Dear Gene Carter Team,
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.