There were two great articles published this week about the current real estate market and the market outlook for the coming year. In Tuesday’s Wall Street Journal, Laura Kusisto talks about the U.S. housing market growing at the fastest rate since mid-2014, “a trend that bodes well for sellers but could start to eat into demand as buyers get priced out of the market.”
Ingo Winzer is a regular contributor to Forbes Magazine. He is the president of Local Market Monitor, experts in local real estate markets since 1989. Wizner recently assessed the Myrtle Beach market for Forbes and concluded, “If you’re planning to buy a home do it now, because prices are going up for the next few years”. Investments in single-family rentals have good potential throughout the area, but best in Myrtle Beach.”
On the same day, the Christian Science Monitor published an equally insightful article by Lonnie Shekhtman, entitled “Why this isn’t your grandma’s housing market” that discusses, “Will spring bring abundance to the housing market?” (http://www.csmonitor.com/Business/2017/0328/Why-this-isn-t-your-grandma-s-housing-market) Shekhtman’s analysis is supported by a wide variety of statistics and concludes that “On the coasts, for instance, there’s a relatively low inventory of homes… But at the same time, more people in those areas are starting households. That combination – more households and not enough homes for sale – means that home prices are rising.”
“Tip” O’Neill, former speaker of the house, is credited with saying “All politics is local” during his first political campaign in 1935. The same can certainly be said of real estate markets, too. So, how well do all these national real estate data correlate to the local Myrtle Beach and Grand Strand real estate market?
Spring, historically, is a season of renewal and a season for real estate sales. But in some regions of the United States this spring, the housing market could be somewhat sluggish. On the coasts, though, there’s a relatively low inventory of homes for a variety of reasons and limited supply is a big driver of price appreciation. Inventory in December hit its lowest level since 1999. The number of homes for sale was down 7.1% in January compared with a year earlier. It has since ticked up slightly and inventory in February remained 6.4% below a year earlier.
There are far more buyers chasing after fewer inventory. That is the economist’s definition of strong demand and the driver of higher prices. Increased prices are outpacing people’s income growth which is causing frustration for renters who are trying to get into the homeownership market.
According to Winzer, “The retirement coast starts in Wilmington, North Carolina, and moves down through Myrtle Beach. The two purest retirement markets – Myrtle Beach and Hilton Head – are growing the fastest: three times the national average. I expect home prices to rise 15 percent in Myrtle Beach over the next three years.”
What is the Grand Strand Real Estate Market Driven By?
As for the rest of this year, the summer housing market is expected to see high demand and rising home prices, and fall isn’t expected to see any relief. The Myrtle Beach and Grand Strand real estate market is being driven by a strong economy, job and wage growth, and relatively low (though rising) mortgage interest rates. In fact, the market could experience the hottest fall in a decade. While this is great news for sellers and homeowners, the news isn’t as welcome to potential homebuyers.
The Myrtle Beach and Grand Strand population is growing fast and with so many people coming to the area, people from higher priced markets are sometimes willing to pay more than asking price, if the house if priced right.
In Myrtle Beach, sales of existing homes jumped out to a fast start in 2017, eclipsing a recent high and hitting the quickest pace in nearly a decade.
All areas along the Grand Strand have seen sales growth since January.
For homebuyers, the market is a difficult one. There are not many options and they will have to be prepared to pay nearly full price. Frequently, buyers are having to either raise their offers or lower their expectations. That will continue to be the trend throughout 2017.
The National Association of Realtor’s chief economist, Lawrence Yun, indicated that January’s sales increase is an indication of stability among consumers in spite of a rising interest rate environment. “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” Yun said.
And the odds of a buyer being approved for a mortgage in Myrtle Beach is steadily increasing. That’s good news for the condo market in Myrtle Beach.
And this is not a symptom or precursor to another potential real estate crisis. Most real estate economists maintain that the mortgage market is still tight and it is still difficult for many buyers to attain financing.
The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.
Anecdotal evidence of the high demand, low inventory, and a rapidly appreciating market comes from Jeremy Jenks, Vice President of Sales at The Trembley Group Real Estate in Myrtle Beach. Jenks says, “One the biggest problems our company is facing right now is that demand is outpacing supply and prices are rising. You wouldn’t think that would a problem, but some of our sales are appraising for less than the sales price. Since an appraiser is required to support his or her opinion of value with comparable sales, in a fast appreciating market, appraised value tends to lag sales price by several months.”
Until the market reaches equilibrium and supply begins to nearly equal demand, it is critical to use a Realtor who understands the market and who has the negotiating skills to take a sale from contract to closing.
“Luckily,” says Jenks, “our sales executives have had the training and support to renegotiate their real estate sales contracts and let the sellers feel like they’re getting the price they want while buyers are getting the house they want. It’s been a challenge and sometimes requires a little compromise, but we haven’t had a sale fall through yet. It’s nice to negotiate a home sale where everyone walks away with a smile on their face.”
There is and will continue to be a lot of competition among homebuyers. This seller’s market makes it more important than ever for buyers to have all the “I”s dotted and all the “T”s crossed before making an offer on a property.
Here are 4 Keys to Remember:
1. A seller will make note of an offer from a buyer with a lender’s preapproval letter.
2. A well-prepared offer with short contingencies will make an offer stand out from all the others.
3. A good, realistic offer is absolutely necessary in a market that is moving quickly.
4. In a rapidly moving seller’s market, a buyer cannot assume the seller will negotiate a price. That’s just one more good reason to use a professional, experienced, and well-trained Realtor like the sales executives at The Trembley Group Real Estate.
If you’re ready to begin the complicated process of selling your home, buying a home, or would just like to sit down and discuss the process with a professional, give Jeremy Jenks, Vice President of Sales at The Trembley Group Real Estate a call at (843) 638-3002 and start a process that is sure to be one of the most exciting and probably a lot less stressful than you thought possible.
Need help? Call The Trembley Group at 843.945.1880 ext. 100 and we’ll help you look for the perfect listing or buyers agent!
At The Trembley Group, we pride ourselves on being the experts at more than just selling real estate. We are local residents, some of us have been here for a lifetime. The rest of us will be here until the end of time. We love living, working, and playing in the diverse backyard of Coastal Carolina, and look forward to helping you live and love your dreams soon too. Please reach out to us by phone or email for personalized service and one-on-one advice.