|
Grand Strand Real Estate News
|
|
|
|
|
October 2020
Volume 2020 Issue 9
|
|
|
If you would like to receive this monthly newsletter CLICK HERE
|
|
|
Dear Gene Carter Team,
Summary
Sales activity for oceanfront and resort condos remains strong but it’s uneven in different segments of the market. I charted sales data for the period June 1 to October 25 (Charts below in Newsletter) to compare the percentage changes from the same period in 2019.
First chart shows that overall condo sales are up 25% but most of the increased activity is in the non-condotel buildings (34%). Meanwhile, condotel sales are up only 2%. Condos off the beach have also been selling well (19% increase). Possible reasons for the disparities - Low conventional interest rates for non-condotels (relative to condotel rates), large numbers of true second home and VRBO rental buyers and weak investor interest (primary condotel buyers).
Next chart shows overall condo sales by number of bedrooms. Large condos are selling better than small ones. Efficiencies down 26%, 1BRs up 7%, 2BRs up 22%, 3BRs up 56% and 4BRs up 42%. Possible reasons: Weak investor sales (They primarily buy small condotel units) and lots of second home and VRBO rental buyers, who prefer larger condos.
Next chart shows condotel sales by number of bedrooms. Very similar pattern to overall condo sales with large condos selling better than small ones. One difference is that the large condotels are being bought almost exclusively by VRBO rental buyers rather than true second home buyers.
Last chart shows new condo listings from March 15 to Oct. 25. Only 1% more new listings in 2020 you but once again the distribution is uneven. Follows a similar pattern to the sales with more new listings for large condos. The higher activity levels and increasing prices probably prompted more owners of large condos to list.
Sellers: It’s a great time to sell a non-condotel condo - either oceanfront or off the beach. The low interest rates are fueling sales. Condotels, with the exception of the efficiencies, are still selling well, particularly the large ones (2 to 4 BRs). I am anticipating improvement in the coming months as investors return. I don’t think we’ll see sharp price increases so I don’t believe it’s advantageous to wait.
Buyers: Low interest rates and reasonable prices make it a super time to buy any properties which are not condotels because of the very low cost of ownership. There are some excellent “deals” available in the condotels as well because of this year’s lower than average incomes and mediocre sales pace.
Please contact us if you want to buy or sell to discuss your particular situation.
Covid update. After decreasing to 10 to 20 new cases per day, new cases have spiked to 50 to 80 per day. Masks are still required in all of the municipalities and the county is considering changing back from their “masks strongly recommended” policy to mandatory. Most visitors and locals have adjusted to the new normal and it’s been a pretty busy fall.
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!
I hope you and your families are healthy and well. Unfortunately, Covid is making a bit of a comeback in our area but I’ll cover that in more detail later.
Sales activity for oceanfront and resort condos remains strong, but as I alluded to last month, it’s uneven. Certain segments of the market are doing better than others. My previous comments were just personal observations but now I have data to back it up.
The following charts examine the changes from 2019 to 2020 for various sales and listing statistics. For the sales charts, I chose the dates June 1 to October 25 because early June was about the time the business closings and short-term rental restrictions were lifted. Since the following sales data is based on closed sales rather than new contracts, it actually lags the present market by 30 to 45 days but I think the patterns are still pertinent.
|
|
|
Closed Condo Sales June 1st to October 25th
|
|
|
As you can see, overall condo sales are up 25%. Most of the increased activity, however, is in the non-condotel buildings (34%). Condotel sales are up only slightly (2%). Condos off the beach have also been selling well with an increase of 19%. The stats match up well with my personal observations.
Why are condotel sales lagging? First of all, overall condotel sales are not really lagging - they are actually ahead of last year’s sales. It’s just that the sales in non-condotel buildings, as well as developments off the beach, have been extraordinarily strong. In another blow to condotel sellers, although it doesn’t show up on this chart, in 2020, we completely lost the strongest condotel selling season (March and April) to Covid.
I think one reason that condotel sales have not matched sales for the other buildings is that investors, the primary buyers for condotels, have been holding back because of the unusually low rental incomes this year (due to Covid). Hopefully they will be back soon.
Another factor is that the interest rate reductions for condotel financing have not kept pace with the reductions for conventional loans, resulting in an unusually large gap between conventional interest rates and condotel interest rates. In other words, the mortgage payments for a condotel are much higher than those for a non-condotel at the same price. There are lots of good reasons to buy condotels of course. For instance, condotel rental incomes tend to be much higher and they usually have more amenities. I’ll cover this in more detail next month.
|
|
|
The next chart shows the percentage changes for closed sales for all oceanfront condos during the same time period by number of bedrooms.
|
|
|
Condo Sales for All Oceanfront Condos by Number of Bedrooms
|
|
|
This also matches my observations that large condos seem to be selling better than small ones. The numbers couldn’t be more glaringly obvious. Efficiencies down 26%, 1BRs up 7%, 2BRs up 22%, 3BRs up 56% and 4BRs up 42%.
Also, as with the previous chart, it’s not really a case of low sales for small condos, since 1BR sales have actually been higher. It’s just that the larger condos have shown dramatic increases.
I think this chart also reflects the shortage of investors currently buying since they tend to zero in on 1BRs and efficiencies which, with on-site rental programs, typically have the best returns.
One other explanation is that many of our buyers recently have been either looking for true second homes, primary residences, or properties they could rent out using VRBO and airbnb. Larger condos work best for all of these purposes.
|
|
|
For this next chart I separated condotels from the rest of the market to see if the same pattern of sales for different numbers of bedrooms resulted.
|
|
|
Condotels - Closed Sales by Number of Bedrooms
|
|
|
Sure enough, the pattern is very similar to the one for all oceanfront condos - a percentage decrease in sales for efficiencies, no change for 1BRs, and increasingly high percentage increases for more bedrooms. Note that for 4BRs, the data set was small - 5 sales in 2020 vs. 1 sale in 2019 so the 400% increase should be taken with a grain of salt.
I think the lack of investor interest is suppressing the small condo sales, as previously discussed. However, the large condotels are rarely being bought as true second homes or primary residences, as they are in the non-condotel buildings. The majority of the purchasers for these that we’ve dealt with, whether they are our buyer clients or other agents’ buyers who are purchasing our listings, are buying them as vacation rental investments. Most of these buyers are not staying with the onsite rental management programs. They are renting through VRBO and airbnb, especially the 3BRs and 4BRs. Whatever their reasons, these buyers have fueled increases in sales for large condotel listings.
|
|
|
Everything we’ve looked at so far focuses on sales. Let’s take a look at the listing side. There’s no way to compare inventory levels for subsets of our market during the same months year-over-year so I compared the numbers of new condo listings instead. I looked at the period of March 15 to October 25. This is a slightly longer time period than the closed sales data. I wanted to include the time right after the pandemic hit.
|
|
|
New Condo Listings - March 15th to October 25th
|
|
|
Overall, the number of new condo listings during this time period didn’t change much from year to year – only a 1% increase. Once again, however, it was not an even distribution. I was a little surprised that fewer 1BR condos were listed this year. As expected, there were more 2BR, 3BR and 4BR listings as slightly higher prices, especially in the non-condotel buildings, encouraged more people to list.
I’m also not surprised that the non-oceanfront condo new listings decreased. We’ve noticed a tightening of the inventory. Combined with the increased sales volume, this is leading to quicker sales and higher prices.
|
|
|
So what does this all mean? Except for efficiencies, sales for every other category of condos have been higher since June this year compared to 2019. Sales for large condos have been much higher. Non-condotel buildings, which can take advantage of historically low conventional interest rates, have been selling better than condotels. Yet condotel sales have still been higher for the most part in 2020 during this time.
Sellers:
If you own a large condo which is not a condotel, it’s a great time to sell. There’s high demand and the low interest rates have increased the size of the potential buyer pool.
If you own a condotel, the activity level is still high, especially for the larger ones. The sales for the 1BR condotels have actually been about even with last year so only the efficiency sales have really been suffering. From a cash flow standpoint (as I’ve stated repeatedly in previous newsletters), it’s a good time of year to sell. I do feel that the sales activity for condotels, including the smaller ones, will improve in the coming months as the investors reenter the market. It may take a while for this to be reflected in higher prices however so if you need or want to sell, I don’t think it’s worth the wait.
For owners of condos away from the beach, there hasn’t been a better time to sell in the past 10 years. Inventory is shrinking and pricings are creeping up. Low interest rates work in your favor.
Buyers:
If you want to buy a large condo (or a small one) that’s not a condotel, it’s a great time to buy. Interest rates are incredibly low, making ownership affordable for many more potential buyers. The prices have been edging up but this has been resulting in more listings which means there’s a little more inventory (more choices) than there was a few months ago, although it’s still pretty tight.
If you’re looking to buy a condotel, it’s an excellent time to buy because there are some deals out there right now. Don’t expect fire sale prices but there are a number of situations in which condotels can be purchased at prices 10% to 15% less than they were selling for a year or two ago. Please contact me if you want to take advantage of this situation. A number of my own listings are exceptionally well priced at this time.
If you’re looking for a condo off the beach – on the golf course, waterway, or just within reasonable driving distance of the ocean, inventory is tightening as sales increase and listings decrease. On the other hand, low interest rates will make your cost of ownership low, even at somewhat higher prices.
I’ve mentioned interest rates repeatedly. Don’t take these for granted. The current rates are not going to last forever.
If you’re thinking of buying or selling, please contact us and we will be glad to go over your particular situation and assist in any way we can.
Also, keep in mind that Teressa is an expert at finding homes, particularly new homes, for folks wanting to move to the area.
Now for the Covid report. After new cases bottomed out at around 10 to 20 per day for Horry County a month or so ago, they have spiked back up to the range of 50 to 80 per day. There have also been some recent deaths after a month or two without any. North Myrtle Beach, Myrtle Beach and Surfside Beach all just renewed their face mask mandates for another 60 days. The county had dropped theres in favor of “strongly recommending” the wearing of masks a few weeks ago. They are now considering reinstituting the mask policy countywide. Schools are open and parents have the option of complete virtual instruction or a hybrid of in-school instruction (2 days per week) combined with virtual instruction. Most locals and visitors seem to have adjusted to the new normal. It’s actually been a pretty busy fall.
|
|
|
By the way, this month’s newsletter is being called the October newsletter. The most recent edition was called the August newsletter. Don’t worry, you did not miss the September newsletter. Most of our statistical reports that we receive, other than the ones I put together from my own research, are not available until mid month so I have been writing the newsletters to cover the previous months. So the January newsletter came out in late February and so on throughout the year. From now on, to avoid confusion, the newsletters will reflect the months in which they are actually published rather than referencing the prior month’s sales data.
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!
|
|
|
Here are some new reviews published in Zillow.
- Gene was exceptional from the get go. There were several road blocks we had to work through but Gene persevered and sold our property. We bought and sold our property 18 years apart with Gene and his team. Thanks Gene. Pete. Sands Ocean Club. Myrtle Beach.
- Gene has helped up buy and sell multiple properties in Myrtle Beach. We wouldn't work with anyone else! Gene is so knowledgeable about the Myrtle Beach market, and he has great info about the expenses and income possibilities of oceanfront properties. We highly recommend Gene and his team! Fred and Lynne. 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.
|
|
|
|
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.
|
|
|
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.
|
|
|
|
Comments (3)
on 03/01/24
on 02/25/24
on 01/23/24
Post a Comment