Condo Insurance Crisis

The state of South Carolina, in its short-sightedness has allowed the insurance companies to put everyone that lives along the coast in jeopardy with homeowner's insurance. Nobody really knows right now what is going to happen...it's inconceivable that they will allow the companies to go up on our premiums 400-700%. But unless they can find a way to fix things, that's going to happen.

North Carolina has always had an elected Insurance Commissioner, and he could make the insurance companies jump and do tricks like trained dogs. If you called the commissioner's office with a complaint when you had problems collecting on an accident or something, you'd get a phone call several hours later from the offending company begging your forgiveness. I witnessed this twice myself, and it was amazing.

I was in Miami in June, and overheard CNN down there saying that the insurance companies had put in for a 100% increase on property insurance in Florida, and their insurance commission had granted them a 50% increase instead. That's how much pull they have, and the way it ought to be. South Carolina evidently has no such control, and they'd better get it, otherwise our condo insurance is going to ruin Myrtle Beach and the rest of the coast in South Carolina. Myrtle Beach Condo sales will be in deep trouble.

Here's the latest article about the condo insurance crisis...

Posted on Wed, Oct. 18, 2006
REAL ESTATE
Lawmaker airs plans to lower insuranceJENNY BURNS

State Sen. Dick Elliott, D-North Myrtle Beach, says he's working on legislation to keep insurance rate increases from driving Grand Strand residents from their homes.

As insurance costs continue to skyrocket, homeowners are finding their insurance bills are increasing as much as 600 percent to 700 percent, especially those living in condominiums.

Elliott said his insurance legislation will:

Require companies to operate in all parts of South Carolina, not just "cherry pick" certain areas.
Propose a move of the wind pool line to the Intracoastal Waterway from U.S. 17 Business.
Set up a statewide self-insurance pool where prices would be driven by losses within that pool.
Propose that the state insurance director become an elected position.

"In states where they have an elected insurance commissioner, insurance is cheaper, more available and there's a more stable insurance market," Elliott said.

Eleanor Kitzman, director of the S.C. Department of Insurance, said in late August she would move the wind pool line but no action has been taken, Elliott said.

Kitzman has the authority to move the line in an emergency.

Elliott is working with Senate President Pro Tem Glenn McConnell, R-Charleston, and Sen. David Thomas, chairman of the Banking and Insurance Committee, on preparing this package.
Elliott said all have agreed it's critical that insurance issues be a "front burner" item in January when the legislative session begins.

While these proposals may not immediately solve the problem, Elliott said they are a start towards a long-term stable insurance market.

Realtors say the insurance crisis is especially hurting the condominium market, forcing owners to sell and making it more difficult for buyers to afford to purchase the condos.

Elliott said the problem will also hurt the lending industry, which requires that a buyer have insurance before it can approve a mortgage loan.

The senator said he's seen "good times and bad times come and go" but he hasn't seen anything that could hurt the coastal economy as much as the current insurance crisis in the past 10 years.

Contact JENNY BURNS at 626-0305 or jeburns@thesunnews.com.
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Dick Elliott is the Elliott from Elliott Realty, which is one of the biggest companies that handles Myrtle Beach Condos - Rentals and Sales. He's got a big stake in the problem, so maybe that will make him even more likely to do something about it.

Myrtle Beach condos in the news

Permits for new Myrtle Beach condos down sharply Resale market slow; single-family homes still sell
Associated Press
Myrtle Beach, S.C.

The softening real estate market in the Grand Strand has slowed condominium building.

The number of condo building permits in Horry County dropped 34 percent in the second quarter, from 1,105 last year to 724 this year.

New condo sales fell 31 percent and the resale of condos fell 26 percent, according to Market Opportunity Research Enterprises, a regional real estate market research firm in Rocky Mount, N.C.

But some analysts don't see the slowdown as a long-term problem."We don't see this as an extended downturn. Although it seems sharp right now, it is sharp only in the very short term as builders try to adjust from the excess of their starts late last year," said Bernard Helm, president of Market Opportunity Research Enterprises, which tracks real estate markets in the Southeast.

There are also a lot of condominiums on the market. A number of concerned developers have called Tom Maeser, market analyst and president of the Fortune Academy of Real Estate, because there are about three times as many condos on the market this year compared to the same time last year.

Developers are cutting back on what they build because they may have trouble meeting bank requirements that say they should sell 80 percent to 100 percent of the units before getting a construction loan.

Meanwhile, the market for single-family homes in still going strong in Horry County.

Single-family building increased 7 percent over last year to 1,535 homes, even though sales of new houses stayed flat and resale homes fell 6 percent.

This could be good for home buyers, some analysts say.

"Builders will have some excess inventory, and that will end up being good news for consumers. They have to work out that inventory and that means softening prices," Helm said.

"In Georgetown County, sales of existing homes have declined slightly, but new home sales are up 60 percent, to 104 homes this year."

Georgetown County is getting ready to do what Horry County has already done. It's good on new houses but has problems in resales," Helm said.

"The decline will happen in new home sales."
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My thoughts:
We've got a HUGE amount of condos in Myrtle Beach that have to be consumed before they continue to build more. The land owners that got on the bandwagon too late need to hold off for a year or two and let the present glut sell before they take on yet another new development.

Myrtle Beach condos are still the best investment real estate on the east coast. Right now is probably the best time of all to BUY a condo...there are incentives everywhere and prices have dropped a bit since last year. You should be prepared to hold on to it for a year or so. But you can make so much on rentals that it's not a lot of out-of-pocket expense during that holding time. And you can use the condo yourself instead of shelling out $1000 everytime you want a beach vacation. The conversion condos like Sea Mist Resort and Patricia Grand may be some of the best deals anywhere for this kind of investment.

I also hear first hand that real estate in Charlotte real estate and Raleigh, North Carolina are hot as a firecracker right now. Looks like last year's hot spots are cooling down and sharing the wealth with the ones who were slack then.

The economy is strong and us baby boomers rule. If you can afford a vacation condo or home, go for it. This beach has never seen a long term downturn in real estate prices. We've got beautiful new developments like Prince Resort Myrtle Beach and great bargains like Coastal Villas at CCU. Give us another year or two and we'll be back in the sun again!