Dear Gene Carter Team,
Summary
March has been the busiest month we’ve had in many years.Teressa and I have already sold 34 properties these first three months of 2021. All but a couple were resort and oceanfront condos. I added 5 new listings to MLS this past Friday and 4 of them were sold by Monday. There have been 1000 to 1200 active oceanfront condo listings at any given time for the past 12 years but the number has dropped from 768 last month to 640 today, a 17% reduction in inventory in 30 days. Sales for condos off the beach are just as hot. 1BRs and efficiencies as well as condotels in general are still lagging the market but the pace is picking up for all of these as well.
Does all this crazy activity mean prices are skyrocketing? Generally, no. Other than a few exceptions, we are seeing solid price increases in most segments of the market but not galloping appreciation. However, extremely low inventory in a few segments could lead to some big price gains in the near future.
One of the market segments with practically no inventory at this time is oceanfront condos in North Myrtle Beach - particularly the newer buildings. If you own an oceanfront condo in North Myrtle Beach or in one of the non-condotel buildings on the ocean anywhere on the Grand Strand, contact me if you want to test the market in a new price range!
Are buyers snapping up condos to flip them for big profits? No. Unlike in our “boom” about 15 years ago, I have yet to encounter one true speculator planning to “flip” a property. Buyers are buying for the right reasons. They are buying properties to live in, use as second homes, or rent out as investment properties.
What to expect? Despite demand increasing and inventory dropping, I don’t think prices will just keep going up in a straight line as they did during the bubble back in 2005.
For one thing, lenders are being much more strict than they were at that time. They now insist on seeing an income stream sufficient to cover a borrower’s debt-to income ratio, regardless of his or her assets. They are also limiting the number of loans to any one individual.
Also, appraisers are operating under strict rules which only allow them to value properties according to directly comparable previously closed sales (same building, same floor plan, closing date usually within 90 days). In other words, whenever a listing goes under contract with a financing contingency at a price higher than the last one similar to it sold for, it’s likely it will not appraise at the selling price agreed upon by the buyer and seller, even if there were multiple offers at that price.
The other big reason I think we will see structured, gradual appreciation instead of extremely rapid price increases is because the supply side for oceanfront and resort condos has room to grow to match the buyer demand for most segments of the market. There is a large potential source of listing supply in the huge number of people who bought 10 to 20 years ago who have been waiting to sell for years until market prices increased. This requires some explanation.
The following is the pattern I’ve seen for the past 20 years in individual buildings and across the market as inventory levels drop. As supply decreases, as is happening now, prices start going up as the increasingly rare sellers demand higher prices. Prices don’t usually go up until the supply is at or approaches zero (at least for a particular floor plan or attractive building location). As prices go up, sellers who have been waiting for better market conditions now decide to list, thereby adding to the supply, which, in turn, tends to moderate prices. If demand remains strong, inventory drops again until prices start going up, followed by more listings and the cycle starts over. Be aware that if demand is not strong enough, prices can plateau at one level for a long time - often for years - even though sales continue. With present market conditions, I do expect prices to increase. In most segments of the market, they already have. But the price increases will probably come in cycles over time.
One wild card that could result in extreme appreciation is if speculators start buying in large numbers or if demand for our area becomes superheated for some other reason, overwhelming the number of potential sellers. Anything is possible but I think the restraints from the lenders and appraisers will probably keep this from happening.
Buyers - There are still plenty of good deals out there but anticipate higher prices going forward. This is good news. Wouldn’t you rather buy in a market where prices are going up than one in which they are not? Also - we still have low interest rates and a strong rental season is right around the corner.
Sellers - It’s a great time to sell - lots of eager buyers out there. Your property can probably be sold quickly at a price higher than it could’ve been not so long ago. Keep in mind, however, that prices in our oceanfront resort condo market typically do not go up in a straight line so tomorrow might not be a better time to sell than today. The cycle I described earlier also varies from building to building and even floor plan to floor plan. If you have been waiting for a while to sell, now might be a good time. Please contact me and we can go over your particular situation.
Other News:
Late Covid surge as people drop precautions but the end is in sight as vaccinations will be available to everyone 16 and over statewide in the coming weeks.
All reports point to an exceptionally strong upcoming vacation rental season.
Southwest Airlines will start flights to our area for the first time.
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!
Some of you may be getting bored with my reports of how busy our market has been in recent months but get ready for another one. This has been the busiest month yet. After the last few lengthy analytical newsletters filled with lots of graphs, I’ll spare the illustrations and just give you some anecdotal data and personal observations.
Teressa and I have already sold 34 properties in less than three months. All but a couple were resort and oceanfront condos. These are just our new contracts. We also had some additional closings from last year’s contracts mixed in. By the way, although most local agents are doing well, we’re doing way better than most.
I added 5 new listings to MLS this past Friday and 4 of them were sold by Monday.
I mentioned in last month’s newsletter that there were only 768 active oceanfront condo listings and that this number was far less than the normal 1000 to 1200 listings we’ve seen at any given time for the past 12 years. Well, I checked today and there are now only 640 active oceanfront condo listings. That’s a 17% drop in inventory in 30 days.
Sales for condos off the beach are just as hot. Magnolia Pointe, a large golf course condominium complex in which Teressa has sold a number of properties, had 107 sales in 2020. Magnolia Pointe has over 850 residences. There are currently only 7 active listings for sale - less than 1 percent of all the units in the complex! Of these, only one has been on the market more than 28 days.
As busy as it’s been, there are a few segments of the market still lagging. For instance, of those 640 current active oceanfront listings, 359 of them are one bedrooms and efficiencies. These are definitely still selling slower than the larger condos although the pace is picking up.
Condotels in general are still selling slower than other parts of the market but the pace is picking up for these as well, especially for the larger condos.
Does all this crazy activity mean prices are skyrocketing? Generally, no. Other than a few exceptions, we are seeing solid price increases in most segments of the market but not galloping appreciation. However, extremely low inventory in a few segments could lead to some big price gains in the near future.
One of the market segments with practically no inventory at this time is oceanfront condos in North Myrtle Beach - particularly the newer buildings. If you own an oceanfront condo in North Myrtle Beach or in one of the non-condotel buildings on the ocean anywhere on the Grand Strand, contact me if you want to test the market in a new price range!
Are buyers snapping up condos to flip them for big profits? No. Unlike in our “boom” about 15 years ago, I have yet to encounter one true speculator planning to “flip” a property. Buyers are buying for the right reasons. They are buying properties to live in, use as second homes, or rent out as investment properties.
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