Posted By Gene Carter @ Oct 29th 2021 9:45am In: Monthly Real Estate News


Grand Strand Real Estate News


October 2021


Volume 2021 Issue 10

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Dear Gene Carter Team,


Summary


As we move into the “offseason”, we are still seeing strong vacation rentals and lots of buyer activity but we need more sellers!

Inventory, particularly for oceanfront condos, continues to drop. As I write this, there are 192 active listings in oceanfront buildings on the entire Grand Strand, down from 234 a month ago, setting a new monthly record for the lowest inventory I’ve seen in 36 years of selling oceanfront real estate (See the updated graph in the complete newsletter below). The number of active condo listings not in oceanfront buildings also declined again, from 354 last month to 315 today. 

So if you are thinking of selling, should you wait to see if prices go even higher? If you are thinking of buying, should you wait for the market to cool down and prices to decrease? My answer to both questions:

If you have a good reason to sell, then sell now. 

If you have a good reason to buy, then buy now. 

This advice applies to everyone in every situation. Trying to time the market is nearly impossible and often costly.

Sellers- Why You Should List NOW

NOW, while resort condo listings are SELLING QUICKLY at HIGH PRICES, is the time to ask yourself if you are probably going to sell in the next few years. If not, just enjoy the ride. But if selling is in your plans during the next few years, please consider the following.

Increasing prices - but for how long?  NOW is the best time to sell in 15 years. Situations like this are golden opportunities for sellers but they have rarely lasted for long in our market (as illustrated by the history below). This might be your best chance for years. 

I believe in real estate. Over time it will only go up in value. But no one knows the path the future will take and there’s no assurance that values will continue to rise at their recent pace indefinitely. The past can give us some perspective.

Price history - past 36 years. The big takeaway from the following history is that we have not seen continuous price increases year after year for resort condos in our area so when we do have a period of rapid appreciation, best take advantage of it. Prices have historically remained relatively flat for many years at a time with brief periods of sharp increases (or decreases) every decade or so. 

We are now in only the third surge in prices I’ve seen since I started my real estate career in 1985 and the other two only lasted for a year or two each.

There have also been two occasions in my career in which prices for oceanfront and resort condos in our area dropped sharply. Both were sudden and both were triggered by government financial or tax policies.
 
As can be seen in the graph in the complete newsletter below, prices bottomed out in 2010 and remained relatively flat until 2020 when average prices increased by about 12% over 2019 prices. Prices for oceanfront condos in 2021 so far are averaging $241,352, an increase of 11% over 2020 prices and a total of 19% over 2019 prices. I think that current pending sales at high prices will result in a higher average at year-end.

Exceptionally low market inventory. The very best time to sell is when your property is the only listing of it’s type. This often allows you to list at a new, higher price level, negotiate better terms (no contingencies, for example) and probably sell very quickly. NOW is one of those rare opportunities for lots of condo owners. There are many resorts in which there are currently no listings with desirable locations or floor plans. In some resorts, there are no listings of any type. Owners, please check with me if you are interested in selling. You might be surprised at the price your property can bring.

Tax advantages from selling in this calendar year. If there is a tax advantage to selling before the end of the year (to offset a loss or a gain), we can probably still get it done for you because properties are selling so fast - but time is running out. 

What could stop the current seller’s market?  I don’t anticipate another meltdown and massive recession to devastate prices (as happened after the 2005 market peak) but here are some other factors which will eventually slow our resort condo market down. 

Higher prices entice more owners to list, increasing inventory, putting downward pressure on prices.

Higher real estate prices contribute to inflation which, in turn, drives interest rates higher, decreasing buying power for potential purchasers.

This year’s sky-high vacation rental incomes may or may not be sustainable. I hope this year is just the beginning of bigger rental incomes in the future but there are those who think this year could be an anomaly fueled by lots of Covid cash in the economy and the pent-up demand of vacationers.

Will there be any government, tax, or regulatory changes that may affect our market? 

Owners, if you want to know what price your property could command in today’s market, please contact me. You will probably be pleasantly surprised!

Buyers - Why You Should Purchase NOW

Despite the hot seller’s market for Grand Strand oceanfront and resort condos, there are definitely reasons to buy NOW as well. 

Prices may very well continue to go up for a while and current pricing may be as good as it gets. 

Oceanfront and resort condos along the Grand Strand are still inexpensive compared to comparable properties in other resort areas. 

Interest rates are still at historically low levels but, as previously mentioned, there are no guarantees that they will stay this low. 

Don’t underestimate the money saving aspects of these low interest rates, even if you have to pay a little higher price at this time. 

NOW is definitely the time of year to buy a vacation rental property if you plan to either handle the rentals yourself or switch to one of the offsite or virtual companies for lots of reasons (read full article for details).

Whether you are thinking of selling or buying, please contact me or Teressa to advise you as to the specific market conditions for the property you own or the one you would like to own. We look forward to hearing from you.

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,

We are supposedly moving into the “offseason” but the beach has still been mighty busy with visitors and buyers galore. My wife and I arrived on Monday morning at the Myrtle Beach Airport from a trip to Boston and it was packed! Strong vacation rentals have been reported by all the owners and rental managers with which I’ve spoken. Buyers are making offers left and right and my team has been fielding requests from a record number of inquiries. 

The one thing we don’t have enough of is sellers! Right now, every single one of my listings is under contract. I listed 2 oceanfront condos last Thursday at prices more than $50K above recent comparable sales and both were under contract by Friday night, one above asking price and the other very close to it. 

Inventory, particularly for oceanfront condos, continues to drop. As I write this, there are 192 active listings in oceanfront buildings on the entire Grand Strand, down from 234 a month ago, setting a new monthly record for the lowest inventory I’ve seen in 36 years of selling oceanfront real estate (See the updated graph below). The number of active condo listings not in oceanfront buildings also declined again, from 354 last month to 315 today. 


So if you are thinking of selling, should you wait to see if prices go even higher? If you are thinking of buying, should you wait for the market to cool down and prices to decrease? My answer to both questions:

If you have a good reason to sell, then sell now. 

If you have a good reason to buy, then buy now. 

This advice applies to everyone in every situation. Trying to time the market is nearly impossible and often costly. If someone had told me last spring, as Covid shut down the entire world, that we were going to see the biggest real estate surge in our market in 15 years and the highest rental incomes ever in 2021, I would have thought they were crazy. Who knows what next year will bring. Here’s what I know NOW.

Sellers- Why You Should List NOW

NOW, while resort condo listings are SELLING QUICKLY at HIGH PRICES, is the time to ask yourself if you are probably going to sell in the next few years. If not, just enjoy the ride. But if selling is in your plans during the next few years, please consider the following.

Increasing prices - but for how long? NOW is the best time to sell in 15 years. Situations like this are golden opportunities for sellers but they have rarely lasted for long in our market (as illustrated by the history below). I talk to owners every week who are still kicking themselves for not selling at the market peak in 2005.They thought prices would just keep going up forever. Why take advantage of a seller’s market today when I can sell for even more tomorrow, right? Only they couldn’t.  

I believe in real estate. Over time it will only go up in value. Hopefully, current owners will enjoy even higher price levels in the near future. But no one knows the path the future will take and there’s no assurance that values will continue to rise at their recent pace indefinitely. The past can give us some perspective.

Price history - past 36 years. The big takeaway from the following history is that we have not seen continuous price increases year after year for resort condos in our area so when we do have a period of rapid appreciation, best take advantage of it. Prices have historically remained relatively flat for many years at a time with brief periods of sharp increases (or decreases) every decade or so. The periods of rapid appreciation have generally lasted for only a year or two and, other than the most recent one, most didn’t seem to have any single definable cause - prices just seemed to randomly go up for a while.

We are now in only the third surge in prices I’ve seen since I started my real estate career in 1985. The first was an increase of about 20% back in 1995 (not sure why). The second was the huge run-up in prices from 2003 to 2005 (this turned out to be the bubble that burst when the “great recession” hit a few years later). Now, after almost 10 years of flat prices, we are seeing dramatic increases again. By the way, I don’t think we are in a “bubble” this time, at least not yet. There are still no “flippers” buying - only end users. Also, our prices were way overdue to catch up with those in other oceanside resorts around the country. 

There have also been two occasions in my career in which prices for oceanfront and resort condos in our area dropped sharply. Both were sudden and both were triggered by government financial or tax policies. Resort condo prices plummeted in 1986 because of Reagan’s tax overhaul which severely reduced the tax benefits of investment real estate. This resulted in a big government bailout (“Resolution Trust”) of hundreds of bankrupt lenders throughout the country. Prices remained lower for a number of years. 

The other big drop in average prices started in 2007 and lasted until about 2013 (See graph below). As explained in detail in the comments about the graph at the bottom of this newsletter, the big drop in market values actually occurred mainly between 2005 and 2007. This event was caused by the cascading effects of the “Great Recession” which, according to most analysts, was the result of years of poor banking decisions based on loosened lending regulations - which were tightened significantly afterward. As you can see in the graph below, prices bottomed out in 2010 and remained relatively flat until 2020 when average prices increased by about 12% over 2019 prices. Prices for oceanfront condos in 2021 so far are averaging $241,352, an increase of 11% over 2020 prices and a total of 19% over 2019 prices. 


*See comments regarding this graph at the bottom of the newsletter.

Exceptionally low market inventory. The very best time to sell is when your property is the only listing of it’s type. This often allows you to list at a new, higher price level, negotiate better terms (no contingencies, for example) and probably sell very quickly. For oceanfront and resort condos, being the only comparable listing is rarely possible. You are usually competing with multiple other condos which are virtually identical, unlike in the single family home market in which most listings are relatively “unique”. NOW is one of those rare opportunities for lots of condo owners. There are many resorts in which there are currently no listings with desirable locations or floor plans. In some resorts, there are no listings of any type. Owners, please check with me if you are interested in selling. You might be surprised at the price your property can bring.

Tax advantages from selling in this calendar year. If there is a tax advantage to selling before the end of the year, we can probably still get it done for you because properties are selling so fast - but time is running out. For instance, if you have a taxable gain from a sale in 2021, this could possibly be offset by selling your property on the Grand Strand at a taxable loss in this same calendar year. On the flip side, if you have a taxable loss from a sale in 2021, this might be a good time to sell your Grand Strand condo at a big taxable profit and avoid taxes by offsetting them with the loss on the other sale. 

What could stop the current seller’s market? 

I don’t anticipate another meltdown and massive recession to devastate prices (as happened after the 2005 market peak) but here are some other factors which will eventually slow our resort condo market down. 

Higher prices entice more owners to list, increasing inventory, putting downward pressure on prices. These are discretionary sales, unlike most single family home sales (in which the seller must now find somewhere else to live), so there’s generally nothing holding an owner back from selling if he so chooses - and a higher price can be a pretty attractive reason to sell. 

Higher real estate prices contribute to inflation which, in turn, drives interest rates higher, decreasing buying power for potential purchasers. Inflation is currently at its highest in years and we have seen interest rate increases in recent weeks. 

This year’s sky-high vacation rental incomes may or may not be sustainable. One of the driving factors for the higher prices has been the huge rental incomes this year, which are enticing buyers to pay top dollar while simultaneously making owners hesitant to sell. I hope this year is just the beginning of bigger rental incomes in the future but there are those who think this year could be an anomaly fueled by lots of Covid cash in the economy and the pent-up demand of vacationers.

Will there be any government, tax, or regulatory changes that may affect our market? Changes are being discussed for capital gains taxation rates, 1031 exchange revisions, financing regulations, changing or eliminating the “stepped up basis” for inherited property, etc.

Owners, if you want to know what price your property could command in today’s market, please contact me. You will probably be pleasantly surprised!


Buyers - Why You Should Purchase NOW

Despite the hot seller’s market for Grand Strand oceanfront and resort condos, there are definitely reasons to buy NOW as well. 

Prices may very well continue to go up for a while and current pricing may be as good as it gets. 

Oceanfront and resort condos along the Grand Strand are still inexpensive compared to comparable properties in other resort areas. They have been undervalued for many years and the price increases we are seeing now are long overdue. 

Interest rates are still at historically low levels but, as previously mentioned, there are no guarantees that they will stay this low. Rising inflation is already pushing lenders to increase their rates. 

Don’t underestimate the money saving aspects of these low interest rates, even if you have to pay a little higher price at this time. The average price for oceanfront condos has increased 19% in two years but if the interest rate goes from 2.75% to 4%, this is a 45% increase in the amount you will pay in interest over the life of the loan. 

NOW is definitely the time of year to buy a vacation rental property if you plan to either handle the rentals yourself or switch to one of the offsite or virtual companies. First, there is a South Carolina law which states that a buyer must honor reservations for 90 days after closing. Most rental companies are interpreting this to mean that you must stay on their rental programs for 90 days. You can still start booking future reservations during the 90 days but keep in mind that vacation renters start booking their spring and summer vacations in January. Also, most buyers using this rental management strategy spend time and money upgrading their newly purchased properties and then obtaining new photography for their marketing. In addition to these time sensitive reasons, it’s currently taking at least 30 days for most cash purchases to close and 45 to 60 days for financed purchases to close so this must also be factored in. I repeat, if you plan to self-manage or switch to an offsite company, NOW is the time to buy.

Tax advantages can be reasons to buy NOW. Many of our buyers (and sellers) are taking advantage of 1031 tax deferred exchanges. It makes sense for many buyers to pay premium prices (and defer capital gains taxes) here because they took advantage of hot markets to sell like-kind properties in other areas or along the Grand Strand at high prices.

Whether you are thinking of selling or buying, please contact me or Teressa to advise you as to the specific market conditions for the property you own or the one you would like to own. We look forward to hearing from you.

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.

See you at the beach!

*This graph is a bit misleading in two ways. First, as for the 2021 YTD average, many of the sales at the highest prices have gone under contract in recent weeks and have not closed yet so I believe the year-end average price will be higher. Second, the rise and fall of prices between 2004 and 2010 was actually much more pronounced than it appears on the graph because of the huge number of preconstruction sales from 2004 to 2007. Contracted selling prices actually peaked in 2005 after only a couple of years of sharp increases but this graph is based on closed sales, which did not occur until 2 to 3 years after the pre-construction sales. By the time most of the new buildings were completed in 2006 and 2007, the real values were already far lower - the reason so many owners either never closed at all or defaulted shortly after closing. However, only the closed sales, at the inflated 2004 and 2005 prices, showed up in these stats, making the 2007 averages far higher than truly attainable selling prices at that time. 

Beach Pro Reviews

Here are some new reviews published in Zillow. 


  • We listed our condo with Gene and everything worked out as planned. No problems or issues. Would recommend his services and would use him again if needed. Rob. Verandas. North Myrtle Beach.

  • Finding Teressa for a realtor was a godsend! She helped us clarify what type of property we should focus on and immediately got to work locating properties and lining up walk-thrus. Through her connections with other realtors, she located the property type of interest that wasn't even listed on the market! We recently closed on our new condo and couldn't be happier. Highly recommend Teressa and the Beach Pro Team! Diane. Coquina Harbour. Little River.

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 100 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 - September 2021

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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