Hilton Head Luxury Real Estate Update
In the Hilton Head Island Luxury Market (over $2m), statistics show there were half as many sales in the second half of the year than in the first half. However, there were 35% fewer new luxury listings that came on the market in the second half of the year. The net effect was an increase in inventory.
More of a Lull Than a Crash
Despite the recent decline in # of transactions, there are no critical signs of distress in the luxury market. Low inventory contains the ability for buyers to lowball, home values remain fairly stable, and many homeowners are keeping their low-interest rates. The affluent are content to look beyond the short-term turbulence and focus on future opportunities instead. Although prices have fallen modestly during the last four to five months, they are still at near-record levels across North America.
All markets tend to be cyclical, but the major difference in this one was how swiftly this change occurred, as the impact of a weakening economy took its toll on the luxury market. The rush is over, as is the likelihood of fast investment returns and unchecked frenzy of selling and buying of luxury homes. That being said, the last few years have left their legacy on the luxury market and it has a growing influence. This increase has been driven by a growing affluent demographic who consider owning a luxury property a necessity in their asset portfolio. All indications are that this trend is here to stay, although that demand will return to a more sustainable level.