If a single word could describe the 2021 real estate market, “desperation” might be the closest. But today, a better description might be “swift tranquility.” Homes still sell quickly but not in the same unhinged manner as they once were.
In Myrtle Beach, homes for sale dropped to record low numbers in 2021 as buyers flooded into the market offering tens of thousands over asking price and waiving due diligence steps such as home inspections and appraisals, local real estate agents said. They made those sacrifices because so many sales turned into bidding wars.
At the same time, potential sellers held onto their homes, fearful they wouldn’t be able to find their next home for a reasonable price, if at all, further reducing the supply of houses on the market.
These “emotion-driven” decisions drove up prices by record levels, as wealthy New Englanders moved into the region, flush with cash and often able to purchase properties twice the size of what they had up north — but for half the price.
A year after that peak of home selling, Myrtle Beach’s real estate market has finally started to cool off. Rising interest rates and inflation have made the prospect of home buying a much more expensive ordeal to some.
That doesn’t mean it has stopped altogether, by any means, Century 21 real estate agent Greg Harrelson said.
It does mean that the market is much calmer. Properties that would have turned into 10-person bidding wars on the first day now spend a week or three before selling to the fourth buyer who stopped by, Harrelson said. Home sales are still happening quickly, just not as quickly.
“We are starting to see that the (number of) days on the market is increasing a little bit,” Harrelson said. “Right now instead of it selling in five days, hypothetically, it might be 25 days. That’s still what we call a seller’s market. But it is definitely totally different than what it was last year.”
The slowdown has also meant that buyers have a little more leverage — although Harrelson cautioned against calling it a buyer’s market. Basically, buyers no longer feel obligated to waive their rights to home inspection and the ability to back out if the appraisal comes back poorly. The offers they make are competitive, but not well above the asking price.
“It’s 100% different than it was three months ago or four months ago,” said Renny Diedrich, South Carolina Association of Realtors’ vice president over Myrtle Beach. “It is a more normalized market. The last two and a half years was something that we never experienced.”
If home buying today is a borderline calm experience, when did the slowdown first begin?
Harrelson said he first noticed a change at the beginning of the year.
“Before you see a shift in the data, you’ll see a shift in conversations,” he said.
Suddenly, buyers were sounding more frustrated. They were “fed up with having to pay more and more,” Harrelson said. They complained about the multiple-offer bidding wars, paying $30,000 over the asking price.
“The buyers felt bullied,” Harrelson said.
Whereas, “at the height of the market, people were saying, ‘Find me something. I’ll pay anything,’” he added.
As the slowdown has progressed since the beginning of the year, the supply of homes for sale has steadily recovered. In one building Harrelson works with, there were three condos for sale last year. Now there are 40. The prices remain competitive, he said, despite the massive increase in availability.
“On average, (there were) 4,500 houses on the market from 2000 on,” Diedrich said of the Myrtle Beach area. “We dipped down to the lowest at about 1,200, and now we’re back up to about 2,100. So we’re not where we normally are, but we’re headed in the right direction.”
Neither Diedrich nor Harrelson believe there is much chance for home prices to actually decrease, at least in the interim. Home sales are still happening at a steady clip.
“I honestly don’t believe, based on what we’re hearing and what we’re seeing, that prices are going to go down,” Diedrich said. “They’re just not going to go up as quickly as they did in the last two years.”
One positive sign is the fact that sellers are not suddenly rushing their homes to the market as the slowdown appears, Harrelson said. That happened during the 2008 financial crisis and contributed to that long-lasting recession.
Advice for buyers
Diedrich and Harrelson shared advice for buyers and sellers as the real estate market continues to change. The gist was that buyers need to just “breathe,” as Diedrich said.
There are also some more concrete tips and ways of thinking that people need to consider.
Think long-term: Interest rates have spooked buyers, but they are still fairly low. If you want to buy a home, do it. You can always refinance the loan if interest rates decline in a few years.
“Some people are going to say to me, ‘Well, great, I’ll just wait until the interest rates come down,'” Harrelson said. “Here’s what I would say to that: ‘Well, what happened the last time interest rates came down? The last time interest rates came down, there was nothing to buy, no inventory. And when one came on, you had to pay $30,000 over price.’ So be careful what you’re wishing for.”
And, having a higher base loan will cost more in the long-run in the 30-year life of the loan than a few years of interest, he added. Even though a 6% interest rate hurts more than 3%, it’s still better than double digit rates the US has seen in decades past, Harrelson said.
For buyers: Diedrich recommends getting pre-approved for a loan with a local lender because they know more about any potential rules for homes at the beach, such as when a home is purchased as a vacation property.
And don’t rush it. Home-buying is a long-term decision, a place to spend the next decade or more of life. If you see something you like, don’t wait on it, but if you aren’t sure, spend a little more time looking to find the perfect fit, Diedrich said.
“Before, (buyers) didn’t have a choice. They had a choice of A, A and A and thought, ‘Well, let me guess? I’m going to choose A because I didn’t have a choice,’” Diedrich said. “Now there’s a little more competition out there, and I feel like they can make the best decision. … They’re not making a decision because they have to make a decision.”
For sellers: Get your home ready to sell; Don’t wait to see if there is going to be another market shift or a “better time” to buy your next home after you sell, Diedrich said. And make sure to have the latest advice from a local real estate agent, because the market conditions are changing from one month to the next, she said.
“Have someone up to date on the local industry trends and the local trends so they can educate you,” she said. “Like, ‘Here are your options. What path do you want to go down?”