THE MATTHEW EFFECT Potential Impact on the Hilton Head Island-Bluffton Real Estate Market - November 1, 2016 -
The Matthew Effect:
Will It Effect Homes Values in Hilton Head and Bluffton? Hurricane Matthew caused no damage to most homes in the area, moderate damage in other areas, and significant damage in some parts of Hilton Head Island and Bluffton. The Island Packet reported that a total of 933 homes were damaged in Hilton Head (of close to 17,000 houses). There will be calculations of clean up costs, insurance costs, business loss and more. As a premiere global real estate company, the number one question we are being asked is “What will the impact of Hurricane Matthew be on the real estate market, and more specifically, what will the impact be on my home’s value?”. The Matthew Report provides data, advice, and an answer to that very question. The sources of information include: Engel & Völkers New Orleans License Partner Marty Brantley who shares post-Hurricane Katrina learning and insight. Additional informational sources include Hilton Head Area MLS data and trend review and a real estate industry literature review. The short-term impact of Hurricane Matthew to the Hilton Head and Bluffton real estate markets will be minimal to moderate. The long-term impact will be positive. While each community and home varies in terms of location, damage incurred (if any) and market value, we are confident that the value of homes in this market will continue to increase. KEY METRICS
First Nine Months Home Sales, 2004-2016 Source: Hilton Head Area MLS
YEAR 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
MEDIAN NUMBER OF MEDIAN DAYS ON MARKET MEDIAN PRICE HOMES SOLD SALE/LIST RATIO (DOM) 1669 $370,000 96.60 81 2051 $442,500 97.19 53 1572 $412,000 96.77 70 1482 $384,375 95.63 113 1249 $333,975 94.94 140 1112 $275,000 94.62 158 1377 $270,215 94.84 126 1551 $255,000 95.14 120 1732 $252,000 95.48 96 2080 $269,308 96.25 77 2017 $275,000 96.38 71 2301 $300,765 96.77 66 2465 $320,000 96.95 46 = Recession Low
= All Time Best
It may be surprising for some to learn that, based on historical data, hurricanes have not sunk coastal home values. Prior to the Great Recession this chart shows the hurricanes in 4 areas, South Carolina being the second line from the top. After each hurricane in every market, coastal home values continued to rise. This indicates that the desire to live near the ocean in a favorable climate overrides the ‘fear’ of another hurricane. In the Hilton Head and Bluffton markets, it is well-documented that storms of this magnitude are rare, leading some to call Matthew the ‘hundred year storm’. Source: Bloomberg Business Week. Data: Zillow.
The first nine months of home sales in the Hilton Head - Bluffton Area MLS are at an all-time high. The number of sales in 2016 are 20.2% above the prerecession peak. While the prices are 27.7% lower than the prerecession peak, they are 6.4% above the same time last year. In other words, the market momentum was very strong prior to Hurricane Matthew and there is no reason to anticipate a significant drop after the storm.
KEY TRENDS
Causes of Momentum in the Real Estate Market The momentum in the real estate market has been strong for a number of reasons including low interest rates, demographics, and location desirability.
Location Desirability Low Interest Rates Interest rates are low, and although they may sneak up a bit, the cost of borrowing is low.
Demographics Demographics are in our favor with both Baby Boomers and Millennials, two large cohorts, moving to this area.
EXPERT OPINION
This is a desirable area for people wanting an upscale, active lifestyle. Hilton Head was voted the #1 Island in North America for a reason, and that hasn’t changed.
While there has been some damage to homes, businesses and amenities, we do not expect that to override the three factors driving the market.
Impact of Hurricane Matthew on the Hilton Head - Bluffton Real Estate Market: Enduring and Emerging a Stronger Community
Marty Brantley License Partner Engel & Völkers New Orleans
Rick Turner President Engel & Völkers Hilton Head Island-Bluffton
We spoke with Marty Brantley, owner of Engel & Völkers New Orleans, to gain insight and advice based on Hurricane Katrina, a much more severe disaster than Matthew, involving death, destruction and extreme flooding. According to Brantley, “While there is still a lot of work to do to repair and restore our community, overall, the city is doing well. Very well. One of the silver linings is that the spirit of caring and generosity that emerged during Katrina continues today, over ten years later. We are a stronger, more vibrant city. ‘Older’ neighborhoods were rebuilt and are revitalized and homes have increased significantly in value. Public facilities and amenities were repaired and rebuilt to provide newer, more modern and desirable infrastructure. While it did take time, it is amazing how quickly the restoration happens.” Engel & Völkers Hilton Head Island – Bluffton President, long time local resident and Realtor, Rick Turner, is bullish on the post-Matthew market here, stating “Hurricane David hit Hilton Head Island in 1979 and, like Matthew, downed a lot of trees. However, within just a month or so the real estate market was back in full swing. I’m confident we’ll see that same response from the market again. The media outside this market didn’t really dwell on Matthew on Hilton Head Island. People in cities in Ohio, New York, Pennsylvania, and Canada were seeing the unfortunate North Carolina floods on the news, and the unfortunate election debates! Many of our buyers were barely aware that there was even a storm here! And, thanks to help from our head office in New York, and Marty in our New Orleans shop, we were able to gather information and advice for home sellers here. There are things that people need to do here to protect their home values, whether they are selling now or down the road from now. It just broke my heart when Marty told us that some home sellers in New Orleans are now paying the price when trying to sell their homes because of We want to help people grow their how their renovation documentation was home value and hope this advice, handled. We don’t want that to happen and our Homeowner Recovery to our clients, or anyone here, so we have Kit, helps achieve this. pulled together what we can to help peo-Rick Turner, President ple get the highest price when they do put their home on the market.” Engel & Völkers Hilton Head Island-Bluffton
#LowcountryStrong How to Protect the Value of Your Home When selling your home, now or down the road, your goal is to maximize value. There are some measures you can take proactively that will pay off later, regardless of whether your home was damaged in the storm or not.
#ShopMoreLocal.
You Get What You Pay For.
Use local and licensed trades whenever possible. Not only does it help the individual’s business, it also helps boost the local economy. In addition, these trades will be more motivated to do a thorough job and are easily accessible should there be issues with the repair.
While there will be a desire to get any repairs done quickly, resist the temptation to choose trades based on speed of repairs or price alone. Future home buyers will do inspections and will be on the lookout for quality construction and repairs.
Document Diligently.
Warrant and Pre-Inspect Your Home.
Be sure to retain all documentation and receipts for any renovations and repairs you contract. This includes any warranties, certificates, quotes, and invoices. This will be important when it comes time to demonstrate the quality and value of repairs to your home.
Home buyers will always desire peace of mind. For a very small cost, a homeowner looking to sell can provide this by warranting and pre-inspecting their house. As an added benefit, taking these steps can also assist with ensuring a closing progresses smoothly down the road.
A Picture is Worth a Thousand Words.
Know Your Numbers.
Taking photos is helpful for insurance purposes and can be handy if you have to verify the damages incurred and the repairs that were done. Photos will act as proof that your house was either not damaged, that it was minor damage, or that you effectively repaired damage.
Determining the value of a home is never easy, especially post-Matthew. Educate yourself and work with a professional Realtor who knows your neighborhood. We can set you up to receive automatic email alerts every time a home is listed or sold in your neighborhood helping you remain informed on the value of your investment.
TECH TOOLS
Document Your Home’s Contents
Use Social Media
If you’re not on Facebook and Instagram, you need to be! Facebook We recommend this great app called ® Groups like Bluffton/Hilton Head Ask Know Your Stuff , which can be and Answer and community sites like downloaded from Nextdoor provided real time updates www.knowyourstuff.org. and help during the storm.
HOME VALUE CONSULTATION
Store In The Cloud
Save important documents, like your insurance policies, in a cloud -based service like Dropbox so they are accessible wherever you are.
Engel & Völkers is a global brand with more than 700 shops in 37 countries including 85 shops in highly desirable markets across the United States and Canada. Our local team of real estate experts leverage Engel & Völkers powerful global referral network, industry-leading technology and distinctive marketing measures to unite discerning buyers with the sellers of beautiful homes. Call or email us for a complimentary home value consultation and to find out how our global reach and technology can find the right buyer for your home, from anywhere in the world!
800 Main Street, Hilton Head Island SC 29926 Telephone • 843-715-4422 Email • hiltonheadbluffton@evusa.com Website • www.hiltonheadislandbluffton.evusa.com