We have seen the average cost of a home on St. Simons increase by over 50% since 2019. Most of that increase occurred from 2020 to 2022 during Covid. The average price of a house on St. Simons went from $518,162 in 2019 to $787,093 in 2023. As you can see in the chart below, the rapid value increases have cooled off to a modest 3% over the last several months. Interest rate hikes cooled the price growth but we continue to see significant value in new construction and renovations, particularly those that include a lifestyle component like a water/marsh view, walk/bike to the village/beach, or perhaps a home with a dock.
In May of last year, the Fed began a series of interest rate hikes that significantly increased the cost of borrowing money for homeowners. As a result, we immediately saw a slowdown in the number of sales transactions. Sales activity went from approximately 90 closings a month to approximately 60 closings a month. Interest rate increases are not the only factor limiting the number of sales.
The scarcity of available homes and new home construction is limiting transaction volume. The Supply of available homes is at an all-time low. Would-be Sellers are not willing to give up the low-interest financing they currently have and they don't like the lack of purchase options to move to. This is causing many would-be sellers to sit tight.
We have more buyers than sellers. We are still seeing buyers migrating from urban regions/centers seeking the small-town, beach lifestyle. Many of these buyers have the ability to purchase with cash. The triple impact of low inventory, increased home prices and increased cost of borrowing has slowed the number of transactions, but buyers are coming to St. Simons from all over the country to live our small town, island lifestyle and they have the financial means to purchase.
2220 Bruce Drive
Beachfront or waterfront is in premium demand. Recently, this small renovated 1930s cottage at 2220 Bruce Drive on East Beach sold for $2,600,000. The seller purchased it for $875,000 in July of 2019. Their timing was impeccable. They did a beautiful renovation, keeping much of the original 1930's beach cottage charm. They added a pool and a second-floor porch with stunning views of Gould's inlet and the south end of Sea Island. This 4 BR/ 3BA, 2,200 SF home sold for nearly $1,200/SF making it one of the highest per square foot sales ever on St. Simons.
East Beach saw another record-breaking sale in 2023. This 5,600 SF beachfront home at 2204 Dixon Lane between 11th and 12th Street, recently sold for $5,150,000. The highest price ever paid for a home on St. Simons Island. The Seller, George Summers bought the home in 2017 for $1,875,000. He then did a renovation, it having been originally built in 1972 and previously renovated in 1998.
2204 Dixon Lane
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. (Our housing stock is approximately 12,000 units and we annually build on average approximately 100 to 120 new homes.)
Having natural growth constraints and significant demand for the outdoor lifestyle helps ensure that property remains scarce and values continue to rise. Expect renovated and new homes with a view to continue to achieve record-setting prices. 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.
Migratory demand and a lack of supply are driving values. Proximity to the beach and water and the lifestyle associated with a property is likely the biggest value determinant for buyers today. For those that can afford it, those choices will continue to drive prices higher. 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, medical services. Lifestyle will continue to drive demand and values.