As a real estate agent, I’m regularly asked to provide my professional thoughts on what the real estate market is doing on St. Simons Island. My answer typically begins with a review of recent market activity and a series of professional observations. After which, I pull out my crystal ball and predict what the market is going to do in the future. I call this my...
SSI Market Report...
I don’t REALLY use a crystal ball. I focus exclusively on the St. Simons and Sea Island market, and I closely track sales data that I use to evaluate demand, supply, and best pricing strategies for every client we represent. It is with confidence that I recommend strategies for achieving the highest sales price; or if you are a buyer, a purchase price that reflects a property’s true value.
Demand
Patrick Parker, a long-time resident of East Beach and owner of Parker’s convenience stores, recently made the observation that it may have been his purchase of Villa de Suenos that started the bulls (Buyers) running toward the East Beach market. In the Summer of 2020, I represented the sale of that iconic home at the end of Bruce Drive that was and remains the highest price ($4.2 Million) paid for a home on St. Simons Island.
In the spring of 2020, demand for homes dramatically increased. It was largely driven by the migration of families from urban areas seeking the coastal lifestyle of the Golden Isles. Buyers came from Atlanta, where St. Simons has always been well represented, and throughout the major Northeastern cities such as New York and Boston. Often, buyers made offers sight unseen. Home sales went from a total of 735 in 2019 to nearly 1100 in 2021, an increase of over 30%.
Buying Frenzy. At the end of 2021 and into early 2022, interest rates were predicted to rise, and buyers reacted by entering the market at record numbers. Buyers outnumbered available inventory. What resulted was a buying frenzy. Investors drove up values in income-producing properties, and traditional homebuyers seeking their next home saw prices escalate rapidly. Between the end of 2021 and the middle of 2022, the average value of a home sold on St. Simons increased by over 20%.
The FED's May and June interest rate hikes have cooled the market. Recently, the May and June rate increases, along with uncertainties in the broader national economy, have eased buyer's demand. A snapshot comparing year-over-year June sales numbers on St. Simons shows a 25% reduction in the number of sales AND an all-time high average value of a home sold at nearly $875,000.
Supply
More listings are on the market today. Anticipating an interest rate increase, Sellers made the decision to list their homes ahead of the May/June increases. In the last 4 months, available inventory increased from 80 available in March (before the uptick in interest rates) to 96 in April, 120 in May, and now 138 in June.
This is still a very tight inventory of available homes. Prior to 2020, St. Simons averaged over 350 homes available at any given time. This recent uptick in inventory should give both buyers and sellers more confidence to move up or down, depending on their needs.
Values
Over the last 2 years, we have seen the average price of a home on St. Simons increase from $518,000 to over $779,000. The most recent monthly numbers showed the average price for a St. Simons home sold in June was nearly $875,000. While there were fewer sales, the values have continued to rise on average.
As inventory increases, seller competition may moderate values. Additional interest rate hikes are forecasted for later this year, and rate increases will also moderate values. I believe pricing has leveled off for the time being. Cash buyers may wait and see what the market does, otherwise now is a good time for buyers to lock in interest rates before they rise again.
St. Simons has traditionally been undervalued compared to other luxury markets on the East Coast. It is an island with a finite amount of property for development with only about 1% growth per year in new construction inventory. Having natural growth constraints and increasing demand for the outdoor lifestyle should ensure that property remains scarce and values continue to rise. Older housing stock with deferred maintenance and/or property that does not have access or views to the beach or water will likely not see the same increases in value.
Lifestyle choices drive values. Proximity to the beach and water and the lifestyle associated with a property may be the biggest value determinate for our next generation of island buyers. As the population continues to age, we’ll see more and more retirees willing to pay a premium for ease of living, green space, and proximity to restaurants, shopping, and medical services. Lastly, location on the island will become more critical as the island becomes more populated and our roads and bike paths become more congested.
