Red Hot Real Estate Market

While the Grand Strand's booming real estate market continues to set quarterly sales records, mirroring records sales nationally, economists around the country have started talking about the possibility of a housing bubble that could halt double-digit price increases. Some economists think Myrtle Beach could be headed for a bubble, but local real estate analysts say the area's market just recently got hot, fueled by the kind of national recognition needed to join the ranks of booming housing markets in other parts of the country.

Dramatic increases in first-quarter condominium sales and the number of building permits issued locally concern some analysts while others say the Grand Strand's condo market simply wasn't so good last year and this year's numbers show healthy growth.

Sales of new condos quadrupled during the first three months of this year - to 1,101 from 282 - according to Market Opportunity Research Enterprises, a real estate market research group in Rocky Mount, N.C. The number of building permits issued also increased - to 1,009 from 110. Resales have also surpassed record levels (for a sampling of condos currently listed for sale in Myrtle Beach, go to Myrtle Beach Condo Sales.

Last year, the number of new condos that were sold more than doubled - to 2,382 from 925 in 2004. The number of building permits issued more than tripled in 2004 compared with 2003 - to 1,879 from 554.

Tom Maeser, president of Fortune Academy of Real Estate in Myrtle Beach, said the soaring sales and building permit numbers reflect a rebound from a somewhat dismal year last year, when permits for just about 110 condos were issued.

Maeser, whose school trains real estate agents, said this year's increases are happening, in part, because older hotels are starting to sell their oceanfront land to make way for taller condo towers that hold more units, and because hotels are wanting to sell to owners as condo conversions. "We have the buyers to fill them and that's good," Maeser said.

The majority of this area's condo market is made up of second-home buyers, Maeser said, who are interested in rental income, tax advantages, price appreciation and personal use. Maeser said recent numbers reflect a market that is healthy and coming of age, one driven by retiring baby boomers, a shaky stock market that makes real estate a safer investment, higher pricing in other coastal areas and a location that many visitors can reach in their cars.

If there's a real estate bubble in South Carolina, it would be along the coast, said Ron Rogers, director of the S.C. Center for Real Estate at the University of South Carolina School of Business. But the S.C. coastal market still doesn't compare with the rapid price appreciation seen in many California and Florida markets, Rogers said.

But in a market where developers have lottery-style drawings for units where often two-thirds of potential buyers go away empty-handed, it's hard to imagine a slowdown in demand, Maeser said.

Many analysts say it's hard to imagine demand dwindling much at all with huge numbers of people moving to coastal South Carolina, where home prices are lower than many other coastal locations.

Maeser said there's plenty of pent-up demand to keep the market from hitting a saturation point for quite some time. "We've got an undersupply and an overdemand," Maeser said.

Lawrence Langdale, past president of the Horry-Georgetown Home Builders Association, said the market will slow down at some point. But he adds that the Myrtle Beach market historically has been protected from nationwide downturns because it is a resort market.

"No one has a crystal ball, but the resort market usually keeps us somewhat insulated," Langdale said.

Maeser and Helm said price appreciation along the Grand Strand is in line with the rest of the country.

Steven McCarthy, who in August moved to Myrtle Beach from Cape Cod, Mass., to cash in on the hot real estate market, said he doesn't think the market is going anywhere but up. McCarthy owns a home in Barefoot Resort and an investment condo.

"I think it will continue to rise until it gets to the prices in the Northeast," he said. "There, $250,000 will get you something you have to knock down and rebuild. Here, there are more amenities; the weather is better. Why wouldn't prices reach that of the Northeast?"

Everyone he knows wants to own something in Myrtle Beach, McCarthy said.