Archive for April, 2009

Hilton Head Luxury Home Prices Were 23% Lower In 1st Quarter 2009 vs 1st Quarter 2008

This brand new home in Palmetto Hall for sale $799,000 has had two price reductions.

Every day there are more reductions of prices of Hilton Head luxury homes.  It seems like the higher the price, the greater the discounts; $25,000, $50,000 and even $100,000 discounts are common.  Recently, I received notice of a beautiful luxury home with swimming pool and three-car garage in a top Hilton Head neighborhood that the owner paid $1.1million for in 2001, made over $100,000 of improvements and now it is listed for $750,000!   If you want more detail, let me know. 

National price forecasts predict year over year price reductions of 6.3% to 19% for 2009.  I have not seen any articles that address this comparison and so I decided to make a sampling and find out if our luxury Hilton Head home market was following national forecasts.  It would be good to know: 

1. How do Hilton Head luxury home price reductions compare with the national forecasts?
2. Have luxury Hilton Head home prices hit bottom?  
3. Is this a good time to buy?

Another question, but not directly related to price reductions is:  

   4.  Are more people buying luxury homes on Hilton Head Island or in Bluffton?

The numbers I looked at are from the MLS of Hilton Head Island and they require this disclaimer: “The statistical data contained herein has not been verified by the Multiple Listing Service of Hilton Head Island, Inc. and the publication of information hereof is not a representation or warranty of any fact whatsoever.”

Three luxury residential gated communities on Hilton Head Island and three luxury gated communities in Bluffton, the town just across the bridge from Hilton Head Island are representative for our purposes.  The  names of the communities, their locations and their average home prices are given below.   

The Average List Prices of Six Gated Communities on Hilton Head Island and Bluffton Today

Many other luxury gated communities in both Hilton Head Island and Bluffton could easily have been used for numbers such as Sea Pines, Palmetto Dunes, Hilton Head Plantation, Palmetto Hall, Port Royal Plantation, Moss Creek, Hampton Hall and others but I didn’t want to crunch more numbers than necessary.  Prices in the chart are averages and each community has homes for sale at much higher and much lower prices.  If you would like to receive more information about any gated community on Hilton Head Island or Bluffton, please let me know.

Luxury Home Sales of the First Quarter 2008 vs. First Quarter Sales 2009

The numbers do not give a large quantity of data and more home sales would give more reliable averages, but aside from Wexford and Long Cove, it is interesting to see how similar the per cent decrease of luxury home prices have been in this simple analysis.  Therefore, it may be reasonable to conclude that luxury home prices have fallen by about 23% between the first quarter of 2008 and the first quarter of 2009.  I have no explanation about why there are no home sales in the first quarter of 2009 after there were 7 for the same period of 2008.

Many More Luxury Homes Sell on Hilton Head Island than in Bluffton, South Carolina

This is a small number of homes from which to draw conclusions, but the number of luxury home sales that occurred in the thee Hilton Head Island gated communities in the first quarter of 2008 was 15.  Only 7 luxury homes sold in the three Bluffton communities during that same time. 

In the first quarter of 2009, 12 luxury homes sold in the three Hilton Head Island gated communities and 7 sold in Bluffton.   Hilton Head Island luxury home sales in our sample communities are about twice the luxury home sales in the Bluffton sample communities for the first quarters of both 2008 and 2009. 

Interpreting numbers can be tricky but the greater number of luxury sales on Hilton Head vs Bluffton in these six communities corresponds with my own sales experience that people are more likely to spend more for a home on Hilton Head Island than in Bluffton.  There are more luxury gated communities on Hilton Head Island than in Bluffton, South Carolina so it is fair to say that if this ratio is consistent among Bluffton and Hilton Head Island luxury communities, many more luxury homes are sold on Hilton Head Island than in Bluffton.  Although none of the three Hilton Head Island communities have ocean front locations, other communities on Hilton Head do have oceanfront, ocean oriented and ocean view homes that often cost more and are in high demand because close proximity to the beach is one of the biggest reasons people will buy expensive homes. 

Are Hilton Head Luxury Home Prices at the Bottom?

For prices to stop going down:

1. More homes must sell than the number of new listings and foreclosures (not yet).
2. Finance must be available and attractive for luxury homes (yes! just arrived!)

But, nobody knows what will happen next.  There are reasons to believe that prices are low enough already and there are reasons to believe that prices could go a bit lower. 

Reasons for lower prices include:

1. The same forecasts that predict 6.3%-19% price reductions this year nationally also predict that prices will stop falling in 2010.  
2. If sales do not increase, inventories will increase and some sellers will lower their prices.
3. If foreclosures increase, more lower-priced properties will be for sale.
4. If the economy does not improve, lower priced short sales will continue.

Reasons that prices are low enough include:

1. The price decreases in the first quarter of 2009 may be attractive enough for buyers.
2. New, lower jumbo loan interest rates will stimulate sales and reduce inventories.
3. Forecasts for lower prices include many lower priced homes with higher defaults rates than luxury homes.

4. Sellers become less negotiable with news of an improving economy.

Is This the Time to Buy a Luxury Home on Hilton Head Island?

Yes, as long as you will hold the property for at least a few years.  Reasons to buy now include:

1. Outstanding inventory.
2. Eager, negotiable Sellers.
3. It takes more luck than skill to call an absolute bottom in prices and how do you do that on a specific luxury home? (you can’t)
4. Lowest available interest rates in a generation.   

5. Luxury homes are unique homes in valuable locations that cannot be duplicated.

My advice to buyers is that when you find a luxury home today at a good price that meets your needs, this is a great time to buy.  Don’t worry about the possibility about some additional drop in average prices if you will hold the property for at least a years.   You will be enjoying your house!   

There are many luxury homes for sale today at prices below the average first quarter 2009 sales prices.  To find a bargain luxury home in the right gated community for you, please call the Hilton Head Gated Communities Specialist® today!  Yes, I have all foreclosures and short sales – just ask.

Richard Kadesch, Owner and Broker-in-Charge The Gated Community Specialist ® Go Gated Realty ® Hilton Head Island, South Carolina Rich@gogated.com www.GoGated.com 1-800-333-5025 Read Some of My Clients’ Success Stories

Morning Golf Costs Less in Bluffton than on Hilton Head Island

The Clubhouse at Palmetto Hall on Hilton Head Island.  Palmetto Hall has two championship golf courses designed by Robert Cupp and Arthur Hills.

Golf in Bluffton costs less in the morning than morning golf on Hilton Head Island.  If you vacation on Hilton Head Island and you are willing to drive about 2o minutes to play golf in the morning, you will save some money.  Bluffton’s lower morning golf rates do not mean that the golf courses in Bluffton are not as good as Hilton Head Island golf courses.  As a whole, they are as good or better with Bluffton courses designed by Arnold Palmer, Gary Player, Fuzzy Zoeller, Davis Love III and others.

Some Afternoon Golf on Hilton Head Island Costs Less Than In Bluffton

Golf prices on Hilton Head Island are the highest of the year during April until mid-may when they come down.  I called to find out what the local Hilton Head Island and Bluffton golf courses are charging tourists now and just as I expected, a morning round of golf in Bluffton costs about $35-$50 less per person than a morning round of golf on Hilton Head Island.  But, after 2pm, some clubs on Hilton Head Island charge the same or less than what several clubs in Bluffton charge after 2 pm.

The driving range and practice green at the Rose Hill Golf Club in Bluffton, South Carolina

Some Hilton Head Island pros say that Bluffton and Hilton Head Island are different golf markets.   Convenience is certainly a factor when booking tee times, but  some visitors may have no problem driving a few miles to save some money on golf, especially in this economy  Non-playing spouses might like to enjoy the great shopping in Bluffton while they are there that includes two outlet malls near the bridge to Hilton Head Island.  

The prices for all of the Hilton Head Island and Bluffton championship golf courses were quoted to me by telephone yesterday.  The rates are presented in ascending order with separate lists for Hilton Head Island and Bluffton golf courses.  All courses have their highest prices in the morning and their lowest prices after 2 pm every day except for the Sea Pines Resort that has one price all day.  Prices are given without the 7% hospitality tax that must be added for the total cost with the exception of Old South Golf Links that quotes rates with tax included.   One pro shop attendant said that the rates she quoted are better than the rates on their web site, so enjoy some Southern hospitality and call for the most current and best rates.  Note that rates for Hilton Head golf are lower during the summer and lowest during the off-season months of November-February. 

If you are wondering if local players pay these high rates - we don’t.  Residents with local driver’s licenses typically pay $35-$40 per round in Bluffton all year and on Hilton Head Island, some clubs offer  good off-season rates to locals.  Of course, many locals belong to one of the many outstanding private golf clubs on Hilton Head Island and in Bluffton.  If you would like information about private golf on Hilton Head Island, please let me know.

Hilton Head Island Golf Courses and Rates: Mornings Are $91-$255.

1. Palmetto Dunes Oceanfront Resort, Fazio Course: $91 before 11am, $63 after 11am, $54 after 2pm.  843-785-1138.  www.palmettodunes.com. 
2. The Country Club of Hilton Head in Hilton Head Plantation: $95 before 11:30am, $69 after 11:30am, $49 after 2:30pm.  Rates for mid-day and afternoon play must have a newspaper ad to qualify or the rate will be $80 after 11:30am and $69 after 2:30pm.  843-689-4653.  www.hiltonheadclub.com.
3. Golden Bear Golf Club at Indigo Run:  $95 before 11:30am, $80 after 11:30 am, $59 after 2pm.  1-843-689-2200.  www.goldenbear-indigorun.com.
4. Port Royal Golf Club and Shipyard Golf Club: $99 before noon, $80 after noon, $62 after 2pm.  1-800-2FindIt18.  www.Hiltonheadgolf.net.
5. Oyster Reef Golf Club in Hilton Head Plantation and Palmetto Hall Golf Club with Robert Cupp and Arthur Hills Courses: $109 before noon, $88 after noon, $68 after 2pm.  1-800-2FindIt18.  www.HiltonHeadgolf.net.
6. Palmetto Dunes Oceanfront Resort, Robert Trent Jones Course: $117 before 11am, $80 before 2pm, $59 after 2pm.  843-785-1138.  www.palmettodunes.com.
7. Palmetto Dunes Oceanfront Resort, Arthur Hills Course: $119 before 11am, $95 after 11am, $65 after 2pm.  843-785-1140.  www.palmettodunes.com.
8. Sea Pines Resort Ocean Course:  $120 all day.
9. Sea Pines Resort Heron Point Course: $140 all day.
10. Sea Pines Resort Harbourtown Course: $255 all day, includes forecaddy with recommended gratuity of $25 per bag.  Closed until May 20 for the PGA Verizon Heritage Classic.  843-842-8484 or 1-800-seapines.  www.seapines.com. 

 Bluffton Golf Courses and Rates; Mornings Are $45-$95

1. Rose Hill Golf Club: $45 before 2pm, $30 after 2pm.  1-843-757-9030.  www.golfrosehill.com.
2. Island West:  $48 before 2pm, $37 after 2 pm.  1-843-689-6660.  www.golfshop@Islandwestgolf.net.
3. Eagles Pointe Golf Club: $79 before 11am, $65 after 11 am, $55 after 1pm.  1-888-325-1833.  www.eaglespointe.golf.com.
4. Crescent Pointe Golf Club:  $85 before 11am, $75 after 11 am, $65 after 1pm.  1-888-325-1833.  www.crescentpointegolf.com. 
5. Hilton Head National Golf Club: $86 before noon, $80 after noon.  1-843-842-5900,  www.HiltonHeadNational.com. 
6. Old South Golf Links:  $95 before noon, $80 after noon.  1-800-257-8997.   www.oldsouthgolf.com. 

If you are planning to relocate to Hilton Head Island or get a second home, please call on me.  I am a Hilton Head Buyer’s Real Estate Agent with 34 years of local real estate experience and I have all of the information that you want about Hilton Head real estate and golf.   Allow me to save your time  and money and find the right home, club and community that you want.  To start the process with no obligation, please click here.

Richard Kadesch, Owner and Broker-in-Charge The Gated Community Specialist ® Go Gated Realty ® Hilton Head Island, South Carolina Rich@gogated.com www.GoGated.com 1-800-333-5025 Read Some of My Clients’ Success Stories

Lower Hilton Head Jumbo Rates Will Help Sales

More money and better terms for Hilton Head Island luxury real estate lending is one of the recovery signs that we have been waiting for.  In just the last week, several Hilton Head lenders have advertised jumbo rates @ 6.375%, the first significant drop in jumbo rates in more than a year, down from 6.875%.  This reduces a $600,000 loan payment by about $200 per month.

Expensive properties are often financed with loans greater than $417,000, called non-conforming or ‘jumbo’ loans.   These loans are not purchased by Fannie Mae and did not benefit from the government’s stimulus package.  Jumbos are financed by independent investors like insurance companies, pension funds, hedge funds or some large banks.   The luxury jumbo market has been waiting a long time for the difference in interest rates of conventional and jumbo mortgages to narrow.  Jumbo loans have been about two percentage points higher, at about 6.875% -now 6.375%.   

Loans under $417,000 are called conventional loans and they are offered by Hilton Head lenders today at 4.875% with no points, 30-years, fixed. 

No PMI on Hilton Head Real Estate Jumbo Loans

More good news for luxury buyers is that at least one Hilton Head jumbo lender does not require private mortgage insurance.  This saves the borrower about $85 per $100,000 borrowed or about $510 per month on a $600,000 mortgage.

Lower interest rates and and no mortgage insurance combine for a savings of about $710 per month for a $600,000 loan.  Many Hilton Head Island luxury properties have higher mortgages for even greater potential savings for the buyer/borrower. 

Conventional borrowers have had lower interest rates for some time and now luxury buyers have lower rates too.  To discuss the real estate that you want to buy and the lenders who can finance your purchase, please call or email the Hilton Head Gated Communities Specialist®today! 

Richard Kadesch, Owner and Broker-in-Charge The Gated Community Specialist ® Go Gated Realty ® Hilton Head Island, South Carolina Rich@gogated.com www.GoGated.com 1-800-333-5025 Read Some of My Clients’ Success Stories