Now that the summer season is officially here, you may find yourself on Route 80 headed to Tybee Island. You will also notice more For Sale signs than you may have in the past. Not that they are easy to see, with the large number of signs showing vacation rentals. Roughly half of the island’s properties hold a vacation rental permit. There has been much debate over the changes the city implemented in its short-term vacation rental ordinance, which after years of public hearings was passed in June of 2024. There is even an ongoing lawsuit filed by property management companies and some owners. Has this affected real estate on Tybee Island?
Let’s start with some history. Tybee Island, Georgia, has been a vacation destination since the late 1800s. The Tybee Railroad carried passengers from Savannah to Tybee Island from 1877 to 1933. US Route 80 was constructed and reached Tybee Island in 1923. The advent of the automobile ended the life of the little railroad branch, but just increased the popularity of the island. Many of the historic cottages that still stand were constructed in the 1930s. Tybee has always had full-time residents. Mostly those who made their living in the fishing trade and then around tourism. Today, less than a third of the properties on Tybee are full-time residences.
So, what has changed? Before 2016, Tybee did not have a short-term rental ordinance. With the advent of nationwide services such as Airbnb and VRBO, it became apparent that the industry was growing and the island needed to put some protections in place. During the pandemic in 2020, the island found itself flooded with those seeking to flee whatever city they were trapped in. By 2022, island officials looked to tighten up the policies. So, what do you need to know? Since June 2022, the island has been divided into Commercial and Residential Zones. No new short-term vacation rental permits will be issued in the areas deemed Residential. Properties already holding a permit can renew the permit, but they do not convey if a property is sold. Some of the arguments against the new ordinance are that the policy will hurt homeowners’ ability to sell their properties, and values will decrease. Since nearly two-thirds of the island is vacation rentals and/or second homes, how did this pass? Residents get to vote! Those living on the island full time have elected officials with their interests in mind. Full-time residents complained of a lack of community, with their neighbors turning over every week or often every few days. Vacationers tend to let loose and act differently than they normally would in their neighborhood.
Has real estate been affected? Let’s look at the numbers. I like to look at the Absorption Rate. You may hear people say it’s a Seller’s Market or a Buyer’s Market. What does that mean?
If we look at the Months of Inventory, the number of months it would take to sell every home in a given market, where does it fall? Greater Savannah has been in a Seller’s Market for over five years. How does Tybee Island compare?
Here we can see that Tybee began to shift in the fall of 2023 from a Seller’s Market to a Neutral Market to a Buyer’s Market. Typically, a resort market will have less inventory in the spring/summer, which you can see this trend yearly. The bigger shift we see here began in August of 2024. This could be compounded between interest rates in the high 6’s to low 7’s and the effect of the new short-term rental ordinance. Even though owners who already hold a permit can continue to rent their homes short-term, there appears to be a bit of panic. Some feel the elected officials could tighten up the ordinance even more and have chosen to sell vs see what happens. This has increased inventory into the range of a full Buyer’s Market. It will be interesting to see if this has eased once the May numbers are released or not.
This is an opinion of mine as a 23-year career real estate professional. There are some real deals on Tybee Island right now. I believe this is a short window. Once these homes sell, the values and the inventory will once again settle. It is the swinging of the pendulum. In any market, homes that are priced fairly will sell and sell quickly. If you see a home that looks like a deal, it is time to jump. Call me. Don’t fall into the trap of thinking this is a “bubble” or a “crash.” This is a point in time that you could benefit from. Next year you could look back and kick yourself. Don’t be on the “Shoulda team”.
Reach out to me at 912-200-8338, email me at Michelle@LiveInSavannah.com or DM me on the socials. I am here to help. I am a local who lives like a tourist and I spend a good deal of time doing this on Tybee Island.