Real estate is often considered one of the most secure types of investments. It has the potential to build sustainable, long-term wealth that can span many generations. Whether you are purchasing your first house, your forever home, or your investment property, Hilton Head Island is one of the most highly sought-after real estate markets in South Carolina. This has been true over the past two years, but will that still be true five years from now? Here’s what might change in Hilton Head Island’s real estate market over the next five years and how it will impact current and future real estate investments.
The current Hilton Head Island real estate market
Similar to many real estate markets across the country, Hilton Head Island received a massive increase in real estate activity from 2021 to 2022. This is likely due to a few different factors, including:
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More and more people are purchasing second homes or income properties. Vacation rentals have become an increasingly lucrative industry, and online platforms are making it easier than ever before to rent out properties.
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The advent of remote work has made it possible for people to move to Hilton Head Island part-time or full-time while keeping their careers.
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Nearby Bluffton has a low unemployment rate of around 3.0%, which is lower than the national average of 3.7%. As a result, the Bluffton-Hilton Head Island-Beaufort area has a strong local economy with positive growth.
As of the latest market report in September 2022, Hilton Head Island has 25.7% more homes for sale than in 2021, although new listings have dropped 22%. In addition, Hilton Head Island listings have a higher median sale price of $453,060, which is a 15% increase from 2021.
Hilton Head Island listings are also spending much more time on the market (125 days), and closed sales are down 13%.
So what does this mean for local buyers? With inflation and interest rates increasing, the market is cooling off. With more properties available on the market, sellers may be more likely to negotiate, making market conditions more favorable for buyers in the upcoming months and into 2023.
Will a recession shape the real estate market?
As with any type of investment, real estate markets are influenced by a number of factors. While real estate has historically been one of the most stable forms of investment, there are certain factors that can influence the housing market.
One of the biggest recessions in recent memory occurred in 2008 after the housing bubble burst. This left many homeowners scrambling to sell their homes, many of whom defaulted on their properties. While some economists predict we could face another recession, it is unlikely it will mirror the 2008 recession. The circumstances for a potential recession in the near future are significantly different, with some of the biggest factors being inflation, limited supply chains, and an increase in federal interest rates.
Factors that influence the local real estate market
Photo courtesy of Unsplash
So what does this mean for the local real estate market? Whether you are considering buying or selling real estate in Hilton Head Island in the coming years, one of the most important factors you should pay attention to is interest rates. Interest rates dipped to a 30-year all-time low in 2021 and 2022, which was one of the contributing factors behind the massive increase in real estate activity nationwide. Interest rates dipped down to a record low of 2.96% in 2021. Since then, interest rates have increased to over 6% for the first time since 2008. While this is likely to stabilize the real estate market, it will also mean buyers will pay higher interest rates on their property, which means buyers will likely lower their budget on their new home in order to pay a similar amount. To compensate for this, sellers may consider lowering their asking price.
Other factors that will likely influence the Hilton Head Island real estate market include projected job growth, inventory, and government policies or subsidies. When any of these factors are favorable for prospective buyers, that means a greater demand for local real estate, which is good news for sellers and investors.
What will the real estate market look like in the next five years?
Taking multiple factors into consideration, including interest rates, job growth, and inventory, is one of the best ways to determine what the local real estate market will look like over the next five years.
Along with interest rates, one of the biggest determining factors is job growth. For many buyers, the local economy plays a major role in where they choose to live and work. Bluffton, which is just minutes from Hilton Head Island, has experienced 1.6% job growth in the past year and is likely to experience 38.3% job growth over the next 10 years, which is higher than the national average. As a result, more people will relocate to the area, which will increase demand for Hilton Head Island real estate.
Another thing to consider is the target buyer market, namely the age of real estate seekers. Baby Boomers and Millennials are the two largest generations that are currently alive. As of 2022, there are over 69.6 million American adults from ages 58 to 76, making Baby Boomers the second-largest generation. The largest generation is Millennials, which comprise 21.8% of the total U.S. population. While Baby Boomers and Millennials are at different stages of their lives, they are the two largest groups currently buying real estate. This trend will continue over the next five years, meaning demand for real estate will remain high. More and more Baby Boomers will retire, which will increase the demand for vacation homes. More and more Millennials will also be purchasing real estate, which will increase the demand for primary homes. Overall, this is a win-win for local sellers and investors.
While the potential for a recession can keep things up in the air, the current economy is quite different from the 2008 recession. As a result, the real estate market will likely remain stable in the Hilton Head Island area for years to come, which is always a good thing.
Are you ready to look for Hilton Head Island homes for sale? Are you searching for luxury real estate in one of the Lowcountry’s most highly sought-after communities? Trust Anthony and Co. to help you find your dream home on Hilton Head Island. Anthony & Co. is one of the area’s premier real estate teams, with years of industry experience and local expertise on their side. Contact Anthony and Co. today to get your home search started.
*Header photo courtesy of Shutterstock
Are you ready to look for Hilton Head Island homes for sale? Are you searching for luxury real estate in one of the Lowcountry’s most highly sought-after communities? Trust Anthony and Co. to help you find your dream home on Hilton Head Island. Anthony & Co. is one of the area’s premier real estate teams, with years of industry experience and local expertise on their side. Contact Anthony and Co. today to get your home search started.
*Header photo courtesy of Shutterstock
