Grand Strand Real Estate News - July 2023

July 2023

Volume 2023 Issue 7

Dear Gene Carter Team,

Summary

In my July newsletter last year, I stated that we were transitioning into a normal healthy market. A year later, some buyers and sellers still haven’t adjusted to this new “normal”. This month we will take a look at just how freakish the past two years were and what to expect going forward. First, here are the current market stats.

Oceanfront and Resort Condo Update

After a slowdown in May and June, buyer activity picked up in July. The number of active oceanfront listings increased for the 4th month in a row, from 539 in June to 551 in July. The number of active listings off the beach increased again as well, from 883 to 961. (See chart in Newsletter).

The average selling price increased sharply, from $332,664 to $380,287, a 14.3% increase. The number of closed sales dropped significantly, from 154 to 105, a 32% decrease. Pending sales increased from 158 to 209. New listings slowed down, from 227 to 194. (See chart in Newsletter). 

Sellers: Prices for larger condos (deluxe 1BRs and up) are still holding up very close to the top of the market. I hope this continues. There are some storm clouds brewing that could cause problems. Please contact me if you are considering selling in the next 12 months. Also, as I mentioned last month and I’ll mention again next month, now is the time to spend 10 minutes deciding if you may consider selling in the next year. Don’t carry your property all winter and then start thinking about selling it in the spring.

Inventory is increasing rapidly for smaller condos in a number of buildings and prices have started drifting down in some. If you are going to sell in the next several years, I would suggest sooner rather than later. Please contact me about your specific situation.

Buyers: As inventory increases, your choices are multiplying. Please contact Teressa or Kevin to help you find the best deals.

New Home Sales

New construction sales moved back into the lead with 431 versus 414 resales (Chart in newsletter). Please contact Teresa or Kevin if you’re interested in purchasing a home in our area.

Where Did Our Hot Market Go? 

Why are listings now taking weeks, months or longer to sell? Why aren’t buyers willing to just immediately agree to the asking prices? What is going on? It didn't used to be like this!

The fact is that it has always been like this - except for the past two years. This is a normal resort condo market. The only time periods when it wasn’t like it is now were early 2021 to mid 2022 and from mid 2004 until late 2005. Just how unusual and downright freakish were the past couple of years?

The Unicorns Have Galloped Off

To quote Keeping Current Matters, a real estate publication to which I subscribe, “Comparing this year’s numbers to the two “unicorn” years we just experienced is almost worthless.” The following chart (in Newsletter) shows the percentage of annual appreciation since 2017 (housing nationwide).

Note that for the national housing market, the two unicorn years were 2020 and 2021 and our resort condo market lagged by about a year. The big takeaway is that appreciation now is not “low”. It’s just back to where it was pre-unicorn and prices for most property types are, in fact still rising.

Here is a chart (in Newsletter) showing numbers of closed oceanfront condo sales each year since 2004 (including a projected 2023 number based on YTD sales). In the unicorn years: There were 2612 sales in 2005, 2804 sales in 2021 and 2159 sales in 2022. No other year produced more than 1746 sales. 2023 sales are projected to be around 1719.  

Here is a chart (in Newsletter) showing median yearly appreciation for 2013 to 2023. The years 2020 and 2022 both show far bigger increases than any other years - 17.8% and 25.7% respectively. Appreciation was no more than 4.7% in any of the other years. I think the enormous influx of new listings (in response to the higher prices) in 2021 held down the appreciation and then it skyrocketed the following year as inventory shrunk to historic lows.

This next graph (in Newsletter) shows monthly median sales prices per square foot for all condos sold in our market (not just oceanfront). This is a particularly good graph because it takes into account the sizes of the condos. The median price per square foot increased very slowly from 2013 until early 2020 ($112K to $120K, 9% in 7 years). Then, between April 2021 and May 2022, it increased from $120 to $228. That’s an 84% increase in 13 months! And then it stopped. In the 10 months since then, it has now decreased from $228K to $214K (-6%). 

Lesson: Don’t try to Time the Market!

Please do not change your investment and life decisions to try to time our real estate market. Don’t listen to the hindsight prognosticators. Events like this defy prediction. No one knows when they will start or end.

There are potential buyers who didn’t buy when the price per square foot had gone up 20% because they wanted to wait until prices came down. Prices went up another 64% after that. The last “bust” market when prices decreased rapidly ended in 2011, 12 years ago. How long will these buyers wait? 

There are sellers who didn’t sell last fall because they anticipated prices going up even more and now a year has passed and prices are at the same level or lower and they’ve missed out on other investments or life opportunities. This most recent period of rapid appreciation actually ended last summer (2022) and the one before that ended in 2005, 18 years ago. How long will these sellers wait?

When it makes sense to buy, don’t wait. If there are reasons for you to sell, go ahead and do it now, whenever “now” is. Oceanfront and resort condos are good long-term investments and of course they are ideal second homes or even primary residences for many.

One undeniable benefit for current owners is that the crazy appreciation re-set prices at levels 50% to 80% higher than they’ve been for the past decade or so. It was overdue. Let’s hope they stay there.

I’ve sold through two giant upswings and two giant downswings (yes, those happen too). But most of the time, oceanfront and resort real estate has been like it is now. Expect modest appreciation over time with occasional sharp jumps. There is some predictable seasonality in sales volumes but not prices. Individual resorts can be affected by issues specific to their buildings. Vacation rental incomes vary some from year to year, largely depending on the weather, with gradual increases over time. 

Regardless of your timing or your reasons for buying or selling, my team can help you. 

Please Contact The Beach Pro Team If:

You are thinking of buying or selling an oceanfront or resort condo in our area

                                                                  Or

You are considering moving to our area or know someone else who is

                                                                   Or

You are an agent who has clients thinking of moving here or buying or selling in our area

                                                                   Or

You currently own a condo in our area and want a permanent home here

Check out our usual Grand Strand Market Reports, Sales and Listing Updates, my Best Buys, and new Beach Pro Team reviews.

Greetings from The Grand Strand!

The first line of my July newsletter last year was, “There are now indications that we are transitioning (hopefully) into a normal healthy market.” A year later, some buyers and sellers still haven’t adjusted to this new “normal”. I want to take a look at just how freakish the market was over the past two years and how we should plan for the future. But first, let’s examine the current market stats.

Oceanfront and Resort Condo Market Update

After a slowdown in May and June, buyer activity picked up in July. The number of active oceanfront listings increased for the 4th month in a row, from 539 in June to 551 in July. As has been the case for months, most of the new listings were condotel “shotgun” 1BRs and efficiencies. The number of active listings off the beach increased again as well, from 883 to 961.   

The chart below shows month-to-month metrics for oceanfront condos. The average selling price increased sharply, from $332,664 to $380,287, a 14.3% increase. I suspect this is because of an unusually low ratio of small condos selling versus the bigger, higher priced condos. The number of closed sales dropped significantly, from 154  to 105, a 32% decrease. I have mentioned that May and June were very slow and the dead spot has now shown up in closed sales. I also mentioned that sales have picked up in July and, sure enough, pending sales increased from 158  to 209. New listings slowed down, from 227 to 194.

Sellers: Prices for larger condos (deluxe 1BRs and up) are still holding up very close to the top of the market. I hope this continues. There are some storm clouds brewing that could cause problems. Please contact me if you are considering selling in the next 12 months or so. Also, as I mentioned last month and I’ll mention again next month, now is the time to spend 10 minutes deciding if you may consider selling in the next year. Don’t carry your property all winter and then start thinking about selling it in the spring.

Inventory is increasing rapidly for smaller condos in a number of buildings and prices have started drifting down in some. I don’t know of any reason for this to reverse course soon so, if you are going to sell in the next several years, I would suggest sooner rather than later. Please contact me about your specific situation.

Buyers: As inventory increases, your choices are multiplying. Also, there are some “slightly” motivated sellers out there (but don’t count on stealing anything). Please contact Teressa or Kevin to help you find the best deals.

New Home Sales

The chart below shows single family home stats for July. New construction sales moved back into the lead with 431 versus 414 resales. Please contact Teresa or Kevin if you’re interested in purchasing a home in our area.

Where Did Our Hot Market Go? 

Why are listings now taking weeks, months or longer to sell? Why aren’t buyers willing to just immediately agree to the asking prices? Why do buyers want to see detailed records of rental incomes for previous years and year-to-date figures for this year? Why do they want to see the most recent two year’s HOA meeting notes and the budget?  What is going on? Oceanfront and resort condos always sold immediately, regardless of the asking prices and buyers didn’t ask for these picky details. It didn't used to be like this!

Well, the fact is that it has always been like this - except for the past two years. This is a normal resort condo market for our area! The only time periods when it wasn’t like it is now were early 2021 to mid 2022 and from mid 2004 until late 2005. Crazy markets like these don’t last very long. We just experienced a once-in-a-generation extraordinary market and now it's back to business as usual.

So why does this shift seem so weird and sudden? We all share a basic human characteristic known as “recency bias”. Here’s a Googled definition: “The tendency to overemphasize the importance of recent experiences or the latest information we possess when estimating future events. Recency bias often misleads us to believe that recent events can give us an indication of how the future will unfold.” The crazy market is still “recent” to us.

OK, enough “Psych 101”. To properly plan for the future, it’s important for us to acknowledge that these “recent” events are now in the past and that we are back in a normal healthy market.

But first, just how unusual and downright freakish were the past couple of years?

The Unicorns Have Galloped Off

This month there was an article in a publication to which I subscribe (Keeping Current Matters) entitled, “The Unicorns Have Galloped Off”. The definition of unicorn was “Something that is greatly desired but difficult or impossible to find.” It further stated that “Comparing this year’s numbers to the two “unicorn” years we just experienced is almost worthless.” The article included the following chart showing the percentage of annual appreciation since 2017 (housing nationwide).

Note that for the national housing market, the two unicorn years were 2020 and 2021 and our resort condo market lagged by about a year. The big takeaway is that appreciation now is not “low”. It’s just back to where it was pre-unicorn.

Also, please note that this doesn’t mean prices dropped back to where they were pre-unicorn. It just shows that the yearly appreciation rates returned to their normal historical norms but prices are actually still rising. 

Let’s look at some stats a little closer to home. Here is a chart showing numbers of closed oceanfront condo sales each year since 2004 (including a projected 2023 number based on YTD sales). 

It’s pretty easy to pick out the unicorn years (2005 and 2021, 2022) and now 2023 is on track to drop back to the pattern from 2018 to 2020. There were 2612 sales in 2005, 2804 sales in 2021 and 2159 sales in 2022. No other year produced more than 1746 sales. 

Here is a chart showing median yearly appreciation for 2013 to 2023.

The years 2020 and 2022 both show far bigger increases than any other years - 17.8% and 25.7% respectively. Appreciation was no more than 4.7% in any of the other years.  I think the appreciation was not as high in 2021 because, once prices started going up, listings started pouring in from owners taking advantage of the situation, inflating the supply side of the equation. This also produced a huge number of sales in 2021 as shown in the previous chart. As inventory dropped to historic lows in 2022 and demand stayed high, prices skyrocketed. Also, note that median prices either increased or remained flat in every year since 2013 (no yearly decreases).

This next graph comes from Info Sparks, the statistical reporting service provided by our Coastal Carolinas Association of Realtors. It shows monthly median sales prices per square foot for all condos sold in our market (not just oceanfront). This is a particularly good graph because it takes into account the sizes of the condos. Graphs which only show median prices can be misleading because sales of smaller condos always outnumber sales of larger condos, making the median price increases lower than they really are for condos which are the same size.

As you can see, the median price per square foot increased very slowly from 2013 until early 2020 ($112K to $120K, 9% in 7 years). Then, between April 2021 and May 2022, it increased from $120 to $228. That’s an 84% increase in 13 months! And then it stopped. In the 10 months since then, it has now decreased from $228K to $214K (-6%). 

I could show chart after chart  - days on market, percentage selling price to list price, you name it, and they would all show similar patterns of anomalous numbers compared to “normal” years. 

Lesson: Don’t try to Time the Market!

Please do not change your investment and life decisions to try to time our real estate market. Events like this defy prediction. Exceptional markets just seem to pop out of nowhere and develop a life of their own. No one knows when they will start or end.

There are potential buyers who didn’t buy when the price per square foot had gone up 20% because they wanted to wait until prices came down. Prices went up another 64% after that. The last “bust” market when prices decreased rapidly ended in 2011, 12 years ago. How long will these buyers wait? 

There are sellers who didn’t sell last fall because they anticipated prices going up even more and now a year has passed and prices are at the same level or lower and they’ve missed out on other investments or life opportunities. This most recent period of rapid appreciation actually ended last summer (2022) and the one before that ended in 2005, 18 years ago (George W Bush had just been sworn in for his second term.). How long will these sellers wait?

When it makes sense to buy, don’t wait. If there are reasons for you to sell, go ahead and do it now, whenever “now” is. Oceanfront and resort condos are good long-term investments and of course they are ideal second homes or even primary residences for many.

Don’t listen to the hindsight prognosticators. Everyone’s great at explaining why something happened after the fact but no one has been able to consistently forecast market swings like this. We had low interest rates, a big jump in vacation rental income and everyone was excited about the end of the pandemic but there was nothing to indicate that prices were going to increase 9 times as much in a year as they had in the previous 7 years combined. We’ve had other “good news” years that didn’t produce this outcome. The truth is that no one saw a boom like this coming. And then it ended abruptly in the middle of 2022 and no one realized that either until months later.

One undeniable benefit for current owners is that the crazy appreciation re-set prices at levels 50% to 80% higher than they’ve been for the past decade or so. It was overdue. Let’s hope they stay there.

I’ve sold through two giant upswings and two giant downswings (yes, those happen too). But most of the time, oceanfront and resort real estate has been like it is now. Expect modest appreciation over time with occasional sharp jumps. There is some predictable seasonality in sales volumes but not prices. Individual resorts can be affected by issues specific to their buildings. Vacation rental incomes vary some from year to year, largely depending on the weather, with gradual increases over time. 

Regardless of your timing or your reasons for buying or selling, my team can help you.

Please Contact The Beach Pro Team If:

You are thinking of buying or selling an oceanfront or resort condo in our area

                                                                  Or

You are considering moving to our area or know someone else who is

                                                                  Or

You are an agent who has clients thinking of moving here or buying or selling in our area

                                                                  Or

You currently own a condo in our area and want a permanent home

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

See you at the beach!

Here are some new reviews published on Google. 

• Kevin is amazing very friendly easy to communicate with. He is very knowledgeable about buying and selling. Our experience had its ins and outs and he walked us through each step. Highly recommend Kevin. Kim.

• It was a pleasure working with Gene from Remax. My property was listed and sold within less than 3 weeks with no problems at all. Everything went by very smoothly, he even recommended us a closing attorney. I highly recommend him! Jessie. Carolina Dune. Myrtle Beach.

We just started collecting Google reviews. At this time we have over 150 Zillow reviews which can be seen on our website Beach Pro Team reviews. 

Grand Strand Market Report - June 2023