06/10/2023
In the game of 30A real estate, is it time to fold, stick or twist? And if you are going to play, when is the right time to dive in?
I've been selling and buying real estate for decades along our shores, bought and sold homes in New York and Memphis, and held and invested in houses overseas in the UK and Switzerland. In all that time, three simple metrics have dominated - Supply, Demand and the Price of Money.
In our not-so-sleepy beach town, recent teardowns and relaxed permitting has lead to a wave of new building. But while visitors love our beaches and enjoy spending their Summers with us, they are largely priced out of a single family home starting in the millions, or a condo from the high 700's. The buyers of late have been businesses and wealthy investors looking for rental properties for their portfolios.
But now that the Price of Money has reached near record highs, even investors have stopped shopping. A recent REDFIN report revealed investor home purchases fell 49% year over year in Q1 as the price of borrowing has skyrocketed and household expendable income has shrunk. Rental management companies are already looking to discount their summer inventory with book 4 get a 5th night free offers, and are open to shorter breaks than the traditional Saturday to Saturday stay.
For home owners who have seen their mortgage payments double in 12 months, their insurance rise by 30% or more, and a hike in property taxes due, without the 'guarantee' of rental income, these homes are quickly becoming unaffordable.
So what to do? Most private renters tell me they will hold on through the Summer as they need whatever income they can generate.
With labour and material shortages adding to the quandary, I doubt the big builders and developers are in any rush to flood the market with inventory for which there is little demand.
But come the Fall, I expect many homeowners to accept they will have to sell, even with a freeze on Fed interest hikes, as they enter the most expensive period of ownership - October to March when repairs are due and income is spotty.
With investors currently out of the picture, there will be opportunities for those looking for a private beach home to enjoy with their family and friends without the pressure of having to rent it to whoever to pay the bills.
If you are interested in getting ready for that window of opportunity, now is the time to start getting prepared because the bargains - and there will be some as there always are in a correction - will fly off the shelves fast.
Get in touch if you'd like to explore more or want to get your property ready for sale later this year.
In the meantime, as always, enjoy your Summer.
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