Posted By Gene Carter @ Oct 2nd 2020 10:01am In: Monthly Real Estate News


Grand Strand Real Estate News


August 2020


Volume 2020 Issue 8

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Dear Gene Carter Team,


Summary

Vacation rental incomes have been a roller coaster this year. Are rentals for 2020 down 10% or 75%? The real numbers seem to vary depending on the type of property and the type of rental management. 

Condotels seem to have fared most poorly, with YTD incomes through August down 35% to 50% from 2019 figures. This could be expected since they are heavily dependent on group sales, which have been all but eliminated during the pandemic.They are adapting by marketing to individual families and their occupancy rates seem to be improving going into the fall.

Offsite rental management companies have experienced wildly different results from one to another, with some experiencing income decreases of 30% to 50% and others experiencing little or no changes from 2019 figures. Some just seem to have handled the adversity better than others.

The one group of vacation rental properties which have appeared to generate the most consistently strong incomes are the ones properly managed by owners handling their own rentals utilizing VRBO, airbnb, etc. This takes some time and effort (It’s not for everybody) but they get lots of repeat guests who are willing to pay top dollar to stay in a condo they are familiar with and know they like. 

Overall, our rental season was disappointing but not the disaster everyone predicted back in April. It certainly didn’t meet the worst-case predictions. Much of the decrease was due to the loss of all rental income from mid March through late May. However, summer incomes were only somewhat lower than normal and seem to be improving going into the fall. 

What to expect next year? I believe that vacation rental incomes will be back to normal or at least close by next summer, if not sooner - assuming that one or more of the many Covid vaccines under development is effective and assuming we don’t go into a deep recession.

One silver lining to this year’s poor rental figures is that I think there will be good opportunities over the next few months for purchasers of investment properties to pick up some bargains. I’ll cover this in more detail in my next newsletter.

Over the past five weeks, new contracts for condos in oceanfront buildings were up a sizzling 46% year over year. Also, the same five weeks produced 13 % more new listings than the same time period in 2019. Large condos, especially in North Myrtle Beach, have been the best sellers. Condotels have been selling slower than other segments of the resort condo market but I don’t think this is a long-term situation and I’ll give you my thoughts on it in the next newsletter. 

Covid Update: The mask mandate for indoor businesses has just been extended for another 60 days. Schools are reopening, although with many limitations. New Covid cases have decreased from 250 per day in June to around 20 per day. 

Check out all our usual Grand Strand Market Reports, sales and listing updates, new Beach Pro Team reviews, and my Best Buys.




Greetings from the Grand Strand!

 As always, I hope you are healthy and well. The local news continues to improve regarding Covid but once again I’m going to cover other issues first.

Although not every resort condo owner or a potential owner is concerned with vacation rental income, it is significant to many. It’s been a roller coaster this year. We were off to a good start. Then, from the latter part of March through late May, all short-term rentals were shut down by our local governments. We saw an unexpected boom in June as things opened back up. This was followed by a slowdown in July as Covid cases escalated in our area and a number of states mandated14 day quarantines for visitors to our state. Now, following a big decline in local cases, vacation rentals seem to have picked up again as we enter the fall season.


Ocean Blvd in April, 2020

Are rentals for 2020 down 10% or 75%? What are the real numbers? Well, it seems to vary depending on the type of property and the type of rental management. Most are below the norms for recent years but some more so than others. 

The estimates I’m about to give you are based on anecdotal evidence and a sampling of hard numbers from various sources. They are in line with my conversations and observations based on interactions with a number of rental companies and individual owners. I waited until I could see the August rental statements so that the prime summer months would be included in my analysis. The income through August comprises over 80% of the yearly income for most properties.

Condotels seem to have fared most poorly. I took a look at actual incomes for individual units in five different buildings and the year-to-date incomes through August were down 35% to 50% from 2019 figures. Keep in mind that condotel gross incomes are typically far higher than incomes with off-site rental management companies so even the lower totals this year are stillI higher than the totals for many off-site companies in normal years. It stands to reason that these properties would have been most severely affected because they depend heavily on group sales – conventions, weddings, family reunions, golf packaging, and sports tourism (travel teams, tournaments, cheerleading, dance competitions, etc.). All of these types of events have been completely shut down since mid-March. In particular, the resorts with large convention facilities had the biggest income declines. Fortunately, only a handful of local developments are centered around convention business. To their credit, the condotels are adapting. One of the reasons for the improved fall occupancy is that the on-site rental companies have stepped up their marketing to individual vacationers. 

Offsite rental management companies have experienced wildly different results from one to another. Most rental managers I’ve spoken with have told me their business was down 30% or more and I know of one case in which the income was down 50%. However, I’ve also seen some individual owner statements which indicated rentals this year were almost the same as in 2019 or even higher. I think the results depend on the property itself, the location, and the marketing efforts made by the rental management company. There are hundreds of off-site rental management companies in the area and some just seem to have handled the adversity better than others.

The one group of vacation rental properties which have appeared to generate the most consistently strong incomes are the ones properly managed by owners handling their own rentals utilizing VRBO, airbnb or similar marketing strategies. When I say “properly managed”, I’m referring to the owners who have significantly upgraded and updated their condos to rental guest’s expectations and then expertly marketed them. This takes some time and effort (It’s not for everybody) but they get lots of repeat guests who are willing to pay top dollar to stay in a condo they are familiar with and know they like. 

We deal with quite a few of these entrepreneurs and all reported rashes of cancellations in March, April and early May. Most owners, however, rebooked the majority of the reservations. I don’t think I can give you any “average” percentages because it varied so much from owner to owner but many lost very little income once they got past the mandatory shut-down period. The quality of the property – updated furnishings, etc. - definitely made a difference. The fact that these owners were able to sustain or increase their incomes in 2020 gives me optimism that there is significant room for improvement going forward for all property owners, regardless of the type of management.

Fall rentals seem to be pretty strong. The condotels in particular appear to be doing much better. We’ve had a difficult time getting in to show listings and take pictures of new listings because we’ve had to work in between guests. Most restaurants and businesses are relatively busy, at least by the standards of the new normal. Hopefully this will continue into the winter. 


Myrtle Beach late May 2020

So was our rental season the disaster everyone predicted back in April? I don’t think so. Incomes were down significantly in many cases but didn’t meet the worst-case predictions. Much of the decrease was due to the loss of virtually all rental income from mid March through late May. However, summer incomes were only somewhat lower than normal and seem to be improving going into the fall. 

What to expect next year? At the risk of crystal balling, I believe that vacation rental incomes will be back to normal or at least close by next summer, if not sooner. Of course this is assuming that one or more of the many Covid vaccines under development is effective and assuming we don’t go into a deep recession. People will go back to planning weddings, family reunions and tournaments. People will still want to vacation on the Grand Strand and will be willing to travel again. The fact that the Grand Strand is a one day drive-to destination for 100 million people should help us if many are still leary of flying. The convention business may be slow to recover but this will only affect a handful of properties significantly and, as previously mentioned, the management companies are already adjusting their marketing to target more families and other groups. 

One silver lining to this year’s poor rental figures is that I think there will be good opportunities over the next few months for purchasers of investment properties to pick up some bargains. However, I don’t think there will be a large number of these and I don’t think this opportunity will last very long. I’ll cover this in more detail in my next newsletter.

I’ll dispense with the charts this month but here are the stats for new oceanfront condo sales and new oceanfront condo listings. As always, these are representative of resort condos in general (ocean, waterway, golf course). Over the past five weeks (August 17 to September 20), new contracts for condos in oceanfront buildings were up a sizzling 46% from the same time period last year. Also, the same five weeks produced 13 % more new listings than the same time period in 2019. The increased sales activity is not even across all types of condos. Large condos, especially in North Myrtle Beach, have been the best sellers. Condotels have been selling slower than other segments of the resort condo market but I don’t think this is a long-term situation and I’ll give you my thoughts on it in the next newsletter.


We've sold 2 large condos in Windy Hill Dunes in the past 3 months.

Once again I’m going to mention that if it’s a possibility you will be selling in the next 12 months, now is the time to do it rather than waiting until spring, especially as strong as recent sales have been. If you rent out your property, take a hard look at the seasonal cash flow - not the yearly cash flow. Check out the cash flow chart below. If selling is a possibility, please contact me to discuss. We will make it quick and easy to list.


I’ll end with a quick Covid update. Employees, locals, and visitors seem to have gotten used to wearing masks whenever they are indoors and many wear them when they’re outdoors as well. The mask mandate for indoor businesses has just been extended for another 60 days. Schools are reopening, although with many limitations. Whatever the reasons, new Covid cases have decreased from 250 per day in June to around 20 per day. I’m sure this has had a positive impact on the improved rental figures. I’ve noticed that, in our area at least, most people seem to be less stressed about the pandemic than they were.

That’s all for now. Check out all our usual Grand Strand Market Reports, sales and listing updates, new Beach Pro Team reviews, and my Best Buys.

See you at the beach!

Beach Pro Reviews

Here are some new reviews published in Zillow. 


  • Gene and company were very friendly, professional and responsive to all our needs and questions. He was the selling agent when we sold our unit at the Grande Shores. He was very knowledgeable regarding the pulse of the community and the real estate market during this stressful time we are in due to COVID. We do not live near Myrtle Beach and Gene went about and beyond by shipping a item that we had in the condo that we wanted returned to us before the sale was completed. We would definitely recommend Gene and his associates to anyone looking to sell or by in the Grand Strand area. Bob and Joan. Myrtle Beach.

  • Gene Carter has sold five condo's in Myrtle Beach for our partnership in the last 3 years, the last closing 7/1/2020. His knowledge and expertise is second to none. The most recent sale had a number of twists and turns. Had it not been for Gene's experience and knowledge and ability to get things done, we would still be trying to hold the sale together! He had the answer for every hurdle. His research of sales in our building and with like units at the beach enabled us to price our unit in the range it would most likely sell. This saved a lot of time negotiating before a contract was offered. We sold at the upper end of his market analysis. I highly recommend Gene to represent you either as a buyer or seller. He's the consummate Real Estate Professional and has an outstanding team working with him. Lewis and Judy. Windy Hill Dunes. North 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 80 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


Below is a link to a detailed report on the current state of our local real estate market complete with statistics for just about anything imaginable. Please keep in mind that these statistics cover a broad range of properties and that particular areas or developments may behave quite differently.  

As always please contact me if I can be of service in any way.

See link below to interpret terms used in this report.


Grand Strand Market Report - August 2020

Best Buys


The following current listings are exceptionally well-priced and represent great values. The spreadsheets are sorted by price. These are live links to listing details and they will change according to changes in the MLS (Pending, Sold, etc.). The listing details are in the same order as the spreadsheets. Please call me directly if you find something of interest to you.
  


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
If you are considering buying or listing any property on the Grand Strand, or if I can be of assistance in any other way, please contact me. Also, please feel free to forward this newsletter to friends or acquaintances and of course I will be happy to add them to my email list.

Finally, please let me know if you are going to be in the area and would like to get together.

See you at the beach!




Gene Carter
Beach Pro Team
Cell Phone:  843-455-4785

The material provided is for informational and educational purposes only and sometimes contains current or forward-looking statements on real estate market conditions, and should not be construed as legal, investment and/or real estate advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors, and is not necessarily the opinion of RE/MAX Southern Shores or its agents.

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