The Grand Strand is a foreclosure hot spot, ranking in the top ten throughout the country, that's according to a new CNN Money report that looks at U.S. real estate markets.
Local real estate experts agree, our area is in fact a hot spot for foreclosures. But, those we spoke with say the Grand Strand may also be uniquely primed to recover.
"People say, I don't want a deal, I want a steal... So, people are looking for that bargain," said Tom Maeser, Market Analyst for the Coastal Carolina Association of Realtors.
According to the recent CNN report, the Myrtle Beach area is ranked sixth among foreclosure hot spots in the U.S. with one in every 62 homes foreclosed, that includes condominiums.
You may ask, where are all these foreclosed homes? Why aren't there foreclosure signs lining neighborhoods around Horry County?
Maeser says they can be tough to notice since many are condos without obvious "foreclosed" signs. Not to mention, in many Grand Strand area communities, homeowners associations prohibit foreclosure signage, so the scale of the foreclosure mess may not be properly illustrated, at least not visually.
Tom Maeser says that bad news also translates into good news. Prices are down as banks attempt to unload defaulted homes, often times for a fraction of the price of the original mortgage.
New investors - who Maeser says are responsible for more than 60% of Grand Strand home and condo buys, as opposed to families and permanent residents - then sweep in looking for the deal.
"Many of the investors bought when the market was high. They bought in 2006 to 2007. Well, now those prices have come down and a lot of those are going into foreclosure. So, it's the investor foreclosing and other investors coming in and purchasing now that the prices are low," explained Maeser.
So prices are low, meaning it's a good time to buy. And real estate experts say they are buying, as sales in December of 2009 were up 5% from the same period in 2008.
As Maeser illustrates, "When people come to this area they're not asking to see homes, they're saying 'we'd like to see your foreclosures.'"
While it's a good time to buy, it's also a hard time to buy, unless you've got cash on reserve.
"The main problem right now is getting financing. Banks are not lending, and it was something like 44% of our sales in December were cash sales, and then 13% were VA or FHA. We used to run less than 1% government loans," said Maeser.
Gary Loftus, Director of the BB&T Center for Economic and Community Development at Coastal Carolina University, adds that an overabundance of building has saturated the Grand Strand area real estate market. Loftus says condominium development has flooded the area in recent years, while demand has lagged behind.
Maeser says he thinks the Grand Strand is primed to recover quicker than other foreclosure hot spots, as out-of-state residents look to move in. But first, banks must loosen their grip on lending.
He points out, "The lending is critical, because the other major dilemma is that people want to live here, but they have homes to sell (in other parts of the state and country). So, until they can get rid of those properties, they can't buy (here)."
Experts say once the foreclosure mess is cleaned up - once foreclosed properties currently flooding the market are bought up - prices will begin to recover and the market will begin to stabilize.
While he thinks the significant recovery relies on increased lending, Maeser says he can already spot some signs of a real estate recovery here at home: a rise in sales, thanks to a drop in prices, is helping to boost the market.
Also, Maeser says he's hearing positive rumblings from the construction industry and home builders, as they're beginning to mobilize after a relatively stagnant period.
Click here for a look at the CNN Money article ranking Myrtle Beach in the top 10 for foreclosure hot spots.
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