Myrtle Beach Real Estate ~ no bubble, analyst says

No Bubble

There’s no bubble in the Grand Strand’s real estate market, but prices may stabilize, a national analyst said. “A boom doesn’t mean bust,” said Todd Vencil, Capital Markets financial analyst for BB&T.

Vencil spoke to about 100 local home builders and real estate agents Tuesday night about the future of the building industry. For the market to go bust, Vencil said, the area would need to experience large job losses or an economic shock.

He cited a study by the Federal Deposit Insurance Corporation that says a bust occurred in 9 out of 54 boom periods prior to 1998 within a five-year window.

Speculators, he added, were behind the significant drive up in prices. Their departure is causing the market to slow. “But your slowdown is nowhere near as bad as Florida,” Vencil said.

Baby Boomers

Joel Warner, owner of Warner Custom Homes, said he agrees with Vencil. “The investor market is dropping off. I do think prices are starting to stabilize…. But I do think that this Grand Strand area is going to continue to boom with all the baby boomers,” Warner said.

Warner caters to the baby boomer market through condominiums, townhomes and single family homes at about 2,500 square feet because most boomers want to downsize, he said.

Vencil told builders that the active adult market would be a sweet spot for the next 10 to 15 years. “A lot of what baby boomers want isn’t in the housing stock,” he said.

Hurricanes

One topic at the top of builders’ minds was how hurricanes in Florida and the Gulf were affecting Myrtle Beach real estate. Vencil said he had not seen any significant numbers to show that people are leaving Florida and moving north.

Reasons that the housing boom slowed in the second half of 2005 was primarily affordability from rising prices and a shaken consumer confidence after Hurricane Katrina, Vencil said.

“Prices went up a lot and housing became less affordable. Investors started pulling back after Katrina. Investors have gone from buyers to sellers,” he said.

Nationally, sales slowed and inventory increased. While the rising federal funds rate didn’t affect 30-year mortgage rates much, it did affect adjustable rate mortgages, which are now hurting some homeowners, he said.

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