Grand Strand condominium sales dropped 41 percent in the first quarter, falling to a sales level that's lower than in the same quarter in the past three years - and the largest quarterly drop in sales in the past year.
The drop didn't surprise real estate analysts, considering the market's investor exodus and skyrocketing insurance costs.
But they were surprised that condo sales didn't at least grow above 2004 levels, when 1,040 condos sold on the Grand Strand.
This year in the first quarter 901 sold on the Strand, according to the Multiple Listing Service for Horry and Georgetown counties.
The question is, when does the market stop dropping and start going up?
Oceanfront condo agents report that investors are returning to the market, and those investors say they think the price bottom has either been hit or will hit soon.
"They feel like the bottom is kind of here somewhere, whether its today or in a month, but they are coming back," said David O'Connell, owner of oceanfront-condo-
seller New Resorts.
First-quarter sales for single-family homes also dropped - 17 percent, to 1,090 from 1,311 - also the largest quarterly drop in the past year.
In the fourth quarter, single-family-home sales fell 4 percent.
But it's the second-best year since records have been kept for home sales, down from 2006 but up from 2005 when 932 homes were sold.
"We're comparing it to the best year ever in the business," said Tom Maeser, market analyst and president of the Fortune Academy of Real Estate.
While the single-family market looks like it's experienced a sharp drop, research economist Don Schunk at Coastal Carolina University said it's just getting back in line with sales for a normal market after a market peak in the first quarter of 2006.
"The drop in single-family sales is not that big of a concern. The overall trend is still going up," he said. "But with the condo market, it's a different story."
Schunk says condos will take much longer to get back into balance.
"We have about 9,000 condos [on the market] and sales about 10 percent of that. That's a pretty large imbalance," he said.
Maeser and Schunk expect a pickup in single-family sales from first quarter to second quarter, but not enough to beat 2006 sales levels.
"I don't see it reaching last year's numbers," Maeser said. "If we continue to stay on pace, it's going to be the second-best year ever."
That's not so for condos.
"I see inventory getting smaller, but it's still a year to a year-and-a-half of a tough market," he said.
The 2006 real estate market started out booming and moved to a buyer's market, as the third and fourth quarters showed a slower sales pace.
"The second half of the year, we very easily should be back on track," he said.
While inventory is rising and sales are falling, prices year-over-year are showing increases. The median price of homes and condos in the first quarter increased 10 percent from the year before.
But some say that increase doesn't reflect actual yearly appreciation in the market.
Rachel Broadhurst, president of Century 21 Broadhurst, says it's not accurate to say that a homeowner's condo has appreciated 10 percent since last year.
She said the reason the numbers show an increase is because condo buildings that were sold in 2005 at higher prices, constructed and then closed in 2007 are part of the 2007 sales statistics.
"It doesn't really give a true picture. It's not sales made in '07," she said.
In the single-family market, builders are offering large incentives but not lowering the actual home purchase price, which also affects the overall prices shown in Multiple Listing Service, Maeser said.
For the past several months, buyers held off on buying, and sellers kept waiting until they finally reduced prices and product started selling, said Greg Harrelson, president of Century 21 The Harrelson Group.
"Some of the product out there right now is coming to a level that buyers are willing to take it. I'm hoping that trend continues. That's the beginning of a flattening market, but we haven't gotten enough data yet to support that," he said.
Harrelson hopes it will be a year of flattening prices.
An area with sluggish sales, the Grand Strand oceanfront, might be showing some positive signs.
Harrelson said he's getting calls from buyers who are hearing about a suppressed market and want to look for deals.
"It's not enough to see any shift in the market at any level. You have to increase calls before you increase sales," he said.
Condo seller O'Connell says a large investor group is negotiating to buy 100 units in one of his oceanfront buildings - a sign to O'Connell that investors are coming back in.
"They do buy all over the country, and they feel like Myrtle Beach is a good value right now. If they're buying - then the bottom must be pretty close. Usually they come into the market right before the market starts to go up," he said.
He's seeing investors snatching up inexpensive resales, which he says is a good sign for selling new construction condos.
Pricing hasn't gone up, he said.
"We may still see a little bit of a tick down as this absorption happens," he said.
Broadhurst said the amount of interested-buyer hits on her Web site doubled last month. Telephone calls from inquiring buyers are up 50 percent from past months. On Friday, she had seven calls to show homes in one small neighborhood.
"The buyer is shopping," she said. "Activity will become contracts; it just depends on how long it takes."
Real estate agent Chuck Houseman of The Litchfield Co. in Pawleys Island agreed that traffic is picking up. He said "quantum jumps" in insurance rates had a big effect on folks who wanted to buy, but didn't.
Maeser said insurance costs hurt inland condo sales because rental-income investors looking for homes between $150,000 and $250,000 couldn't make money after insurance rates jumped.
"They are the ones having the most problems, [so they are] putting them on the market," he said.
The investors that bought when prices were high don't have much wiggle room to drop prices, Maeser said.
"They're not wanting to take a loss, so they're holding on. It's kind of a standoff right now," he said. "Everybody I know is starting to feel that buyers are starting to make more decisions realizing that [reducing prices are] not going to last too much longer."