Investors are getting notice, through their condo association insurance, that premiums for coverage are jumping by as much as 700 percent. The insurance increases have put some investors in the red.

“The name of the game in investment rental real estate is cash flow, so when you look at decreasing rental rates [for short-term rentals] and increasing cost, it has a negative effect on investment,” said Tom Maeser, market analyst and president of the Fortune Academy of Real Estate.

• Internet sites have kept short-term rental rates low, and many investors pay between 45 to 55 percent of their income to their rental management company, Maeser said.

• Investors can’t raise long-term rental rents enough to cover the increased insurance costs.

Maeser said the Grand Strand’s largest investor group buys for rental income.

• “I’d hate to see us discouraging them from buying these properties, especially since we have 10,500 [condos] on the market,” Maeser said.

• “We’re not anywhere near attracting enough of those people to absorb the inventory we have right now.”

• If insurance relief doesn’t come to Strand homeowners, Maeser said the worst case scenario is “losing the investor market because they can’t cash flow these units, and they’ll go some place else.”

Maeser said he hopes investors will wait to see if the insurance market levels off in the next six months.

Source: Jenny Burns, The Sun News, Myrtle Beach

An insurance crisis along the S.C. coast could drive people from their homes, devastate the real estate market and slow tourism.

FAR-REACHING EFFECTS

• Businesses might have to pass the extra expenses on to consumers or take a financial hit.

• Apartment building owners might be forced to raise rents.

• Condo owners planning to vacation or move to the S.C. coast might go elsewhere.

INSURANCE MARKET FORCES

• Growth along the coast and rising real estate values have tightened the state’s insurance market. Every time a new home is built, more insurance is needed.

• With skyrocketing reinsurance rates — the insurance that insurance companies buy — and forecasts of severe hurricane seasons, the problem has worsened.

• Condominium projects are seeing the highest increases because few companies are willing to write large policies.

• Rating organizations also have been placing pressure on carriers to reduce risk on the coast by threatening to reduce financial ratings if the carrier is overexposed.

REAL ESTATE MARKET TROUBLE?

• A once-booming real estate industry could take the biggest hit.

• Condo owners can’t afford to pay an HOA fee that is almost as large as their mortgage.

• And when potential buyers find out what the insurance payments are, some might back out. Investors are finding they can’t raise rents enough to cover the increased cost.

• The Myrtle Beach area has seen the number of condos on the market triple since last year and condo sales have fallen by 27 percent.

• Hotels, restaurants and other businesses can’t pass on such increases to consumers without impacting tourism.

• Already, tourism officials are seeing a softening in discretionary spending. Raising hotel rates and other prices would just make the situation worse.

Source: Jenny Burns, The Sun News, Myrtle Beach

The rates for reinsurance along the Grand Strand have skyrocketed, and insurers say they are passing that on.

Factors affecting Grand Strand rates include the building material of structures and the rise in property values. Condominiums built of wood have higher premiums, insurance agents say, because they are especially vulnerable to wind damage.

• Allstate is raising premiums, changing deductibles, limiting new business and stopping renewals in certain markets to make sure it can protect its existing customers.

• Allstate also has stopped writing new commercial policies on condo associations in the S.C. coastal market.

• Nationwide says it is still writing condo association policies in South Carolina and hasn’t raised insurance premium rates for condo associations.

• Farm Bureau is requiring higher deductibles along the coast and excluding wind coverage where it can be written through the wind pool - a carrier of last resort run through state government.

Source: Jenny Burns, The Sun News, Myrtle Beach, SC

Condominium projects in all price ranges and areas of the Grand Strand are getting hit with skyrocketing premiums.

Here are some examples:

• Sweetwater in Murrells Inlet – 3 BR condo – this year owners will pay a $3,850 for homeowners association insurance on top of monthly HOA fees of $185.

• Park West in Socastee – garden home - monthly HOA fees would have risen to $569 from $239, but Beazer Homes, which is still selling in the development, agreed to cover the increase through next year.

• Winchester at Wachesaw East in Murrells Inlet - premiums have jumped from $103,000 to $270,000 a year for 128 units.

• South Bay Lakes in Surfside Beach - premiums rose from $213,000 to $929,900 for 496 units. The deductible also went up from 2 percent to 5 percent for wind and hail.

• Townhomes at Wynnbrooke in Murrells Inlet – an 81 percent increase in premiums; residents charged a $450 special assessment.

• The Edgewater project in North Myrtle Beach - premiums increased from $400,000 to $1.1 million. Homeowners had to pay a special assessment and HOA fees are doubling.

• The Cross Gate condos in Deertrack, Surfside Beach - premiums rose from $51,000 to $149,000 at the 75-unit project.

Source: Jenny Burns, The Sun News, Myrtle Beach, SC

Unsold homes hit record high mark.

Sales of new homes dropped in July by the largest amount since February while the inventory of unsold homes climbed to a record high.

Piling on more proof that the housing boom is over, the Commerce Department reported Thursday that new home sales fell by 4.3 percent last month to a seasonally adjusted annual sales pace of 1.072 million units.

The July level of 1.072 million units sold was down 21.6 percent from a year earlier and below the 1.100 million that had been expected by analysts.

“Builders are offering many extras to entice buyers,” said Peter Morici, a professor at the University of Maryland’s business school. “Overall, values are falling and builders’ profits are threatened.”

Analysts expect home sales to drop by some 10 percent this year. Prospective home buyers have turned cautious about making such a big-ticket purchase as mortgage rates have gone up and uncertainty has risen over whether the economy and job creation will keep slowing, analysts said.

The data follow another report Wednesday that also provided evidence of how much the once-sizzling housing market has cooled.

Sales of previously owned homes dropped 4.1 percent in July from June to a 2½-year low, while the inventory of unsold homes climbed to a record high, the National Association of Realtors reported.

Source: Marcy Gordon, The Associated Press

Check out this established website for extensive information on Myrtle Beach restaurants - www.myrtlebeachscrestaurants.com.

You’ll find “reviews, ratings, coupons, & information” to satisfy every taste and pocketbook. A total of 3069 restaurants are categorized by “type & area” to make it easy to find your favorite up and down the Grand Strand.

Check it out: www.myrtlebeachscrestaurants.com

US Airways Magazine has chosen the Myrtle Beach area as the December issue’s city profile, a 36+ page editorial feature.

“Profile: Myrtle Beach and the Grand Strand” will combine traditional travel related information with a comprehensive look at the economic drivers and industry sectors that shape the business landscapes and lifestyles along the Grand Strand.

“A unique editorial feature of this magnitude will emphasize what we as residents already know, that the Myrtle Beach area has remarkable diversity, innate charm and incredible potential for the increase of business and tourism,” said Brad Dean, president and CEO of the Myrtle Beach Area Chamber of Commerce.

“We’re looking forward to having US Airways Magazine showcase the people and places that make each community along the Grand Strand so appealing and inviting.”

“Profile: Myrtle Beach and the Grand Strand” will examine in depth the people, places, industry and history of the Myrtle Beach area. It will include topics spotlighting economic development and emerging industries, real estate, educational and healthcare resources, tourism and convention opportunities, dining, accommodations, recreation, and quality of life advantages.

US Airways Magazine is seen monthly by more than 5 million of the world’s elite business and leisure travelers, and reaches 50 states and 35 foreign countries. It is known for its editorial excellence and upscale readership.

The Myrtle Beach feature will position the area on a national and global scale as one of the best places to work, live, and vacation.

Link to Press Release

The recently launched Dine Myrtle Beach Online.com (DMBO) website – www.dinemyrtlebeachonline.com is comprised of a comprehensive database of restaurants in the Grand Strand area with an emphasis on spotlighting and highlighting locally owned establishments. It is the goal of Dine Myrtle Beach Online.com to provide the best and most current dining information available.

DMBO spotlights local owners, chefs, along with photo galleries, a monthly sweepstake, auctions, restaurant opening and closings, and currently articles by Chef/Owner of SeaBlue Kelly Graham, Personal Chef Lori Eaton and much more. Whether you want to grab a bite to eat or fine dine, find it on Dine Myrtle Beach Online.

Check it out: www.dinemyrtlebeachonline.com

The Grand Strand has added a third course this year - Barefoot Resort, Love Course - to the Golf Magazine rankings of “Top 100 You Can Play” public courses in the United States.

• Caledonia Golf & Fish Club – No. 25
• The Dunes Golf and Beach Club – No. 46
• The Love Course at Barefoot Resort – No. 95

Beware of the Bears!

The Department of Natural Resources has set two bear traps in the residential area of Barefoot Landing… in response to encounters with bears last week that indicate the animals may be getting more aggressive toward residents.

Brunswick County, N.C., and Horry County saw the greatest increase in housing supply in their respective states last year.

They also made the top 100 list of fastest-growing counties in the nation, according to new census figures released Monday.

Brunswick County ranked 28th in the United States in housing growth with a 5.8 percent increase from 61,116 housing units in 2004 to 64,647 units in 2005.

Horry County ranked 61st in the nation with a 4.7 percent increase from 140,628 units to 147,207 units.

“[The rankings] just show the potential of this market. Everyone has been projecting that this will be the hot spot for growth, and this verifies that there is probably some truth to that,” said Tom Maeser, market analyst and president of the Fortune Academy of Real Estate.

Both rankings fall in line with population increases.

Brunswick was ranked 29th and Horry 67th in population jumps for the same time period.

Officials say it’s good news that the number of housing units - which counts all homes, apartments and condos in a county - is growing at about the same rate as population. For the same time period, Brunswick’s population grew 5.4 percent and Horry’s grew 4.3 percent.

This signals that homes are being snapped up as permanent residences, not as investment property.

“We are a resort area, and more people are moving here on a more permanent basis,” said David Sandifer, Brunswick commissioners chairman and owner of Holden Beach Properties. “In the past, growth in housing has been attributable to absentee owners. Now we’re getting more permanent people.”

Source: Jenny Burns, The Sun News, Myrtle Beach, SC

Myrtle Beach was among the country’s 100 fastest-growing cities and towns between 2000 and 2005. The Myrtle Beach area, also embracing Conway and North Myrtle Beach, grew by 15.4 percent to a population of nearly 227,000, ranking No. 37 in growth rate among U.S. cities and towns.

Nationally, the country’s five fastest-growing metropolitan areas were Palm Coast, Fla.; Fernley, Nev.; St. George, Utah; Greeley, Colo. and Heber, Utah.

Reflecting the Myrtle Beach-area expansion, Horry County ranked No. 61 in housing growth between 2004 and 2005; it added more than 6,500 new units.

Michael MacFarlane, state demographer for South Carolina, said development along the Interstate 85 corridor from Atlanta to Charlotte and then up to Greensboro and Durham is fueling growth in the Carolinas.

A planned freeway extension from Interstate 95 to Myrtle Beach will bring more people and homes, MacFarlane said.

Source: James Rosen, McClatchy Washington Bureau

A new survey shows that high-income baby boomers are high on the Carolinas for second home purchases, according to ChangeWave Research.

• North and South Carolina had the highest growth in planned purchases for retiring boomers than any other state, said Andy Golub, associate director of research and membership for ChangeWave.

• The Carolinas scored four points in growth momentum - with New Mexico next at three points - while Florida saw a one-point drop.

Researchers say this proves the “half-back” theory. Florida retirees are choosing to come halfway back to the Northeast by living in the Carolinas.

• “Our research has confirmed our firsthand observations. Indeed, a significant number of recent Florida immigrants have chosen to come half-back to cheaper, less crowded and less hurricane prone residential areas in South and North Carolina,” said Tobin Smith, founder of ChangeWave, which surveys business executives and professionals in more than 20 industries.

Growth in popularity of the Carolinas among boomers is no surprise to Dan Owens, president of the National Active Retirement Association in Charlotte, N.C.

• Owens says Del Webb research shows younger boomers are picking North Carolina as their top retirement destination.

• “Florida is continuing to lose its grip. Florida is the No. 1 state sending retirees into North and South Carolina. New York is the second,” Owens said.

Grand Strand builders are optimistic that the baby boomers will keep the local real estate market strong - even during a slowdown.

• “The group does shield us from extreme economic impacts,” said Tom Maeser, president of Fortune Academy of Real Estate.

• Builders like Levitt and Sons are developing neighborhoods for the active adult buyer.

The study also shows a shift in the reasons boomers are buying second homes. The highest percentage - 31 percent - said they currently own a second home for rental income. But only 12 percent say they will buy for rental income in the future.

• Maeser said that trend mirrors what’s happening on the Strand. Few investors are still buying for rental income because high prices have caused rental incomes to fall short of covering mortgage payments, he said. Buyers now want larger, livable units that they can own for personal use, he said.

• “My concern is cash flow is pretty hard, and there’s becoming less and less a strong market for that. But permanent second home purchasers are buying more for personal use and with the intent to maybe live there after retirement,” Maeser said.

The study finds that boomers are more likely to buy for personal use.

• Those buying for a primary and secondary residence increased from 17 percent to 39 percent. Buying for appreciation dropped from 16 percent to 12 percent.

• The study also found that 32 percent of homeowners in Florida say they’re more likely to sell because of high insurance rates - three times more than the overall sample of respondents.

Source: Jenny Burns, The Sun News, Myrtle Beach, SC

Myrtle Beach’s big builders are offering big incentives to sell their oversupply of homes this summer. Buyers can get 4.25 percent financing, no payments until 2007 or free homeowners association fees for a year.

The deals are aimed at making cautious buyers during this real estate slowdown take the plunge and purchase. The payoff is in lower monthly payments and less upfront cash to get into a new home.

Incentive summary

• Centex Homes
4.25 percent financing on spec homes
$3,000 to $9,000 in HOA fees at several multifamily properties

• Lennar
No payments until 2007 in Brighton Woods
No closing costs

• D.R. Horton
5.875 percent financing with a 30-year fixed rate
Free HOA fees for a year at two multifamily properties

• Portrait Homes
Free HOA fees for a year and up to $2,000 in closing costs

• Ryland Homes
4.99 percent financing, a free bonus room and $15,000 in design options in Creekhaven at Prince Creek

• Independent Builders Development (local builders)
Financing starting at 4.75 percent in Sommerset Cove at The Gates, Tiger Grand, Bucksville Oaks and Southborough

Excess inventories

Some builders are seeing up-ticks in cancellations compared to last year, especially in condos. The single-family market is also taking a hit, but has seen fewer cancellations and has less excess inventory.

Builders are not only competing with each other, but with ballooning inventory. In the second quarter, condo inventory nearly doubled over last year and home inventory jumped 50 percent, according to the Multiple Listing Service for Horry and Georgetown counties.

The flurry of incentives is making it difficult for the Strand’s smaller local builders to compete. To fight back, one group has teamed up to offer a “buy down” - or lower interest rate - like the national builders.

Buyers benefit

Builders can also offer large incentives that homeowners trying to sell their home can’t, said Tom Maeser, president of Fortune Academy of Real Estate.

But such savings - which will be common as the buyers market continues - should be passed on to the consumer, not given to the real estate agent.

“These incentives should be providing discounts to buyers because they are the ones being impacted with the higher interest rates,” he said.

Source: Jenny Burns, The Sun News, Myrtle Beach, SC

For your best buyer incentives: call Barbara Chartier at 843-902-0204.

As Grissom Parkway’s remaining wooded surroundings are sold and developed, officials and residents are seeing exactly what they requested: a parkway that clusters businesses by type to reduce the number of gateways to the thoroughfare, to encourage pedestrians and to prevent the congestion that has plagued other Grand Strand roads.

• One shopping center on the Robert M. Grissom Parkway in Myrtle Beach focuses on a healthy lifestyle, with a gym, health-food store, chiropractor and sandwich shop.

• Another section near 29th Avenue North is poised to become the city’s new banking district, with a newly built Crescent Bank and a not-yet-completed Beach First.

• A range of doctors - an optometrist, psychiatrist and chiropractor - have formed a hub at 48th Avenue North and Grissom.

• And in one complex near U.S. 501 and Grissom, customers can find all their car repair needs - air conditioning, tinted windows and collision repair - at several adjoining businesses.

“We’re in the early stages of creating a new business destination,” Myrtle Beach Planning Director Jack Walker said. “We want it to develop, but we want it to develop in the proper way. We want nodes of activity, not a strip-commercial district.”

There is no limit to the amount of development that can occur along the parkway, which opened in phases between 1995 and 2002, but the state placed a limit on the number of accesses it will allow to private property from the parkway.

Myrtle Beach Area Chamber of Commerce President Brad Dean said the accessibility to residents and the road’s connectivity to S.C. 31 and eventually Carolina Forest will continue to make it a draw to businesses despite the restrictions.

That means businesses, such as the recently built American Athletic Club near Mr. Joe White Avenue, must negotiate with nearby projects to share an entrance.

• It makes sense to try to move customers within the 2.5-acre cluster by picking related businesses, said Heyward Gulledge, co-owner of the health club and the complex.

• “We’re trying to create a shopping center where our members don’t have to leave to get things done, where it’s more convenient,” Gulledge said. “They can drop off their dry cleaning, have a healthy lunch, work out and finish their errands.”

• The complex will have a Quizno’s, a tanning salon, a health-food store and a chiropractor that should all open in the next several weeks.

• Two more retail spots are unoccupied, and Gulledge hopes to attract a dry cleaner and coffee shop to offer a complete range of services for his customers.

• American Dream Homes is near completion on the 100-home Pelican Harbor neighborhood adjacent to the gym complex, which Gulledge said he hopes will feed into his customer base. The two projects share an entrance onto Grissom.

Residents requested more mixed-use development when the city created a comprehensive plan five years ago, Walker said. He hopes undeveloped land near the Coastal Grand Myrtle Beach mall will incorporate housing so people can walk to shops, the movie theater and restaurants - like in a village, he said.

The development and residents’ positive response to it are making Grissom a major thoroughfare.

Source: Emma Ritch, The Sun News, Myrtle Beach