FEWER AVAILABLE HOUSES MEAN STIFFER COMPETITION, HIGHER PRICES
Real estate broker Michael Manesiotis started the second week in October with one house in his rental home inventory. He knew it would be gone by the end of the week.
“It is amazing the climate we have,” said Manesiotis, broker in charge at Hilton Head Long-Term Rentals. “We can list a property on Thursday and have four or five hits or interested inquiries by Monday.”
The long-term rental house shortage is a result of the scarcity of houses for sale in the Hilton Head-Bluffton market. Homes are selling so fast that sellers are seeking rental homes until they find somewhere new to live. Buyers are renting until they can find a home or while the home they bought is undergoing renovation. As a result, rental rates are rising.
In October, single-family home inventory in the Hilton Head/Bluffton region was 659, down 48.4 percent from October a year ago, according to the Hilton Head Area Realtors and the Hilton Head MLS.
“The buyers are still there,” said Jean Beck, CEO of Hilton Head Area Realtors. “It is the inventory that is low. That is where people are challenged.”
The average sales price was $680,933, up 19.7 percent from the same time last year.
“Our level of inventory is just sort of bouncing along the bottom,” said Tom Reed, president and broker in charge at Charter One Realty. “If you go back in time, end to end, the best year of sales our market ever experienced pre-Covid was 2019. We had the most sales in southern Beaufort County that we had ever seen.”
In 2020, sales declined at the start of the Covid-19 pandemic, with the number of transactions falling below the depressed levels seen during the 2008 real estate recession, Reed said. But once the Covid shutdown eased, sales transactions increased to numbers never seen here, he said.
“In the history of our market prior to the pandemic, we only crossed weekly sales counts of 150 market-wide three times,” he said. “Fast forward to coming out of the shutdown, we went on a tear, averaging over 180 sales per week. It dipped for the holidays and this year took off again.”
Buyers have little leverage, especially when there are multi-bids, in a sellers’ market, Reed said. Before making an offer in this kind of market, buyers should determine what Reed calls their “walk away number.”
“This number needs to be one where they can put their head on their pillow at night and sleep comfortably,” he said, “knowing that they offered the best they were willing to pay and can accept the fact that they did not get the property.”
Delaying a purchase may also cost buyers because prices are rising in a short period, he said.
Sellers thinking about putting their house on the market may want to move up their timeline because no one knows how long this sellers’ market will last, Reed said.
Meanwhile, those in the rental market will continue to find few homes available and pay higher rent.
“We’ve seen a 20-to-30 percent increase in prices on new inventory,” Manesiotis said about the rental market. “Something I would have priced last year at $2,000 (a month), I’m pricing now at $2,400 to $2,500. Existing tenants on renewals have seen increases, but it is a lot less.”
Nationally, single-family rents increased 3.8 percent year over year in September, roughly unchanged from 3.9 percent in August, according to Burns Single-Family Rent Index, which tracks new leases across the 63 largest single-family rental markets in the U.S.
There is nothing to indicate that things will change soon, though it is only natural that the market will slow at some point, Manesiotis said.
“If people maintain their properties, there will always be a rental market,” he said. “Prices may come back a little bit. Sixty-five percent of people own their houses and 35 percent rent. That is the national average. So, there will always be a fundamental need and demand for that (rental homes).”