It’s widely accepted that preparation is one of the major keys to success. This is true in sport, business or life. If you have an idea of what’s coming you can prepare yourself and be ready to handle anything. In my opinion, determining what is coming in the real estate world is done in different ways; 1) by looking at the recent history and trends – what’s been selling, 2) looking at what isn’t there – what hasn’t been selling and why? 3) Looking at the micro vs. macro and how our local market is influenced by national or worldly things. To be more precise, what are the things that could help, or hinder, the market in 2018?
What helps? Limited Supply - There is only so much buildable space and as the economy continues improving and more people are moving to this area, it’s as simple as Economics 101 in that limited supply + increasing demand = increasing sales and prices. Taxes - As more people are moving out of high tax states around the country, they are seeking lower tax states like South Carolina. Given the fact Hilton Head Island and Bluffton are long established communities that offer a great quality of life, they are high on the list of places to live. Both areas have been consistently listed as top places to live by magazines such as ‘Forbes’ and ‘Conde Naste’. Texas has seen a large migration of companies and people as they leave California. North and South Carolina are seeing similar things happen as people are leaving New York, New Jersey and Illinois. Quality of Life- The Lowcountry’s year-round tropical climate lends itself it being outdoors and there are an abundance of things to do in the area. The ocean and beach are far and away the number one outdoor thing to do and the areas golf and tennis are routinely in the best in the country. What doesn’t get the publicity are the other activities such as boating, kayaking, fishing, biking, the list goes on and on. With so much to do it makes it more difficult to spend time working and probably one of the reasons this area is called the ‘slow country’. These things add up to a phenomenal opportunity and a continued increase in demand for our area. For those that have withstood the ebbs and flows of the market, the future is looking better and better. What could hurt the market? The question I’m asked most often of late is if I think there will be a market crash. When I ask where such a question would come from the answer is always, ‘The real estate market has adjusted every decade and it’s been 10 years since the last fall out. Aren’t we due for another?’ My first response is ‘What data is there to support such a theory?’ Let’s look at what the hard data says and what may affect the market negatively. New Taxes- Just as higher taxes in other states have a positive impact on our area, the recently passed federal tax plan does have potential to irritate the market. Because it is so new, the details are not yet known, and the market won’t know the full effect until April as people do their taxes. However, outside of a knee jerk reaction by the minority of buyers, I don’t think this will have a large effect on our market. Those that rationalize will always come up with reasons why they shouldn’t buy; interest rates are up X%, the house isn’t quite the right color, etc. but those that want to be here will find a way to make it happen. When the naysayers and procrastinators see the market continuing forward without them, they are certain to get back into the fold. Student Loans - Students defaulting on government backed debt and its effect on the economy has been discussed for some time. Some believe it could have a reverberating effect like the credit fallout of 2008. I don’t think it would be that drastic or anywhere near that level and believe this to be a blip on the screen. 10-year cycle - If there was a spike in values there may be cause for caution, but if you look at the steady improvements our market has taken for a decade, it makes you scratch your head and say, ‘Fallout from what?’ We haven’t had any sharp increases, so there’s little concern for sharp decreases; i.e. fallouts. In fact, things have been moving closer to consistent all the way around, regardless of what price point you are looking at. Sales, median prices and both on a steady increase (area wide) and days on market continues to drop. Newscasts and those looking for ratings maybe reporting the market will crash but the market is saying something completely different and that is they want to live in the Lowcountry. What’s going to happen this year? Barring any natural catastrophes, I believe the market will continue its upward trend. There may be a slight stall in Q1 and Q2 as buyers wait to learn more about the new tax codes and how it will affect them, but people want to be here and not being able to write off interest on their loan isn’t going to stop them. As many of you are aware, people move here for two reasons: to live and to invest, and sometimes a combination of both. We have seen continued improvement in values and as this becomes more evident to buyers looking to enjoy the good life or diversify their portfolio, I believe it will play a major role in the continued upward trend of real estate value on Hilton Head Island and in Bluffton. Knowing where you want to go and how to get there is a good thing. Understanding what variables you may encounter on the way allows you to plan ahead so those variables can be avoided or taken advantage of. Not only do I look at the ‘normal’ indicators of what might happen, I also look at the variables so when I’m advising someone on how to buy/sell their property they can make the adjustments and know why. When doing so, the pitfalls experienced by others are avoided. It’s the little things, but those little things are what allow me to help you save two of your most valuable resources, time and money.
5 Comments
Lately, I’ve been asked more than once; “Do you think the real estate market is going to collapse?” When I ask why someone would ask such a question or by what measurement did they come to such a conclusion their response is always "It’s been almost 10 years since the last real estate fall out and there seems to be one every decade" It’s something to consider, especially if you adhere to the logic that if we don’t pay attention to history we are bound to repeat it. But if we look closer at the reasons for variations in the real estate market we will have a better idea of what to expect in the future.
While it may be true there has been a market correction approximately every ten years, it would be beneficial to understand the underlying causes of past drops and compare them to today if we are to accept the theory that we are prime for another drop in values. Reason #1 – Credit Crisis The most notable fallout was due to the credit crisis of 2007/2008. If you have read previous posts you will remember I noted this fall out was due in large part to government interference; lending criteria imposed on banks, building restrictions that did not allow for increases of inventory and prices to skyrocket, and a mantra that every American should be able to own their own home. For a complete understanding of the crisis and what caused it read Dr. Thomas Sowells book ‘The Housing Boom & Bust’. There were causes for the bubble bursting in ‘07/’08 but the overriding factor was the result of many poor policies instituted by local and federal government as it related to the housing industry and over a period of decades this had built up to such a feverish level there was nothing left to do but burst. However, today’s market resembles that market as closely as a horse resembles a chicken, at least in the Low country; Hilton Head Island and the surrounding areas of Bluffton and Okatie. Steady as she goes What we have seen since the ‘07/’08 fall out is slow and steady growth. Depending on how someone gathers, puts together and presents these numbers, this growth for the Low country has seen approximately a 3%-6% increase in values per year. Some would argue this number is too high and maybe distorted by the fact the area sells in waves with one category of properties selling at a higher rate of appreciation while other areas remain stagnant. But, the stagnant areas also catch their wave in due time; often within 9-18 months, and their values increase as well. There are also discrepancies within categories of homes that may cause some to feel the prescribed appreciation level is off. For example, the high-end category ($1M+) has seen polar extremes in its inventory and values. On one end, you have new homes or recently remodeled homes that are selling for more money, with less time on the market than homes that have not had anything updated. Those that have remodeled or are selling new say this market is booming. Those that have dated properties say it’s been stagnant. However, the point remains that across the board in the Low country properties values have steadily increased for almost a decade. More importantly they have done so without major spikes; i.e. bubbles. Red Flags When anything grows to quickly it should raise a red flag and cause for concern. The real estate industry is no different. However, the current market has had slow steady growth leaving one to wonder where a collapse or drop might come from? I am not a licensed investor, nor do I play one on tv, but if you look around the various markets for things that may send a shock wave through the country, and thus a readjustment of values for everything (not just real estate), you may find a couple of things. The two most obvious red flags would be the stock market and the college loan system. The stock market and Dow Jones Industrial Averages have seen exceptional increases the past decade (from lows of under 10,000 almost a decade ago to 20,000+ today). Tuition at today’s universities has skyrocketed (higher demand = higher prices) The college loan system closely resembles the mortgage industry of a decade ago. It has been raging out of control for many years and resembles a ticking time bomb. Should one of these entities experience a major shock; a stock market readjustment or a credit fallout from the federally backed college loans, there would be a ripple effect throughout the country effecting everything; prices of goods, services, and even real estate. Where some go awry Throughout history there have been some very educated and smart people that have tried to time the market in all industries; real estate, stocks, etc. to no avail. Knowing this, buyers and sellers still try to pick the best time to buy/sell but this is often at a cost. If there’s an added variable to prediction it is that today’s market is continually changing. (Read my prior post on ‘List now, List later, Could it cost you?’). Most homeowners or buyers don’t have the time or wherewithal to study the market daily. If those that do study things regularly cannot predict the market correctly why would those that don’t study it at all be able to? Tangents Too often people get caught up in tangents; i.e. symptoms, which push them away from the cause or main reason of the thing they want. When someone wants to buy or sell a property fear is something that drives them off on a tangent and they ask, ‘What about…?’, ‘What if…’, ‘Is there a decade long drop coming?’ For buyers, they forget the real reason they’re buying, especially here in the Low country; 1) a place to live and/or 2) a place they and their family can enjoy for years to come. The Low country has always fallen into the long-term strategy category as far as real estate is concerned. You’re not necessarily going to make money flipping property but it is a phenomenal place to live, enjoy on vacation all while maintaining a solid return on your investment; financially and memorably. It’s an invest and hold type model utilized by those that play the long game instead of the get rich quick scheme. If you keep this in mind and understand that markets ebb and flow but are always on a continual rise, it may just ease your mind and allow you to enjoy that piece of property you have been waiting to buy/sell. Besides, are there not other things in life to do than worry if today or next month is a better time to do something? Time is the only resource that once spent can never be recovered. If you carelessly waste it on the minutia of trying to time the market, you may end up losing more than you gain. For decades, the way of predicting markets has been done the same; look at what the trend is over a given period, determine the average then apply that average to the future. Depending on the amount of data used; sales price, size of property, days on market, etc. these predictions can seem relatively adequate. However, what if predictions could be made more accurate? Wouldn’t that allow you, as a property owner or buyer, have more assurance the value of a given property was correct and how to prepare for what was coming in the future? If you answered ‘yes’ to either of these questions, continue reading…
The Traditional Way As each year passes those that are top producers get closer to retirement and a new wave of realtors have their eyes set on becoming the next top producer(s). The up and comers promote the latest gadgets to help you with the selling/buying process while the seasoned vets argue they know the market and have a better sense of it than anyone else. The common denominator with both is the way they analyze markets and how they come up with their predictions of where the market is headed. Because they use similar data, often from the same source, and analyze it in similar ways their predictions are often similar. When they’re right everyone’s happy. When they’re wrong the explanation of ‘You can’t account for all variables.’ is often cited. Could it be they left something out or maybe didn’t consider things outside of the traditional data? Understanding the Variables Since the 07’/’08 credit crisis the appraisal process and the way it is handled has changed. Whether this is a good thing or bad thing is outside the scope of this article, but, understanding how this process works, how it has changed over the years and how it affects your ability to buy/sell is of the utmost importance. Many of the better realtors understand this and take it upon themselves to learn the process of how lenders determine value. For example, if there has not been a third-row home sell in the past 90 days but there have been 2 second row homes and 1 fourth row home sell within that time frame, using the sold properties is what the appraiser often works with. This may seem like an apple to orange comparison but knowing how to turn it into an apple to apple comparison is what separates the good realtor from the better realtor. This know-how would include, but not be limited to, equalizing the properties. Criteria to equalize would include the year built and depreciation percentage on an annual basis, size and value of price per square foot (appraiser value NOT builder value) for that particular area, weighing updating vs non-updated and the value an appraiser would give each (again NOT the retail value), plus a number of other things. Even knowing how to do this does not always yield a better prediction of the future than the traditional way. In fact, it may even come out to the same prediction as the traditional analysis. The Prism Depending on how you look through a prism you will see one of two things 1) light as we normally see it or 2) refracted light and all eight wonderful colors. To the naked eye the beauty of eight colors are hidden, but if you know how to adjust your perspective and look where others haven’t, you are given an eye-opening experience. The same is true in real estate market forecasting. While many are busy looking at the light in the traditional sense; i.e. looking at the trends of the past in order to predict the future, in my opinion that is only one half of the equation. Not only do I look at what everyone else is looking at (what's selling and why?) I also look at what's not there (what's not selling and why?) Hilton Head Island and Bluffton real estate have always sold in waves, meaning a certain segment of the market will sell extremely well for a given period of time; often 9-12 months, while other segments remain idle. As the sales and values of the current market segment (or wave) go up the stagnant market prices remain stable. After a period of time the stagnant market begins to appeal to buyers (because the prices did not increase as the others have) and that market begins to pick up; catch its wave, as the other market slows down (it's wave comes to shore). Knowing both sides; what is selling (what you can see) as well as what is NOT selling (what you can't normally see unless you're looking for it) is imperative to predicting what's going to happen. Let me give you another example, in 2014 & 2015 the high end market on Hilton Head Island was selling very well. I was one of the few that predicted that would slow down in 2016 and caught a lot of grief over it; many said I was being negative, but that market came to a screeching halt in early 2016. However, in late 2016 I also predicted that market would pick up in early 2017 (which it did) and would slowly improve as the year went on (which it's done). Much to the chagrin of my competitors and their predictions, or lack of. I don't have a crystal ball but what I do have is a burning desire to make sure all my clients have all the information they need to allow them to be better prepared for what 's coming. If you're selling a property I can guide you on where the markets headed so you know whether to take an offer because the future of your market segment is going to slow down and now is the time to get out, or hold out for longer because the market will be increasing and holding on for a while longer will yield you more money. f you're a buyer, I guide you on whether you should pay a little more now, because that market is about to go up, or if its going to decrease, you hold firm on your negotiations because you know that markets going to stall, at least for the near future. Either way I don't mind doing that extra work and doing things uniquely and differently because it has helped everyone of my clients in the past and I'm sure i'ts going to help everyone in the future. If nothing else , it will help you retain two of your most valuable assets: TIME & MONEY. The culture of any entity; a company, organization or community is something that is planted early on by the founders/developers and evolves over time. Sometimes the culture grows into something different from what was originally envisioned and sometimes the culture remains the same. Time dictate’s which direction will be followed. The most important thing to understand is the culture of anything is defined by those within. As it relates to a community, that means the homeowners. What is an organization, nation or a community? It’s a group of people with similar values and beliefs. When you have a group of people that share similar values and beliefs, a certain level of trust develops and from that trust, an amazing culture develops. If you’re having doubts, consider this scenario. You’re sitting in the London airport waiting for your plane. Someone you have never seen before sits down, across from you, wearing a sweater with your community logo on the front. What’s the first thing you do? Do you perk up because they probably live in the same community as you or, do you go back to whatever it was you were doing and not say a word? Your demeanor perks up! Why? Because you know that by wearing that logo, they most likely live in your community and if they do you have more in common with them than anyone else in London. By choosing to live in the same community you both share a culture that adheres to your values and beliefs and because of that it’s much easier to trust them, even if you have never met them before. Your immediate reaction is to say ‘Hey, you live in Such N' Such Community? So do I…’ and you probably sit there and talk as friends, even though you’ve never met before. The same thing doesn’t happen if that person has a logo you’ve never seen before, does it? That’s how strong community cultures are. Why is this important? For any community, knowing your culture is not only the first building block, it’s the cornerstone to understanding what your community is, what it represents and what it stands for. It’s the magnet for attracting others with similar values and beliefs to your community. If a community doesn’t know what it stands for then how does it know how to market itself? How do buyers know if they like it or not when there’s little to identify with? The good communities always know what they are, what they stand for and who they want to attract as homeowners. As stated, this is often attributed to the vision of the communities developer(s) and those entrusted with the leadership of the community over the years. This is important because what a community wants is for those looking to move into that community to appreciate the culture it has. If they don’t, the relationship never works. If the buyer and community want the same things, it becomes a match made in heaven. When the latter is the case is when people say ‘It just feels right’ or ‘I know it in my gut’. What they’re really saying is they identify with the community and what it represents. Whether they realize it or not, people buy into cultures more than they do houses. Why is it important that I know this, and what benefit is it to you? Everyone markets a property, obtains a buyer and negotiates for you when listing your house, condominium or lot. However, what if that process could be hacked and streamlined to produce a better more efficient result? Understanding the culture of a community allows me to do just that. By marketing specifically to people that are looking for a particular culture you get direct access to people that want to be a part of the community. This works to your benefit in multiple ways; 1) it makes it easier to obtain a buyer and 2) negotiations go very smoothly and more in your favor. Why? Because when I can identify someone that has a deep desire to be part of something like your community, ‘selling them’ is not required. They already want what you have and the result is you having the upper hand before the negotiating ever starts. I know this because I’ve done it to sell properties in areas that had been sitting idle for extended periods of time when others struggled to do the same. Not only does this give you an advantage in the selling process but makes the entire experience much easier allowing you to save two of your most valuable assets; time and money. Understanding how to utilize the culture of a community to your advantage, whether you are buying or selling, is one of my specialties. In fact, it's one of the most advantageous things I do for the clients I work with and it's what allows buyers to enjoy their new home and area and what allows sellers to sell in less time, for more money and with limited interruption to their life. QUESTION OF THE DAY: Do you think understanding 'Culture' is an advantage when buying or selling real estate on Hilton Head Island and/or Bluffton? Did you enjoy the article above? Please let us know your thoughts in the 'Comments' below, on the PNP Facebook page or on Twitter @PNPRE Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. 2/24/2017 Leverage 101: How to use it to your advantage in an ever-changing real estate market on Hilton Head Island and BlufftonRead NowLeverage (lev-er-age) verb : using borrowed capital for (an investment), expecting the profits made to be greater than the interest payable. We are into the new year by only 7 weeks and already seeing near record sales numbers for Hilton Head Island real estate and Bluffton real estate. For those that have been following and reading my articles for the past 8 years you know that I have been preaching the virtues of buying since the market fell out in 2008. Some of the greatest fortunes throughout modern history have been made by anticipating what was coming and those with the ability to do so are the ones that gain the most. For the best example of this I direct you to Sir John Templeton and how he went from literally nothing to billionaire. Some call him an opportunist but what he really had was the ability to anticipate what the future held. He ended up using his wealth to do good by creating the Templeton Prize which some view as bigger than the Nobel Prize. Some of the reasons cited for the increase in sales of real estate on Hilton Head Island and Bluffton is the positive outlook on the future of the market, the ability to anticipate what is coming and the desire to live a lifestyle people have worked their entire life for. The outlook for the future appears to be clear to those that have been buying property; i.e. they are anticipating something and in the opinion of this author that anticipation is utilizing leverage to their advantage so they can start enjoying the life they have always dreamed of. How? With the financial crisis of 2008 markets crashed and one of the reactions by the Fed was to lower interest rates. Rates have been kept relatively low since (whether you believe that has been artificial or not is beyond the scope of this article) and overwhelmingly to the benefit of the real estate market, even if many have not yet taken advantage. Because you cannot artificially keep interest rates down forever, they have been slowly moving up for a number of years. Where we once enjoyed interest rates in the 3% range we are now seeing rates in the 4%+ range. Suffice it to say, interest rates are NOT going lower anytime soon and are only headed in one direction. To illustrate how this effects todays buyers let me give you a common scenario. Assume you have been considering buying but for whatever reason have decided to wait. While waiting the Hilton Head Island and Bluffton markets have seen steady increases in sales, prices and a reduction of inventory. Simple laws of ‘Supply & Demand’ tell us what happens in this instance; increasing sales + lower inventory = higher prices. Simultaneously, interest rates have also steadily increased. The property you were looking at last year at ‘X’ price has now increased to ‘Y’ and with higher interest rates your buying power has decreased by more than just the price of the property. The increased interest rate has also increased the overall cost to you. Let’s take three different price points and their differences in interest rates to compare: Purchase Price 3% rate (mo. payment) 4% rate (mo. payment) $300,000 $ 1,012 $ 1,150 $600,000 $ 2,100 $ 2,360 $1,200,000 $ 3,650 $ 4,130 *This scenario is based on certain assumptions and used for illustration purposes. It is not to be construed as actual numbers for everyone looking to buy **These numbers were calculated utilizing a credit score rating of 740+ and a minimum of 20% down payment. Loan amounts more than $424,100 are considered jumbo loans in South Carolina and have different parameters for down payments and rate based on sales price. In the scenario above it was a ¼ % higher rate. ***Monthly payment includes principle and interest only As you can see the increase of 1% in interest rate can cause a difference in your monthly payment and decrease your purchase power. This doesn’t include the increase in sales prices overall for the area! If we have a mere 3% increase in prices of property of those mentioned above they would be $309,000, $618,000, and $1,248,000 respectively. (NOTE: the average sales price of real estate in many parts of Hilton Head Island and Bluffton has exceeded 3% annually for the past 3-5 years and in many communities, has averaged a 6%-8% sales price increase per year) Not only would the purchase price go up but so do other costs because the amount being borrowed is now greater; financing 80% of $309,000 is more than 80% of $300,000. There are times when patience is a virtue and waiting is the correct thing to do. However, the past 8 years has not been one of those times as it relates to purchasing real estate in the Hilton Head Island and Bluffton areas. The lone exception would be if you could not find the property you wanted and waited, albeit a short period, for a property of your choosing to come onto the market. However, rationalizing and talking yourself out of purchasing now only increases the cost later and as illustrated, lowers your purchasing power. That dream condo, lot or home you have been dreaming about for years that you passed on is now that much more expensive and going up as time goes on. The crazy thing is that is not the worst part. What’s worse is you have put living the Island and Low country lifestyle, the one you have been working so hard for, on hold. We may see another downturn in the market in the future as it ebbs and flows, but with the current growth being steady, as opposed to large jumps, I don’t foresee a downturn happening for quite some time around Hilton Head Island or Bluffton. With that, the longer you wait the greater the cost to you. I have been advocating taking advantage of a buyers’ market and low interest rates for almost a decade. We are now in one of the rare times of a market where it is advantageous for buyer’s and seller’s alike. Opportunities like this do not come around very often and if you procrastinate too long, you’re going to miss out on a great opportunity. One that allows you to use leverage to your advantage. If you don’t believe me, just ask the many property owners in the area, or those I have worked with, if they ever regret their decision to purchase and I’m quite certain what the answer will be. If you’re still not sure, call me and I will tell you. QUESTION OF THE DAY: Do you agree/disagree that using leverage to your advantage is the thing to do in today's real estate market on Hilton Head Island and/or Bluffton? Did you enjoy the article above? Please let us know your thoughts in the 'Comments' below, on the PNP Facebook page or on Twitter @PNPRE Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. It has been the golden rule since the beginning; when buying property there are three rules to follow: 1) location, 2) location and 3) location. However, in an ever changing world, where nothing seems to be what it was five years ago, this is no longer the case. This is especially true as it relates to Hilton Head Island real estate and Bluffton real estate. How? Technology has changed our lives forever, and continues to do so. It allows people access to almost everything simply by using their phone or computer. But there is a trade off; more things to do = less time. Think about it, do you spend more physical time with your family and friends or do you follow them by using technology such as Facebook, Twitter, etc.? If your loved ones are off doing other things doesn’t that take away from time spent with you? Understanding this, you can see how ‘time’ has become one of the most valued commodities in today’s world. As I discussed in my last post 'Carpe Diem-The Great Stall: 2015-?' more and more people have the means to visit Hilton Head Island and Bluffton, but at the same time they are bringing their work with them. As a result, they don't have the abundance of time they once had and are scrutinizing to a greater degree what they spend their time on. The New Criteria Time and convenience have slowly replaced location as the leading criteria in real estate purchases. With so much going on in their lives, a buyer’s time is at a premium and the last thing they want is to be inconvenienced. This is illustrated by the increased sales of high end homes further from the beach than ever before while high end homes near the beach are sitting idle; i.e. for the same price buyers are purchasing new or updated instead of location. Shows such as ‘Property Brothers’ and ‘Fixer Upper’ are showing people what a house can look like but instead of doing the updating themselves they want it done already. They don’t have the time to remodel and when you’re new to an area finding capable craftsman can be an inconvenience, not to mention having to select colors, tile, etc. These things take time, which is in limited supply. In today's world things seem to change faster and faster. These changes present opportunities that are there for the taking if you know how and where to look for them. If you are wealthy in time, the beach oriented house in need of updating maybe for you because you have the time to spend doing so. To others who have the financial means but limited time there is the already updated or newer home further away from the beach or off the island in Bluffton. We all make choices in life and these choices are based off our experiences, beliefs and things we have to work with; i.e. our resources. Whatever category you fall into in there is something here for everyone. I know, I see it all on a regular basis and enjoy matching people with the property that meets their criteria. As technology changes, people and markets will change too. The ones who can adapt to these changes are the ones who will take advantage of them. How do you stay current on such changes when your time is a premium? Simple, use someone who spends their time endlessly researching such things. Use Pete Popovich and PNP Real Estate by calling 843.842.0804. QUESTION OF THE DAY: Do you agree/disagree that location is no longer the leading criteria in real estate purchases? Did you enjoy the article above? Please let us know your thoughts in the 'Comments' below, on the PNP Facebook page or on Twitter @PNPRE Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. Carpe diem is a Latin aphorism, usually translated "seize the day", taken from book 1 of the Roman poet Horace's work Odes (23 BC). While the Hilton Head Island and Bluffton real estate markets have continued to see continual improvement for quite some time in the <$1M categories, the upper end market ($1M+) has had a more difficult time. This lends itself to the questions: 'What happened and why is this happening, particularly on Hilton Head Island?' and 'How does this effect you, as a buyer or seller of real estate in this category?'; i.e. how can you take advantage of the opportunity or seize the day. The upper end home market ($1M+) has not rebounded the same way other segments of the market have. For example, homes <$1M have been selling on par, or better than years past yet the $1M+ has remained in a stall. Early theories on 'Why?' revolved around the secondary homeowner property tax structure (secondary homeowners pay 6% of the assesed value, instead of the 4% primary homeowners pay but the multiplier is higher for the secondary home and equates to a 2x-3x greater amount in property taxes than that of a primary home). This theory developed shortly after the credit crisis of 2008 where everyone was looking more closely at what their overall costs were and location was becoming less of a variable in the purchase decision. During this time, areas outside of Hilton Head Island started to see increases in sales and prices in the upper end category. Areas such as Destin, Florida have been experiencnig homes selling in the $5M+ range while the highest we have seeen of late is just shy of $4M. Recently, I have witnessed increasing sales and prices in places such as Palmetto Bluff (here locally) and Daniel Island, SC (just up the coast outside of Charleston). SIDE NOTE: The common denominator with both Palmetto Bluff and Daniel Island is 1) the location of both are further from the beach than the developments they compete with. For Palmetto Bluff that would be Hilton Head Island and for Daniel Island it is Isle of Palms and Sullivan's Island. 2) Palmetto Bluff and Daniel Island both have newly built homes in newer communities that creates an exciting vibe while Hilton Head Island, Isle of Palms and Sullivan's Island are more established and have a deeper history. The tax theory was supported when high end homes were selling in Florida, but with them selling in other communities in the HIlton Head Island and Bluffton areas the theory no longer held water. Palmetto Bluff and Daniel Island have been and continue to sell high end properties at a rate that outpaces other area communities. The Reasons The world we live in with advances in technology, has given a larger number of people the means to purchase upper end real estate. Cell phones and personal computers allow buyers to work abroad, meaning they can visit the island more often than years past. While they may be here, the amount of time they have to spend on various activities is limited so time has become one of their most valued commodities and what they do with their time is scrutinized more than ever before. As a result, when looking to purchase real estate, time and convenience are more heavily weighed into the buying equation than decades past. Not from the standpoint of how long it takes to look at, put under contract and close on a property, but from the standpoint of how much time can be dedicated to making the home the way a buyer wants it. Personalizing a home takes time and when time is in limited supply buyers have been opting for the newer house and development, even if it is quite a bit further from the beach. Because of the rise in popularity of home TV shows, more of today’s buyers are better educated and know what they want the interior to resemble. With high demands on their time their first choice is to purchase a house with that look already. What this means is convenience and time have taken over location as the top priority for today’s buyer. Waves? Real estate on Hilton Head Island has always sold in ‘waves’. What that means is segments of the market can stand idle for periods of time before they become such a phenomenal value the market cannot resist them any longer, despite buyer rationale. I predict the high end market on Hilton Head Island will pose such a tremendous value to buyers that they will start to reevaluate the allocation of their resources; i.e. time and convenience vs. money and location. Our upper end market has been idle for some time and is prime to catch its ‘wave’. As the market realizes the tremendous value this segment offers we will start to see the tide change and before you know it the ‘wave’ will be here. But…you have to be ready to take the ride. By this I mean you must be ready to take advantage of it. While part of my magic is asking better questions and finding you the answers, the other part is showing you how to take advantage of the opportunity. For buyers - this means knowing which areas and properties allow for the greatest increases in value going forward. Where can you invest your time, money and effort and get the greatest return? That is where I come in. I follow, study and know these areas and which offer the best ROI. If you don't believe me ask yourself who else has offered as detailed explanation on what's happening in the market and where the next increase in price and value will come from? For sellers - the above clearly illustrates I have a phenomenal understanding of what today's buyers are looking for. It allows me to help you to sell your property in the least amount of time while others are left scratching their heads. It's what allowed me to put under contract a $1.5M house TWICE in less than 14 months (the financing fell through on the first buyer) where others were having difficulty getting offers on theirs. You have to know what it is you have before you can develop a plan for advertising and marketing and you have to understand who you are marketing to so you can explain to them the benefits of the item being sold, in this instance a house. There are few who understand it to the depths I do. My past clients understand this and if you're reading this hopefully you will as well. QUESTION OF THE DAY: Why do you think the upper end market has seen a stall? Did you enjoy the article above? Please let us know your thoughts in the comments link below: Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. "And those who were seen dancing were thought to be insane by those who could not hear the music.” -Friedrich Nietzche Many consider purchasing real estate but when it comes time to actually take the leap; buy, a lot of buyers wait. I've heard all the reasons; 'We're going to wait until after the election.', 'We're going to see what happens.', etc. Those that illustrate such are often the ones that miss out. In the past few years interest rates have been at historic low's and prices in some parts of the country have not seen levels that we are today since the early 2,000's. If you're waiting for things to 'get better', or until you 'feel right' you may miss out on a fleeting opportunity, at least here in the Low Country of Hilton Head Island and Bluffton. A large number of my clients, those that have purchased in the past five years, have taken advantage of low rates, low prices and are now the ones 'seen dancing' while those that continue to seek a real estate Nirvana are wondering 'Are those people dancing about insane?' For some of you there are things in life that don't allow you to take such a leap. But, for those of you who have rationalized over and over why it isn't the time to turn the page on the next chapter of your life you are missing out on a prime opportunity. Interest rates have slowly gone one way for the past 18 months (if you haven't been paying attention that way is UP) and they will more than likely continue to move that way in 2017 (after all if they went down anymore it would be free money). As a very young real estate assistant in the late 80's I can remember the double digit interest rates. Buyers were overjoyed when they got something closer to 10%, compared to the near 20% of the early 80's. Now we're in the 3% range AND prices are still amazingly low considering the location of Hilton Head Island and Bluffton and what you get as far as value. Many of you have worked your entire life, or close to it, for a chance to live the good life. You've dreamed of what that good life would look like and through the years have loved visiting the tropical paradise known as the Low country many of you have mentioned, 'I can't wait to make the jump and get down here.' Don't you think that time is now? Don't you think you've earned it? How often in life do you come across a Perfect Storm; a time when interest rates, prices and opportunity all come together... this is one of those times. It's your time to start dancing and allow someone else to be deaf to the music you so much enjoy. QUESTION OF THE DAY: What did you think of waiting too long and the increased odds of missing out on a 'Perfect Storm'? Please let us know in the comments below: Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. It has been the rule of real estate from the beginning; when buying property there are three rules to follow: 1) Location, 2) Location and 3) Location. However, in an ever changing world, where nothing seems to be what it was a short time ago, this is no longer the case. How? Technology has changed our lives forever, and continues to do so. It allows people access to almost everything simply by using their phone or computer. But there is a trade-off; more things to do = less time. Think about it, do you follow your family and friends by using technology such as Facebook, Twitter, etc.? If your loved ones are off doing other things doesn’t that take away from time spent with you? Understanding this, you can see how ‘time’ has become one of the most valued commodities in today’s world. The New Criteria Time and convenience have slowly replaced location as the leading criteria in real estate purchases. With so much going on buyer’s time is at a premium and the last thing they want is to be inconvenienced. These are the major reasons buyers are looking at new or remodeled homes. Shows such as ‘Property Brothers’ and ‘Fixer Upper’ are showing them what a house can look like but instead of doing the updating themselves they want it done already. They don’t have the time to remodel and when you’re new to an area finding capable craftsman can be an inconvenience. As technology changes, people and markets will change too. The ones who can adapt to these changes are the ones who will take advantage of them. How do you stay current on such changes when your time is a premium? Simple, use someone who spends their time endlessly researching such things. Use Pete Popovich and PNP Real Estate. QUESTION OF THE DAY: What did you think of location no longer being the leading purchase criteria in today's world? Please let us know in the comments below: Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. Want to receive our '5 for Friday'? It's easy, just subscribe below: "We have a strong instinct to belong to small groups defined by clear purpose and understanding--"tribes." This tribal connection has been largely lost in modern society, but regaining it may be the key to our psychological survival." - Sebastian Junger Hilton Head Island and Bluffton are full of communities to select from and trying to choose which to live in can be cumbersome. Communities on Hilton Head Island and in Bluffton come in all different shapes and sizes, each offering something for everyone; private-resort, gated-nongated, golf and tennis, pool-ocean, community rec areas, the list goes on and on. While many may appear to be similar from the outside, once you get into the community you may find they differ significantly and for good reason, each caters to a different type of owner. Many like to say that buying a house is equivalent to buying ‘a box’ and that box sits inside a larger box which is the community its located in. To me this is an overly generic statement and may serve the purpose of simplifying what can become a tedious process but leaves out one of the most important factors in the house selection process, i.e. the culture of the community. Whether you realize it or not, it’s the culture of the community more so than the house you buy that endears you to it. The culture is what allows living within that community to be a pleasure. Live in a community where you clash with the culture, or it doesn’t suit you and your beliefs and every day may feel like an eternity. One of the bi-products of those adhering to the same culture is trust. Without trust as a building block it is difficult to build anything. When you trust those you live around and they trust you, life is so much easier, is it not? For a detailed illustration I would recommend ‘Tribe: Homecoming and Belonging’ by Sebastian Junger. In this New York Times best seller, Junger lived with the American Indian’s of the Southwest while doing research for his master’s thesis studying what it is that allow tribes (communities) to develop trust, a common purpose, responsibilities for certain things, etc. He went on to become a wartime journalist, spending time in Afghanistan with American soldiers. What he found there, which was baffling, was with all the atrocities soldiers see on a regular basis, in some strange way when they returned home they missed the war. As he suffered from his own version of PTSD he started digging more, conducting further research and found when people within a group routinely look out for and help others within the group, even if it means giving up their own life for the protection of others, an unbelievable bond is formed. It is this bond becomes the foundation for the culture of the group. According to Junger, this is also the case with Peace Corps workers that spend time in third world countries for extended periods of time. They grow used to the feeling of ‘community’. Void of the nuances and caste system their own society imparts on them. Yet when they return home they have extremely high rates of depression. The depression is similar to the military and their struggle with PTSD. What the research is discovering is after spending so much time as a cohesive group, soldiers and workers are returning to a society that is singular in its nature. It’s the complete opposite of what they are used to, as part of a unit or group, and assimilating back into society becomes extremely difficult. What does this have to do with selecting a house? When moving to the Hilton Head Island/Bluffton area it’s easy to find the right box; i.e. a house. For many real estate agents, knowing each community is not a difficult thing either; i.e. it has three golf courses, beach access, amenity center, the list goes on and on. However, knowing the culture of each community, how it differs from others and pairing that up with what you are looking for is an art. As an art it is developed and refined over time. For 23 years I have lived in the Hilton Head Island/Bluffton area and observed each community, some as they were being developed and others as they developed their own culture, to determine what each represented and the subtle differences that make one a better fit for one buyer versus that of another. This may seem like something small and possibly something you can forego when moving to the area but too often I have seen people move here only to want to move to another community down the road a year later because they like the people more. A word to the wise, it’s not only the people they like better but the culture those people have created and represent. If you understand that early on you can save yourself the trouble later. Not only will you enjoy everything your neighborhood has to offer but it will be as if you found the fountain of youth as your energy and joy are elevated to a level not experienced since your youth. The excitement of learning more about your surroundings, things to do and people to meet will be revisited. It will be as if you found Nirvana. QUESTION OF THE DAY: What did you think of 'culture' as a way of selecting a community to live in? Please let us know in the comments below: Have a topic you would like to learn more about? Tell me what it is, in the comment section below, and I will be sure to add it to our list of things to write/discuss. Comment rules: Everyone has an opinion and can voice it in the 'Comments' section below. However, respect is a must. If you choose to be disrespectful your post will be deleted. Please refrain from adding URL's and use your personal name NOT your business name. Enjoy yourself and thank you for adding to the discussion. |
Details
PNP Real EstateOur goal is to help you Buy or Sell your property in a timely fashion by providing you with all the information necessaryFor answers to all your questions contact us at (843)-338-6737. Archives
February 2018
Categories
All
|