Rick Hoel - Broker/Realtor, Bluffton, SC

I'm excited. Commentators from all sides of the economic arena are telling us that we may be about to see something we typically only read about in textbooks - real free market supply and demand principles in action and in an important and very visible aspect of our daily lives. Provided the Saudis don't increase oil production and our government doesn't dip into the Strategic Oil Reserve, it appears that something "classic" may be happening right now that should lower the price at the pump all by itself. People are finally changing their behavior. I'm one of them. Just last week I started using my wife's VW Bug whenever I get the chance while Pam takes my gas guzzling Volvo for her shorter jaunt to work. I now plan my errands and carefully see if I can postpone a short trip and consolidate several into one. My list goes on but more importantly, anecdotal evidence seems to show that many of us are taking steps to reduce our demand for gasoline. Most of my friends in Bluffton, South Carolina have altered their driving habits in some way. If memory serves me right, my college economics professor along with Paul Samuelson's text, clearly told me that with less demand and a stable supply, prices go down. Right?

I lived in Hong Kong in the mid 90's and many say that Hong Kong then, and to a large extent even today, despite the turn-over to China, is one of the last bastions of true free enterprise. Milton Friedman believed that "the only plausible explanation for the different rates of growth (between the UK and Hong Kong) is "socialism in Britain and free enterprise and free markets in Hong Kong." But enough of pure economic thought. The question I want to ask is if we do see a cap on gas prices and if our behavior actually does produce the expected result of lowering those prices, what impact will this have on our real estate market. Let's first look at the impact we have seen and can expect from higher energy prices.

First, when energy prices do rise as they have been for some time now, prices start to rise generally throughout the economy. We've all seen this. Starting with basic transportation, everything that needs to be transported is costing more these days. And that list goes on as well. If these higher fuel costs aren't matched by a higher corresponding increase in productivity, inflationary pressures just continue to mount. We would then expect to see lenders looking for some way to offset these pressures and raising interest rates would be the expected next step. I've already said (Bridging the Gap in Today's Real Estate Market) that those buyers sitting on the sidelines today waiting for the buy of the century may look back in the next several months and wish they had acted now with the combination of rates and home prices at a point we may not see again for quite some time.

See also the May 6, 2008 Wall Street Journal Article, "The Housing Crisis is Over", WSJ.com - Opinion: The Housing Crisis Is Over. As the WSJ Article points out, the key factor that started the real estate slump is the same factor that will bring us out of it - affordability. The author optimistically points out that the recent overall decline in real estate prices has brought us back to the point where it now takes "19% of monthly income for the average home buyer....to purchase a house." This percantage had reached as high as 25% just before the bust in 2006. At this point and above, folks just couldn't afford to buy homes and they stopped doing so, pretty suddenly. But at the current 19%, homes are "back to being as affordable as during the best of times in the 1990s." If energy costs do continue to rise, the factors above could delay what some predict could be a pretty quick recovery from a mild or phantom recession, and depress housing sales even more as rates increase.

Well, if Milton Friedman is right and my own behavior and that of my friends is any indicator, we may all be doing this whole market a favor as we ride our bikes and actually pay attention to speed limits. And if we start to see the price at the pump decline, WSJ may be right. Keep your eye on the pump and honk when you see a Bug.

"Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization." So begins the Preamble of the Code of Ethics and Standards of Practice of the National Association of Realtors. I was immediately impressed with this powerful prose which I read during one of my introductory courses. I am equally impressed, and proud to be a part of, The Hilton Head Symphony Orchestra's own celebration of our "land" on May 5, 2008 with its "Dream of America" series.

Directed by Music Director and Conductor Mary Woodmansee Green, the orchestra will perform Peter Boyer's moving piece about Ellis Island which recounts the story of immigrants from seven different countries who arrived in America between 1908-1940. The series will feature dramatic music, actors, and visual projections. Also on the program will be American classics by Adolphus Hailstork, Charles Ives, and George Gershwin. The performance will take place at Hilton Head's First Presbyterian Church.

Following this theme and in keeping with the Symphony's mission to "reach" out to the community, in partnership with The Heritage Library Foundation headed by Bill Alstaetter, residents of Hilton Head Island, sister city Bluffton and the overall area were invited to submit family member, ancestor or their own stories of their personal "Dream of America". Stories or essays were to deal "with some aspect of immigrating to America and were to involve life-altering experiences, challenges and/or relations/connections with special personages, either public or private who inspired the writers at some particular point in their journey."

Holocaust survivor Sophie Miklos was the winner of the adult division of the Dream of America Stories Project. Her story, "My American Dream," was one of survival both from the Holocaust and the early struggles to survive in a new country.

The South Carolina State House passed a bill unanimously on Wednesday of this week that may have a positive impact on real estate sales in Beaufort County and the state as a whole, provided the State Senate follows suit. Current state law requires an immediate increase of the assessed value of residential and commercial property when property is sold or extensively improved. The new value is based upon the new market price, which in the case of a transfer is the sales price.

The new bill delays the increase in assessed value to the date when each South Carolina County completes its next reassessment, which occurs by law every five years. The next reassessment in Beaufort County is scheduled in 2009. Typically assessed values on property are significantly lower than market value and many home-buyers in the recent past have been shocked to learn that the taxes they will pay are as high as twice that paid by the previous homeowner. In some cases in Bluffton and Hilton Head Island, this has lead to contract cancellations.

Though nobody would say that the current market slump is a result of property tax policy, in a market that shows some signs of stabilizing, any stimulus can have a very positive impact. This may be another factor, along with price declines and historically low interest rates, that convince buyers that current conditions are about as favorable as they will ever be.

"We have just been advised by the golf club ownership that the club will be ceasing operations as of noon today. We will provide you with further information as it becomes available." With those words in January, 2006, golf at Rose Hill Plantation in Bluffton, South Carolina suddenly ceased.

A little more than a year later, a blogger summarized the subsequent deterioration, "Does anyone notice the weeds and tall grass growing all over the golf course at Rose Hill Plantation? Why continue to water the grass if nobody will take care of it? It is the most visible golf course in Bluffton from Highway 278. How many newcomers are driving down and they see that?"

Today all of that has changed after the Rose Hill Property Owners Association voted late in 2007 to buy the course for $2.3 million. In January, the association hired the Signature Golf Group out of Myrtle Beach to manage the course and in spite of many dire past predictions, the course is on track to open in September. It means everything to the future of this community and is a wonderful rebirth story.

The club will offer membership programs though most of the play at Rose Hill will be public. There have been some significant changes to the course. Nine of the original 27 holes have been removed. The course will open as an 18-hole facility with most of the 9-hole South Course being converted to a maintained park area. There is consideration now being given to creating a lake and aviary on the bulk of this land. Holes have been realigned so that the old East Course will now serve as the front nine and the old West Course will become the back nine. A unique practice space has been created. Instead of a driving range, players will now be able to warm up on two holes dedicated solely for that purpose.

With the re-opening in only five months you will see a lot of work being done in the coming weeks. And while there is much more to be accomplished over the next several months to prepare Rose Hill for public play, expect to see steady improvement as you drive along 278 this summer.

This is a "sequel" to my April 7, 2008 blog entry, "A Real Estate Silver Lining," focusing on the real estate market in Bluffton, Hilton Head Island and the Lowcountry of South Carolina.

It's easy to become discouraged about the housing market. Pick up any paper and read about record foreclosures, the plunge in new home sales and now, recession. With the endless flow of bleak news, many consumers just assume it's a bad time to do anything with real estate. But in every market there are opportunities for certain segments of the population. Today, particularly in the Lowcountry, there are a number of situations where people have more opportunities than they may think.

First Time Buyers

Excess inventory and evidence of flat and, in some cases, falling prices, have made it tough on sellers. But for those who only want to buy a home, this is perhaps the best market we've seen in a decade. Right now, with a little patience, a buyer should be able to find just what he or she wants in a home and at the right price. This is particularly true in Bluffton where home prices were already 20 to 25 percent below those on Hilton Head Island.

Many potential first-time buyers aren't looking however because they've been frightened by reports of tight credit. While lending requirements have certainly tightened with the subprime crisis, a wide array of new and different programs are available and rates are low. According to Jason Natale of The Money Store in Bluffton: "First time homebuyer loans allow buyers to get into a home more easily with many options and looser credit requirements. These programs offer such things as very low or no down payment, limited fees, and closing cost assistance, all at a very affordable interest rates."

Second Home Buyers

In 1998, while on vacation here, we bought a second home on Hilton Head. We were scared to death but were able to cover most of our annual costs renting to other vacationers. In 2005 we sold the home for a considerable profit. Many today feel they've missed this opportunity.

Yet for all the appreciation we've experienced over the past 10 years, ours was still a relatively under-valued coastal resort community before the recent market down-turn. The current "dip" offers the same opportunities for second home buyers as first-timers. This is particularly true for foreign buyers who can take advantage of the falling dollar.

Moving Up

One of the most common complaints I hear as a Realtor is "I'd love to move, but I can't sell my current home." Some are waiting for the market to "pick up" before selling, forgetting that the market rebound, when it inevitably arrives, will increase the price of the home they buy as well.

The simple fact is that homes in our area are selling when they are prepared to show well and, most importantly, priced realistically. When sellers who want to move set the right price, they can focus on the same expansive buying opportunities that the other groups above enjoy. What they may sacrifice on the selling end can be made up on the new purchase. Additionally, the likelihood of moving to a better neighborhood means greater long term appreciation potential.

Conclusion

There is good reason for optimism here. Experts predict that over 50% of the 75 million baby boomers will be looking to move to the Sun Belt in the coming years, with most of that growth coming along the coasts. Those who take the time to examine their own particular situation carefully may very well find that despite the national hand-wringing about the real estate market, things aren't really so bad.