return to workplaces. Mortgage rates remain low, but concerns about prices, inflation and a Covid comeback are causing some potential buyers to pause.

“Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat,” said Lawrence Yun, chief economist for the National Association of Realtors.

The past year has been “emotional” for buyers, sellers and real estate sales professionals, said Jean Beck, chief executive of the 1,500-member Hilton Head Area Realtors.

Buying a house has been highly competitive. Some houses drew dozens of offers within a matter of days, with intense bidding often driving closing prices well above asking prices. Getting hopes up, then dashed, generated disappointment and shopping fatigue.

market2“It’s emotional for everybody,” Beck said.

Scant inventory was the story of the summer in Hilton Head. In June, for example, 150 detached homes were available for sale – 67 percent fewer than the 459 available in June 2020.

In July, detached homes available for sale in Hilton Head declined 61 percent from the year-earlier month, 153 to 394.

The condo and villa market was similarly tight, with 155 units available in June – a 54.8 percent decline from the 343 in the year-earlier month. Condos and villas available for sale in Hilton Head in July declined 49 percent from a year earlier, 160 to 315.

Chip Collins, broker in charge and owner of Collins Group Realty, said he expects the Hilton Head market to remain active, even as home sales slow nationally.

The “frenzy” is abating, Collins said, “not that the market has gone cold. It’s just cooling off from the insane boiling point.”

“I’m seeing and sensing and hearing from friends and peers that the bidding-war mania is subsiding,” he said.

At least four trends are enduring in the Hilton Head market, according to local real estate authorities: a preference to work from home; strong interest from buyers in Northeast states; the Lowcountry’s growing appeal to buyers from other parts of the country, and an increasing number of adult children hoping to live near parents retired in the Hilton Head-Bluffton-Beaufort market.

“I see it every day,” said Wedgeworth, a real estate sales veteran of more than 39 years.

“Some ask themselves whether they want to sit in an apartment in New York City or on the beach in Hilton Head. Others want to work from home in our kind of setting.

“In addition, the kids are moving here to be with parents who came here first.”

Collins, an Ohio native who relocated to Hilton Head more than a quarter-century ago, said the area is drawing increased interest from around the nation.

“We have represented buyers this year from 26 states,” he said, adding that his firm handled customers from 31 states in 2020.

“The joke used to be that everybody came from Ohio,” he said.