I was having dinner with a good friend of mine on our deck in the North Carolina mountains the other day – I could see about 50 miles out and there were numerous mountain ranges in the distance. 

I asked my friend if he had ever thought why beach real estate has appreciated over the years more than mountain real estate.  I decided that this was because there are a lot more mountains than there are beaches.

It all goes back to supply and demand.  The reason beach oriented real estate has traditionally done better than other real estate is because you have a limited amount of supply.  This would also be true for riverfront property, and to some degree, property on large lakes.

Now is a great time to purchase property at the beach – prices are off because of the economy, but supply is constant.  The closer to the beach, the better off you are.

Great news!  Home and Villa real estate sales were up significantly in August 2009 versus August 2008.  We had 54 villas sell this year versus 50 in August of 2008.  We did see a decrease in sales price in these transactions. 

Lower priced villas are selling better than the higher priced villas.

For the last several months we have had more sales, but lower end priced homes have been selling much better.  We had 71 homes go under contract in August 2009 versus 51 sales in 2008. 

We finally had some of the more expensive homes sell; the average price was $1,191,000 in 2009 versus $860,000 in 2008.

Someone asked me how I have been able to sell $40 million worth of real estate this year.  I jokingly said, “I am not participating in the recession”.

Everybody knows that the recession has affected all of our business; at this same time last year I had sold more than I have at this point. 

I received a call from a client yesterday and asked how his business was.  He said that he had his best year ever.  I asked how he did that.  He said he canceled all of his subscriptions to newspapers because when he read them all he read was bad news.

As someone once said, “If if wasn’t for bad luck, I would not have any luck at all”.

I picked up The Island Packet several days ago and on the front page the headlines read, “Deficit to top $1.5 trillion”, “Former Clerk Smith pleads not guilty to embezzlement charges” and “SAT scores decline at three area schools”.  This news was really depressing. 

I have always believed in the contrariety opinion – buy when nobody is buying and sell when nobody is selling.  If this is true – now is a great time to buy.  There are some unbelievable real estate deals available because most clients watch the mainstream news, they read the paper and hear all the doom and gloom. 

As I have said over and over again, we still have 12 miles of beautiful sandy beaches on Hilton Head and I do not think that is going to change.

Last Sunday morning I was flying to New York for a two day real estate conference and I miscalculated my time.  I’m not sure how I did this, but my flight was leaving Savannah at 6am.  Luckily, I caught every stoplight between here and the Savannah airport on green.

I started thinking how lucky I was because I was able to get to the airport on time and make my flight. 

That is how I look at what is going on in the real estate market from a buyer’s perspective.  There are many stoplights that normally prevent people from buying.

Stoplight #1 would be prices.  Everyone knows that prices are down anywhere from 25%-35% from the high of June of 2005.  According to a recent article in the Wall Street Journal, nationally, real estate values are down 32.2%.  In other words – prices are very good.

Stoplight #2 would be availability.  Wow – we have tons of inventory so whatever a person wants – we have three or four to choose from.

Stoplight #3 would be motivation of the seller.  We have a lot of very motivated sellers a number of bank foreclosures that are willing to be sold at very reasonable prices.

Stoplight #4 would be interest rates.  Interest Rates are basically at an all-time low.  Who would have ever dreamed in the 80s that a person would be able to get a 5% loan. 

Stoplight #5 would be property condition.  So many of my sellers today are doing everything they can to fix their properties up.  I have had clients re carpeting, repainting and remodeling kitchens in order to make their homes more saleable.  The advantage here is that the buyer does not have to spend any money when they purchase a property because it is ready to roll.

There are a lot of stoplights and they all seem to be green.  Smart money is buying now.

If any of your friends have considered purchasing property on Hilton Head Island, I would encourage them to do so now.

I was at the gym this morning and Jane was on the treadmill next to me.  She told me that she saw where CNN stated that the recession was over.

A long time ago I found out that I don’t believe what I read in the paper or hear on the news.  If the press is finally saying the recession is over people will begin to believe it.  The press started this recession and they can end it.

A Realtor friend of mine gave me a bumper sticker that says, “The Recession is over, Buy a house”.  I laughed.  As Realtors, if we can let people know that the market has bottomed out and now is the time to buy, I think you will see people buying. 

I am completely convinced that on Hilton Head Island there are hundreds of people wanting to buy, but they are waiting until they feel like the market has bottomed out at which time they will enter the market.

Advice to buyers – buy now, because if the press is saying the recession is over people will start entering the market and all those “good buys” will not be available. 

There are probably eight to ten great values in each plantation; once those are sold we will be back to a normal real estate market.  Buy now or you will regret it later.

I was watching a baseball game last night and in one of the commercials, Taco Bell had an advertisement for an $.89 chicken burrito.  I’ll be honest with you; I have never had an $.89 chicken burrito from Taco Bell.

The important thing to realize is that the advertising message here is “Value”.  In Taco Bell’s opinion, in this economy, people are looking for a great buy and they are advertising this as a great value.

I think we can learn from these major corporations.  They spend thousands of dollars to figure out what consumers are looking for.

If you look at what is going on in our real estate market you will see the same thing; people are looking for value.

For example, the last three sales in Wexford Plantation have been foreclosures.  If it is not a great value, they are not buying it.

As a seller, you have to figure out what you need to do to make your property a great value.  People are not going to pay $1.40 for a chicken burrito when they can buy one at $.89 – does that make sense?

We can all learn by looking at what these major corporations are doing in advertising.

Last week I had the opportunity to attend the Star Power Conference in Denver, CO. This is a conference that 500 of the top real estate agents in the country go to.

I felt like I was drinking water out of a fire hydrant! It was a great opportunity to talk with top agents across the country and learn what they are doing to keep up with the changing times.

Several of the agents were from areas where the real estate market is much worse than Hilton Head. Mainly Phoenix, AZ, Compton, CA and Las Vegas, NV.

I was surprised to hear that the prices in Las Vegas have dropped on average 64% in the last two years. I was also surprised when I found out that in Las Vegas, 79% of the properties that have sold in the last 6 months have been bank foreclosure properties. In other words, it is difficult for a regular guy to sell a property in that market.

I think the same is true for Compton, CA. In fact, one agent said that his town is the “poster boy” for foreclosures. In Phoenix, approximately 50% of the sales are bank foreclosures.

I was also interested to learn that in these towns, banks seemed to be taking the theory of reducing the price every 21 days to get the property to sell. One agent actually had a property to sell in Las Vegas where they had 55 offers on one property. The bank had been so aggressive in pricing the property. Obviously, these are declining markets. In Las Vegas, the property values are dropping 4% a month. Obviously, this is driven by the foreclosures.

I also learned that we are expecting a new wave of foreclosures in September because of the moratorium that the Obama administration has put on foreclosures. They think that this will have a further detrimental effect on the values in their area. The realtors in these 3 cities are trying to get their sellers to sell today if they are expecting to sell in the short run.

I am committed to learning as much as I can about the future of the real estate market. It is important that all of us realize that we are in a changing market. We have to learn from other agents to get an idea of what they are doing to help their clients.

If you have any questions concerning real estate on Hilton Head Island or in Bluffton, please give me a call at 1-800-831-0359. I will do all I can to help you reach your real estate goals.

 

The front page of The Wall Street Journal on Wednesday stated,   Home Prices Rise across the U.S

This same day, USA Today quoted that ”house prices rounded a corner”.

This initial increase might be small, but it is the first rise in three years

It is important to realize that this is talking about the national market; some areas are better than others.  I do think that this proves that the market has bottomed out

For months people have been saying that they want to buy but they want to make sure that the market has bottomed out.  I tend to think that it is hard to know where the bottom of the market is until it has turned around.

Most people wait until the market has increased 10%-12% before they buy.

How does this relate to Hilton Head?  Our market is slower than the national market, but the important news is that we are finally getting some positive press.

We still have unbelievable values, a lot of foreclosures and we have people who really want to sell.

Just remember, time is a friend of the buyer and an enemy of the seller.