There has been a dramatic increase in Hilton Head real estate sales over the last four to five weeks.   July and August are the busiest months for vacationers visiting Hilton Head Island and short-term rental activity is at its peak.  But historically, July and August have never been great months for real estate sales on the island.   Typically, the properties that do sell during the summer months are primarily in the lower priced category ranging from $300,000 to less than $1 million.  Most higher end Buyers show up in the Spring and Fall to avoid the crowds.  As experienced Hilton  Head Island visitors, they realize access to ocean oriented homes during the busy rental season is almost impossible.

Not only has July and the first two weeks of August real estate on Hilton Head been much busier than expected in terms of the number of sales, but many of the properties that are attracting the attention of buyers are priced in the $3 million and up range.  In fact, we had two recent sales over $6 million.  This is a real phenomenon, but much needed positive news.  Inventory has been building for almost four years to a supply of historical proportions and the higher end price tier has suffered the most.

So why all of a sudden has sales activity increased at a time of the year that is not usually very busy?  Why are the buyers that are purchasing these higher priced properties showing up at a time of the year they never usually buy?  I believe there are a few factors in play that help to explain this phenomenon.  First and most importantly, buyers recognize the opportunity and value that exists in the Hilton Head marketplace with property selling at 2000-2002 price levels.  Many Buyers are in a strong cash position as a result of liquidating equities during the steep market declines and other Buyers are taking profits off the table by selling stocks that have benefited by the run up in prices over the last few months.

Obviously, this is all great news for Hilton Head after four very long years of depressed market conditions.   The increase is sales activity does not mean prices are on the re-bound.  Prices are expected to continue falling into 2010.  Inventory levels must be reduced substantially before values stabilize and once prices hit rock bottom, expect a flat market for a year to a year and a half.  Historically, there has been approximately a two year lag between price appreciation and sales activity.  This would mean the Hilton Head Island real estate market could see the first signs of a return to Seller’s Market conditions in 2-3 years