April 2022

Volume 2022 Issue4

Dear Gene Carter Team,

Summary

A few segments of the oceanfront and resort condo market are starting to shift with more listings and fewer sales than in recent months. The shift is uneven with some areas and types of condos going in different directions. Stats and comments below.

In local news, the Myrtle Beach International Airport will soon be undergoing a $35 million expansion, adding more terminals, a new TSA Security checkpoint and more restaurants and rental car facilities.  

In Myrtle Beach’s ongoing downtown redevelopment project, the city has purchased a dozen “nuisance” properties since December at a cost of almost $20M. Most were old motels which were hotspots for criminal activity. These parcels will be cleared to make way for new private development. 

New oceanfront condo listings are now outpacing sales by a large margin. As can be seen in the chart below, the number of oceanfront active listings increased 69% in one month, from 190 to 321 (and up from 121 in February). The number of non oceanfront active condo listings also increased about 69%, from 192 to 318.

The chart below shows more new listings than sales for several months and a sharp increase in listings in April. Basically, new listings are outpacing new sales.

Uneven distribution of listings: The vast majority of the current active oceanfront listings (83.6%) are in Myrtle Beach (See chart). The listings are also not evenly distributed among the different sizes of oceanfront condos (See chart showing distribution of active oceanfront listings by number of bedrooms). 62.9 % of the listings are efficiencies and 1BRs.

Factors that will influence our condo market: Far higher interest rates are going to reduce price points from where they would have been had rates remained low indefinitely. Higher interest rates may also reduce the number of “cash” purchasers who are really exercising 1031 exchanges by making it more difficult for them to sell their “relinquished” properties. Ironically, condotel interest rates are now the best they have been in relation to conventional rates in a long time since they’ve changed little as conventional rates have increased. The primary reason for keeping interest rates low is to preserve the value of long-term investments and, fortunately, there is no sign yet that the financial markets anticipate high long-term inflation will remain in place. 

Changes Are Coming: Just 2 months ago, it was difficult to find an active listing of any type which had been on the market for over a few days. For 4 or 5 months, every one of my new listings sold within 48 hours, generally with multiple offers at or above asking prices. We are still making sales (4 in the past 3 days) but now we are waiting for offers, occasionally reducing prices, and negotiating with individual buyers offering less than asking prices - just as it’s always been.

First, the bad news (from a seller’s perspective): Buyer mentality is totally different when there are no choices vs. lots of choices. Seller’s markets, when there are few or no comparable choices for sale, are extremely rare when it comes to oceanfront or resort condos in our area. This the first one in over 15 years. Who knows when we’ll see the next one? The higher prices (up to 80% more than 6 months ago) are keeping many potential buyers out of the market. 

The good news: Prices are still at or near their peak in most buildings and still rising (although more slowly) in most segments of the market so sellers still have time to cash in. Grand Strand prices are still lower than in other coastal resort areas around the country so we continue to attract buyers from all over the US. Buyers are choosing our area to get out of the North and the West because of climate change issues (fires, low water supplies), politics, taxes and other reasons. Rental incomes for 2022 appear to be on track to match or exceed the record 2021 numbers. These incomes directly affect condo values and they were largely responsible for the big price increases we saw at the end of last year and the beginning of 2022 as the magnitude of the 2021 totals were reported.

Sellers - What to Do?: If you own a “shotgun” 1BR or efficiency in Myrtle Beach and you plan to sell in the near future, the sooner you list, the better. If you own a larger oceanfront condo (“Deluxe” 1BR or 2BRs or more) or almost any condo in an oceanfront building in North Myrtle Beach and you plan to sell in the near future, it’s a good time to go for that max value while you can before inventory increases and prices flatten or decline. If you own a resort condo off the beach and you plan to sell in the near future, it’s still a great time to sell at a price much higher than in previous years but inventory is increasing fast and all the same supply/demand rules apply. For any situation, please contact us for a FREE evaluation of your property’s current value.

Buyers - What to Do?: For the first time in months, you may be able to buy a reasonably priced condo (per the current market standards) without facing a multiple offer situation. The number of oceanfront and resort condo listings has more than doubled in the past two months so you now have more choices. If you are purchasing with rental income in mind, the peak season is just around the corner and this is perfect timing to take full advantage. Rental bookings appear to be even with or ahead of last year’s phenomenal pace.

Buyers and Sellers: Please contact us if you are interested in buying or selling. The market is very complex at this time with different types of condos in different resorts moving in lots of directions. You need an oceanfront and resort condo expert more than ever.

That’s all for now. Check out all our usual Grand Strand Market Reports, Sales and Listing Updates, my Best Buys, and new Beach Pro Team Reviews.

Greetings from The Grand Strand!

A few segments of the oceanfront and resort condo market are starting to shift with more listings and fewer sales than in recent months. The shift is uneven, with some areas and types of condos going in different directions. Of course, on top of this we have to be concerned about the big increase in interest rates and more anticipated rate hikes to come as well as a topsy turvy stock market. I’ll offer some new stats and my comments on these issues but first let’s catch up on current and upcoming news for the area.

Although 95% of our area’s 20 million yearly visitors drive to the beach, the 5% who fly to the area comprise some of the most affluent tourists and they open up new markets for the future. To accommodate rapid growth, the Myrtle Beach International Airport will soon be undergoing a $35 million expansion. Last summer was the busiest ever for the airport with the addition of Southwest Airlines, several other new carriers and dozens of new destinations. Unfortunately, this also resulted in long lines for security, check-ins, food vendors and rental cars To alleviate these problems, 4 or 5 more gates will be added; A new TSA security checkpoint will be created in a more convenient and functional location; More space for restaurants and retail will be added.

In Myrtle Beach, the ongoing downtown redevelopment project has entered a new phase as the city has purchased a dozen “nuisance” properties since December at a cost of almost $20M. Most were old motels which were hotspots for criminal activity. These parcels will be cleared to make way for new private development. All are well located - within a block or two of the beach. Long-range plans for the downtown area include green spaces, public art, a new police station, a new library, and mixed use facilities that combine work and retail.

Let’s move on to our current market conditions. 

More Listings, Fewer Sales

New oceanfront condo listings are now outpacing sales by a large margin.

Here’s the chart I’ve been including each month showing the number of active listings vs previous months. I’ve trimmed it down to just show 12 months at a time.

As you can see, the number of oceanfront active listings increased 69% in one month, from 190 to 321 (and up from 121 in February). The number of non oceanfront active condo listings also increased about 69%, from 192 to 318. Please note that these figures are still low compared to typical inventories for the past dozen years but they are nevertheless significant increases over the past few months. The number of active oceanfront listings is now back to where it was a year ago.

This chart shows the number of new oceanfront listings each month of this year as well as the number of closed sales.

This shows that there have been more new listings than sales for several months and the sharp increase in listings in April is primarily the cause of the big increase in current active listings. Basically, new listings are outpacing new sales.

The current active listings are not distributed evenly along the Grand Strand. This chart shows the distribution of listings by area (Myrtle Beach, North Myrtle Beach and the South End).

As you can see, the vast majority of the current active listings (83.6%) are in Myrtle Beach. This is partly because there are simply more oceanfront condos in Myrtle Beach than in other areas but I think the inventory is indeed less scarce there than it still is in the other areas.

The listings are also not evenly distributed among the different sizes of oceanfront condos. This chart shows the distribution of active oceanfront listings by number of bedrooms. 

Again, part of the reason a total of 62.9% of the active oceanfront condo listings are efficiencies and 1BRs is that there are a lot of them, particularly in Myrtle Beach. However, a quick look at the inventories in individual buildings will show that the inventory crunch is over in some resorts (14 active efficiency listings in Ocean Reef, 35 active Efficiency and 1BR listings in Caravelle Resort, ….). One observation of mine is that “deluxe” 1BR listings are generally still in short supply (“Deluxe” 1BRs are larger, have washers/dryers, full kitchens and entry is through a hallway instead of a bedroom). 

Interest Rate Hikes, Condotel Financing, Stock Market

Far higher interest rates are going to reduce price points from where they would have been had rates remained low indefinitely. Higher interest rates will make properties more expensive to own and they will reduce returns for investors. 

Higher interest rates may also reduce the number of “cash” purchasers who are really exercising 1031 exchanges because they will make the properties these potential buyers are trying to sell (generally in other parts of the country) effectively more expensive and difficult to sell.   

Ironically, condotel interest rates are now the best they have been in relation to conventional rates in a long time. Condotel rates barely dropped when conventional rates plummeted, resulting in condotel rates twice as high as conventional rates. Now that conventional rates have skyrocketed, condotel rates have barely moved from where they have been all along so the rates are now very similar. We also have some new choices for condotel financing. (See our updated Lender List)

Why are interest rates increasing? The Fed just increased the Fed Funds rate by .5%. In addition, The Fed will begin selling Treasuries and mortgage-backed securities. Although these actions do not directly affect interest rates, they are designed to increase them in the near future to cool off the economy to tame inflation. This comes on top of significant rate increases in recent months. 

Fortunately, there is no sign yet that the financial markets anticipate high long-term inflation will remain in place. This would be a far worse scenario than a brief period of inflation. In other words, the general consensus is that, with the current strong economy and high employment, these measures will shrink inflation without causing a major recession and will also preserve the value of long-term investments - which is the primary goal in keeping inflation low.

Another factor affecting real estate sales is the volatility of the stock market. This doesn’t typically directly affect real estate prices but it can influence the real estate market, especially discretionary purchases such as second homes and investment condos. It may drive some buyers into real estate because they are afraid of stock market risk but it will make other potential buyers hesitant to purchase because they don’t feel confident in their level of wealth - especially if their nest eggs are primarily in stocks. 

Cool looking storm over Myrtle Beach

How Will These and Other Factors Affect the Market?

Changes Are Coming. Just 2 months ago, it was difficult to find an active listing of any type which had been on the market for over a few days. For 4 or 5 months, every one of my new listings sold within 48 hours, generally with multiple offers at or above asking prices. We are still making sales (4 of my listings under contract in the past 3 days) but now we are waiting for offers, occasionally reducing prices, and negotiating with individual buyers offering less than asking prices - just as it’s always been.

First, the bad news (from a seller’s perspective) …

Buyer mentality is totally different when there are no choices vs. lots of choices. I’ve said repeatedly that prices for oceanfront and resort condos only go up when inventory approaches zero and there are no competing choices. Prices level off or decline when there are a number of comparable choices. 

Seller’s markets, when there are few or no comparable choices for sale, are extremely rare when it comes to oceanfront or resort condos in our area. This the first one in over 15 years. That’s why I’ve been so adamant in recent newsletters about sellers taking advantage of the situation while they can. 

The higher prices are keeping many potential buyers out of the market. The asking prices of my current listings are far higher than they were for comparable properties 6 months ago, 80% higher in some cases. This is one reason listings are not flying off the shelf as they did. In some situations, we may be at the peak prices we will see in this market cycle. Some prices will decline from this peak.

Other reasons to expect the number of buyers to be reduced include the secondary effect of high interest rates causing potential buyers not being able to sell their properties in other areas, the volatile stock market and recessionary pressure for the Fed’s actions.

The good news is…

Prices are still at or near their peak in most buildings and still rising (although more slowly) in most segments of the market so sellers still have time to cash in. As previously mentioned, prices are up to 80% higher than they were 6 months ago. Even if you miss the peak and only get 90% of that 80% increase, that’s still a whopping good gain in just a few months!

Grand Strand prices are still lower than in other coastal resort areas around the country so we continue to attract buyers from all over the US. We were way overdue for a market-wide price increase.

Buyers are choosing our area to get out of the north and the west. We’ve always attracted many buyers from the northeast and near mid-west but now we are seeing a huge influx of buyers from the southwest and the west coast. In addition to our relatively low prices, the reasons given for buying here have ranged from climate change issues (fires, low water supplies) to taxes to politics.  

Rental incomes for 2022 appear to be on track to match or exceed the record 2021 numbers according to numerous anecdotal reports I have received (we will know for sure at the end of the summer). I can’t overemphasize how important this is for properties which are primarily purchased as investment properties. These incomes directly affect condo values and they were largely responsible for the big price increases we saw at the end of last year and the beginning of 2022 as the magnitude of the 2021 totals were reported. I was concerned that the 2021 income jump might be an anomaly caused by covid relief money and pent-up cabin fever but so far that does not appear to be the case. 

Same storm looking north.

Sellers - What to Do?

If you own a “shotgun” 1BR or efficiency in Myrtle Beach and you plan to sell in the near future, the sooner you list, the better. The market may have topped out in your building. It depends on the specific resort, current level of inventory and other factors (contact me for a recommendation). If there are multiple choices for virtually identical properties, buyers are going to start bargain-hunting and eager sellers will start accommodating them.This is a recipe for a price decline (hopefully not too much!). Please contact us for a FREE evaluation of your property’s current value.

If you own a larger oceanfront condo (“Deluxe” 1BR or 2BRs or more) or almost any condo in an oceanfront building in North Myrtle Beach and you plan to sell in the near future, it’s a good time to go for that max value while you can before inventory increases. If it doesn’t sell at the high asking price, then you’ve lost nothing. If you wait until inventory increases, you will have lost your leverage. Inventory is still scarce at this time for these types of condos but we are seeing some price resistance from buyers in some cases and, inevitably, the number of active listings will increase as new properties enter the market and don’t sell instantly as they have in recent months. Please contact us for a FREE evaluation of your property’s current value.

If you own a resort condo off the beach and you plan to sell in the near future, it’s still a great time to sell at a price much higher than in previous years but inventory is increasing fast and all the same supply/demand rules apply. Prices are still at or near peak values in most developments but it’s hard to generalize which areas and resorts are in highest demand. Please contact us for a FREE evaluation of your property’s current value.

Buyers- What to Do? 

For the first time in months, you may be able to buy a reasonably priced condo (per the current market standards) without facing a multiple offer situation. This is a much less stressful situation than competing against numerous other buyers.

The number of oceanfront and resort condo listings has more than doubled in the past two months so you now have more choices. 

If you are purchasing with rental income in mind, the peak season is just around the corner and this is perfect timing to take full advantage. Also, as mentioned previously, rental bookings appear to be even with or ahead of last year’s phenomenal pace.

Buyers and Sellers

Please contact us if you are interested in buying or selling. The market is very complex at this time with different types of condos in different resorts moving in lots of directions. You need an oceanfront and resort condo expert more than ever.

That’s all for now. Check out all our usual Grand Strand Market Reports, Sales and Listing Updates, my Best Buys, and new Beach Pro Team Reviews.

Here are some new reviews published in Zillow. 

• I have used Gene Carter in the past and experienced the same positive experience as before. He definitely knows his business! Our property was listed at a higher price than expected, was presented three contracts within one day, and transacted smoothly. I would not use another agent when it comes to buying or selling oceanfront condos. He is the best! Joni. Palace. Myrtle Beach.

• Mr. Carter is very knowledgeable in Myrtle Beach area and general real estate market. He has excellent insight and experience in real estate service. Mr. Carter takes his time to explain the market, the process of buying and selling in detail, the pros and cons to each available options and gives his client plenty of information and advice. With Mr. Carter help I bought my condo in Caribbean Resort in 2020 and sold it in 2022. The process was clear and organized. I highly recommended to consult Mr. Carter not only when buying or selling but also if you want clear and honest information about the real estate market in Myrtle Beach area. Kussay. Caribbean. Myrtle Beach

We have chosen to utilize Zillow's review platform. This is not an endorsement of Zillow (Please ignore the ridiculous "Zestimates") but we think an online third-party review service provides more credibility than simply printing reviews ourselves. At this time, we have over 130 reviews with more coming in each month. To see all of the reviews at any time, you can visit Zillow Beach Pro Team reviews. 

Grand Strand Market Report - March 2021

OF/OV Homes Brochures:    Link to Listings 

OF/OV Homes Spreadsheet:   Link to Spreadsheet 

OF/OV Condo Brochures:    Link to Listings

OF/OV Condo Spreadsheet:   Link to Spreadsheet

Non-OF Condo Brochures:     Link to Listings 

Non-OF Condo Spreadsheet:  Link to Spreadsheet