Myrtle Beach home equity sizzles for recent buys, fizzles for purchases during economic downturn

A recent study on home equity growth in the Grand Strand area shows properties purchased during the housing market collapse are significantly lagging, however homes and condos purchased before the slump have decidedly increased.

The loss of equity in condominium purchases extend before, and well beyond the beginning of the slump in 2006, and the losses are dismal, according to a study conducted by SiteTech Systems.

“Research indicates that condos purchased from 2005 to 2010 are still underwater in terms of their equity when purchased,” the study states.

The average equity lost in a condo purchased in 2007 is nearly $80,000, almost $72,000 for properties bought in 2006.

The estimated loss for condos purchased in 2005 is $45,000, and condos purchased in 2010 still see an equity loss of $5,000.

The housing market crashed after buyers agreed to mortgages and terms they could not afford. The increase in demand led to an increase in prices, but when the bubble burst and millions of foreclosures flooded the market, housing prices declined.

“When the housing boom was going, new construction was strong, new developments were coming up, but it really wasn’t a true demand. Prices were based on speculation and lenient underwriting,” said Todd Woodard, president of SiteTech Systems.

“Now that things have settled down and normalized in the last five to seven years, it’s been really strong,” Woodard said. “We’re now back in line, the market is fairly priced to historical norms.”

Condos purchased before the bubble burst in 2003 saw an average equity increase of 12 percent, or $13,000, and after the market recovered in 2012 equity increased by nine percent averaging nearly $10,000. By 2014, that had declined to one percent for condos purchased that year, averaging more than $1,200 in earned equity.

The analysis says that most of the single=family homes purchased before and after the collapse are also experiencing a growth in equity.

Houses purchased in 2012 have seen an equity growth of 16 percent with gains averaging $30,000, while houses purchased as recently as 2014 have seen a five percent growth averaging $9,000.

However, homes purchased in 2007 saw a declining equity of 16 percent, averaging a $30,000 loss, and homes bought in 2006 are still underwater by 13 percent, with a negative $24,000 in equity.

The analysis summarized all sales activity in the Grand Strand area. Actual equity gains or losses may vary based on price and location of the property.

Hudson can be reached at 843-444-1765 Twitter: @AudreyHudson

This story was originally published December 25, 2015 at 7:03 AM with the headline "Myrtle Beach home equity sizzles for recent buys, fizzles for purchases during economic downturn."