Dear Gene Carter Team,
Summary
Although I won’t make any predictions, in this month’s newsletter I will go over some of the events and trends that could directly or indirectly affect our local oceanfront and resort condo market.
Also, real estate tax bills have now been sent out. Here’s a link to our Closed Sales Histories, which shows details for all closed sales since 2009 for about 200 Resorts.
BeachProTeam.com/nl-ClosedSales
Oceanfront and Resort Condo Market Conditions
Overview: After a busy September, my sales activity has slowed significantly in the first two weeks of October, possibly because of the upcoming presidential election. The overall market conditions have not changed. Listings for large condos, particularly ones in good condition with lots of upgrades, are relatively scarce and the prices are holding up or only dropping slightly. For the smaller condos in most buildings, it’s a buyer's market. A few buildings with exceptional rentals are bucking this trend.
Sellers: My advice continues to be - if you want to cash out on the big price increases in 2021 in 2022, now is the time to do it. I don’t see any more upside for a long time and there is a real risk prices could decline. There is even more uncertainty now because of the recent storms and the upcoming election. It’s also a good time to sell because we are at the end of the peak rental season. Please contact me if you want to discuss a property you own.
Buyers: You have far more choices than have been available in the past several years and there are some motivated sellers out there. Contact Teressa or Kevin to help you find the perfect property.
Active Oceanfront Condo Listings
The number of active oceanfront condo listings increased slightly after being flat for a couple of months. As of October 15, there were 1006 active listings, compared with 995 last month. The number of active condo listings off the beach also increased, to 1778 (up from 1749 last month). (See chart in newsletter)
Oceanfront Condo Monthly Metrics
In September’s chart for month-to-month metrics for oceanfront condos (in newsletter). Everything was down (average sales price, new listings, pending sales, closed sales, closed dollar volume) except the number of active listings, which was up 1.1%. Most notably, the pending sales were down 15.7% from the previous month. Closed sales (only 99 on the entire Grand Strand) were down 3.8% from the previous month and 25 %from September 2023.
New Homes and Resales
In September, there were more new construction closed sales than closed resales, 495 vs. 419. Once again, there were far more new resale listings than new construction listings, 647 vs. 447. The median sales price for resales was $367,500 vs. $349,325 for new construction. (See chart in newsletter).
What Factors Will Influence Our Oceanfront/Resort Condo Market?
What will happen in the coming months and years? Here are some events and other factors that will shape our market.
Rental Incomes
Rental income is one of the main factors determining the value of a vacation rental property. The incomes are either flat or down slightly for most resorts this year. We checked on the year-to-date incomes through August (which would include the entire summer) for nine of my listings. All of these were oceanfront condotels. All were handled by rental management companies (7 with onsite rental companies and two with offsite companies). On average, the incomes were down 10% from incomes in 2023. The incomes in many resorts are now almost back to where they were during the long flat price period which went on for about a decade prior to 2021.
This year-over-year decline is a trend I have observed since 2021. It definitely appears now that the huge 2021 income increase was an anomaly rather than the new norm. Interestingly, many owners handling their own rentals through Airbnb and VRBO have not seen rental income declines over the past few years. I’ll cover this subject in more detail in a later newsletter.
Interest Rates
Hopefully, these will finally come down over the next year or so. Lower interest rates are good for real estate in general because they make it less expensive to borrow money to buy. Low mortgage interest rates are good for investment real estate indirectly as well. It generally means that rates of return for very safe investments are also low, making real estate, which is inherently riskier, more attractive.
Insurance
Most condominium complexes had slightly lower insurance premiums this year. I don’t believe it’s because the insurers lowered their rates. It’s mainly because the property management companies representing the resorts shopped around and got creative, often shaving off layers of coverage they didn’t think were essential.
Unfortunately, two major hurricanes just hit the US, causing massive damage in Florida, Georgia, North Carolina, and Tennessee. There are also monstrous wildfires burning around the country. Climate change is not a hoax. It’s costing US lives and hundreds of billions of dollars per year in losses and higher insurance costs. There is no end in sight for this so insurance rates will almost certainly continue to increase for the indefinite future. For everyone.
Areas most at risk, of course, have higher insurance rates. Currently, Florida has the highest in the country and their rates are getting ready to go even higher. South Carolina’s rates are among the highest as well, particularly in the coastal areas.
Election
The two candidates’ plans for governing are radically different. The decisions made by the next administration will have major impacts on real estate in general for the next four years and probably for many years after that.
Speculation: Florida Exodus?
Florida's condominium owners are facing significant increases to their already sky-high insurance costs. Also, upcoming laws (going into effect by the end of this year) requiring regular inspections and funding reserves for structural improvements are adding further financial pressures on condominium associations.
Will all this be enough to drive Florida condominium owners out of the state? And if so, will some of them repurchase in Myrtle Beach? I feel sure we will see at least a few but I don’t know if it will be enough to influence our market. This is pure speculation, but it’s one of the factors that could affect our market if a large number of owners end up buying here.
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.
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.
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