Real estate prices drop along Grand Strand

Grand Strand real estate values dropped in April, the result of the foreclosures and short sales that continue to drive prices down, Realtors said.

The median price of single-family homes - the price at which half sold for less and half sold for more - dropped to $157,400 in April, down 7 percent from the same month last year, according to data from the Multiple Listing Service that was released this week. In April the median price of condos was $103,813, down 15 percent when compared to the same month last year.

"It's indicative of what foreclosures are doing to the whole scheme of the market," said Tom Maeser, a real estate analyst with the Coastal Carolinas Association of Realtors. "It's causing sales to increase, that's positive, but it's severely affecting the pricing."

The single-family home market is not as volatile as the condo market, Maeser said. Last month the median price of single-family homes was up about 1 percent and has gone up and down during the past several months, when condo prices have just continued to drop, he said.

Condo sales increased 6 percent last month when compared with April 2010, according the MLS. Single-family home sales dropped 4 percent in April, when compared to the same month last year, according to the MLS. Maeser said that by the time Realtors finish inputting the sales that were completed in April there would be an increase in single-family homes sales.

Radha Herring, the broker-in-charge of Watermark Real Estate Group, said that April was a busy month for her company, especially in the condo market.

"We generally see a very strong increase in condo sales in the spring as most people try to close on their condos before the season begins," she said.

Herring said she's disappointed but not surprised that prices have continued to drop because it is expected with the number of foreclosures on the market.

"As foreclosure inventory declines, median prices will start to rise," she said.

Foreclosures create a cycle that drives overall property values down, Herring said. When a building or a neighborhood has a short sale or foreclosure in it, the appraisals will be lower on the next sale even if it is a conventional sale. When a property appraises at a lower value, sellers end up accepting a lower price, even if the buyer had agreed to pay more, which then drives prices down even more.

While the dropping prices may not be good for sellers or property owners, it creates good opportunities for potential buyers, Herring said.

April was a busy month at Century 21 Boling & Associates, with many new clients signing contracts, said Penny Boling, the broker-in-charge. Contracts were written on the properties that sold in April several months ago, when activity was somewhat slower.

"It's just still the process of cleaning up the market," Boling said, adding that the bottom of the market probably hasn't yet been reached.

One continuing challenge is financing, she said. The inability for borrowers to get loans is limiting some sales and contributing to the elevated level of cash buyers, Boling said.

In April, 50 percent of the properties were purchased with cash, 41 percent were paid for with conventional financing and the remaining 9 percent were financed through programs through agencies such as the Federal Housing Administration or Veterans Affairs, according to the MLS.

Properties in the lower price end are more likely to sell in a market where many pay in cash because few people have enough cash to pay for more expensive properties, which will affect the median price, Boling said.

Herring said that financing is available for single-family homes and for some condos, but the condos classified as condotels - or condo hotels - on the oceanfront are almost exclusively paid for in cash.

Herring and Boling said that in certain neighborhoods and buildings prices are stabilizing.

In some desirable neighborhoods, competition is driving prices up, Herring said. On some low priced, quality properties there is a significant amount of competition among buyers - a property one of the buyers submitted an offer on recently got five other offers the same day, she said.

How long the price declines will continue and how long it will take for the market to stabilize are still unknown, Maeser said.

"How much are the banks holding onto?" he said.

If banks put properties up for sale slowly it will extend the negative impact and if they sell many all at once it will be a quick negative impact on property values, Maeser said.

"Either way it's not a positive thing," he said.