The Hilton Head area real estate market has been incredibly successful over the past several years as it is recovering from the Great Recession. Rather surprisingly last year was the strongest EVER IN HISTORY for Hilton Head area home sales! I say “surprisingly” because who would have expected 2013 to be the all-time record for home sales; yet it was. Not only that, but statistics show that this year's home sales market is on pace for another newsworthy showing. One of the primary causes for 2014’s success is the rapid decrease in distressed sales, foreclosures and short sales, which suggests that the area's overall real estate market is settling in for an era of prosperity and stability.
What Exactly is a Distressed Sale?
You may be unfamiliar with the term "distressed sale." Simply put, a distressed sale is either a foreclosure or a short sale:
Foreclosure: a situation in which a homeowner is unable to make full principal and interest payments on his/her mortgage. This allows the lender to take ownership of the property and sell the home, often for a reduced price.
Short Sale: a real estate sale that generates proceeds that are less than the amount owed on the property. An alternative to foreclosure, this occurs when the lender agrees that selling the property and absorbing a moderate loss is preferable to having the borrower default on the loan.
Fewer Distressed Sales are a Good Sign for the Hilton Head Area
Only three times in history have we seen more than 700 homes sold in the first four months of any given year, which occurred in 2005 and 2013, and now again in 2014!In fact, this year an amazing 770 homes have been sold in the first four months, not far from the 803 peak in the first four months of 2013. There is an interesting reason for this slight decrease in sales.
Last year's numbers were bolstered by a plethora of distressed sales. However, these types of sales are now rapidly diminishing as the number of homeowners who are "underwater" is declining. Actually, these distressed sales are down from 228 in the first four months of 2013 to 159 so far in 2014 - a decrease of just over 30%!
This decline in the number of distressed sales goes hand-in-hand with an increase in "normal sales," which have grown 7% in the last year, marking 2014 as the best year for normal sales since the Great Recession started. This is a good indication that the Hilton Head area real estate market has thoroughly stabilized.
A reduced amount of distressed sales go hand-in-hand with in increase in "normal sales," which have increased 7% in the last year. The number of normal sales, as well as the market values for Hilton Head area homes should continue to increase in the coming years.
Prices On the Upswing - What Does This Mean for Buyers?
A decrease in distressed sale inventory will undoubtedly affect those looking to purchase or invest in Hilton Head  area properties. Distressed sales have acted as a significant drag on market values and resulted in lower home prices. With this recent decrease in distressed sales, the median price for homes purchased in the first four months of 2014 was up just over 7% from the same period in 2013. Therefore, experts expect home prices to continue rising over the next few years.
Buyers who want to acquire a home in the area should seriously consider purchasing now in order to take advantage of prices and interest rates that are still historically low. While the median home price is up to $275,000 in the first four months of 2014, the median price is still 30.4% below the peak of $395,000 set in the first half of 2007.
In addition, interest rates remain at historic lows, 4.5% for a 30-year fixed rate mortgage, making homes extremely affordable. This is really something to take advantage of right away because even a seemingly minor increase in interest rates can cost you significantly. For example, when interest rates rise 0.5 percent, home buyers can expect to pay an extra $54,360 over the life of a $500,000 30-year mortgage.
A home that cost $800,000 in 2007 would today would sell for only $560,000 (the 30.4% decrease in value). The interest rate on an 80% mortgage back then would have been 6.34%, but today is 4.5%. The monthly payment on the same home with the 30-year fixed mortgage would have been $3,978 in 2007, and today with the current price and interest rate would only be $2,335. That is a difference of $1,643 per month and a savings of $591,480 over the 30-year life of the loan! Is it any wonder that homes are flying off the shelves?!
More Reasons to Buy Now!
Historically low interest rates are not the only reason to purchase a home in the Hilton Head/Bluffton area. We recently released a new eBook that discusses "7 Reasons Why the Timing is Excellent to Buy Real Estate." This is a guide for smart buyers who are looking to seize the opportunities available in today’s historic real estate market. So what are those seven reasons to buy now?
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The Hilton Head/ Bluffton/ Okatie real estate recession is over - 2013 was the best year for the area's real estate sales ever and 2014 is already ahead in “normal sales.”
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If you're borrowing, money is historically cheap - interest rates are incredibly low and buying now can save you hundreds of thousands of dollars.
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The monthly cost of owning is discounted by more than 41% - with today’s historically low interest rates and median home prices down over 30% has created the opportunity to own at a far lower monthly cost.
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The stampede of Baby Boomers has arrived - in a recent USA Today survey, 42% of this generation reported that the Carolinas are now trumping Florida as the preferred retirement destination.
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The low-hanging fruit is getting picked off - the best buys are often selling in just days of coming on the market and some sellers are even seeing their homes sell for more than list price.
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Creativity is allowing homebuyers to save big dollars - we have used leasebacks, long-term rentals, home building, 401k fund transfers, delayed closings, and creative financing to help our clients take advantage of the deals that are currently available.
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Life is short - why wait to move on with your life and enjoy our Hilton Head beauty and lifestyle?
To learn more about these seven reasons and to find out what they can mean for you, download the entire book at HiltonHeadRealEstateSearch.com/7Reasons.php.
The Bottom Line from your Hilton Head Area Real Estate Expert
If you were waiting for just the right time to buy or sell Hilton Head area real estate, now is an excellent time. Log onto the best real estate search engine in the area, HiltonHeadRealEstateSearch.com, and select some properties of interest. Then contact me at 843.816.0796 with your questions or to schedule an appointment. We will look back a year or two from now and realize 2014 was an incredible time to buy real estate: low, low interest rates and rising, but still low, prices!
Posted by Rick Turner on
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