In our previous article we discussed four steering factors that we are paying close attention to as we look to the year ahead for real estate in the Lowcountry. Here are some others that we find equally pertinent.
Market Pixelization: From 2020 to 2022 and from coast to coast in the U.S., the real estate market reflected pretty much one distinct color: red hot! But as interest rates increased in 2022 and buyers backed away from paying ultra-premium prices, the color of different markets began to change and vary from one another … thus, pixelization began.
We expect that this variation will become increasingly evident from market to market, both nationally and locally. Sub-factors such as affordability, taxes, insurance, rentability, POA dues/offerings, density, traffic, property condition/age/updates, and many others are likely to serve as the basis for greater buyer discrimination in the coming year.
Lowcountry Climate: Punctuated by the unprecedented rains out West and the deadly snowstorms up North this winter, we suspect that already-established migration trends from those locations into the Southeast will gain momentum in 2023. Time and time again when we interview people who have moved to this area, we hear how the Lowcountry is distinctive, given its moderate seasonal changes, its year-round outdoor offerings, and predictable climate. If the Southeast is the primary target for buyers this year, we believe the expanding Lowcountry is in the crosshairs.
Workforce Housing. Due to inflation, rising interest rates, skyrocketing property values, and long-term rental rates over the past few years, housing affordability in the Lowcountry is a real problem. In a market area so dependent upon tourism, the continued shortage of available employees is already having a negative impact on many businesses, resulting in limited hours/days of operation, services, etc.
The Lowcountry is having to play “catch-up” on this issue as it works to create and facilitate near and long-term solutions, and we’ll all be watching closely to see what steps may unfold, including the news in early 2023 about some exciting office-to-residential conversion opportunities on the south end of Hilton Head Island!
Rent vs. Buy. This long-lived debate that most of us have faced at one time or another, especially at the time of considering the purchase of your first home, is quite challenging at the moment. The “perfect storm” is at hand with high interest rates, high rental rates, and high resale values, making the decision a tough one no matter what.
Expanded lending options have emerged over the past year, which are helping tip the scale toward buying for those who qualify and who would rather see their monthly payments work toward their own equity growth. Until/unless rental rates settle, we expect to see the pendulum swing toward buying vs. renting. With some 55 million people currently comprising the 28- to 38-year-old demographic, we know the rent vs. buy debate is a lively one across the country.
If you missed it, you can read through the complete article of 2023 Steering Factors in the Annual Market Analysis at CollinsGroupRealty.com/2023-2.
Chip Collins is the broker-owner of Collins Group Realty. firstname.lastname@example.org or collinsgrouprealty.com