Building development in Myrtle Beach is down in 2023. What’s the cause?

Myrtle Beach has grown rapidly recently, but that development could be slowing.

Fewer building projects were approved in Myrtle Beach this year than in others. The city argues the slowdown is returning to normal after booming business in 2021 and 2022.

“The building boom was still in full swing at this point,” City of Myrtle Beach Director of Public Information Mark Kruea said. “So while it is a little bit lower, I don’t know that it’s anything to stress about.”

Meanwhile, builders within and around the Grand Strand region say the increase in the price of certain materials has made development more difficult.

Myrtle Beach approved 7,751 building permits during the 2022-2023 fiscal year, which just concluded, according to a report by the city.

The value of the planned construction projects for the fiscal year is about $426 million.

Despite a tremendous amount of projects and money, the planned development in the city was lower than in prior years.

During the 2021-2022 fiscal year, 9,018 building permits were issued in Myrtle Beach, valued at $565.1 million.

For context, between the 2021-22 and 2022-23 fiscal years, the number of building permits issued in Myrtle Beach saw about a 14 percent drop, and total construction was almost 25 percent less valuable.

Despite the decline, areas such as Market Common, Balmoral and the Grande Dunes all had construction, Kruea said.

The trend was not countywide. For the 2022-23 and 2021-22 fiscal years Horry County issued more than 17,000 building permits, and the construction value was $1.63 billion in 2022-23, a 10 percent increase from 2021-22.

Kruea added that Myrtle Beach’s relative size makes it a poor comparison for the rest of the county.

“The city of Myrtle Beach is only two percent of the land area of Horry County,” he said. “We don’t even cross the (Intracoastal) waterway.”

The decrease in construction value might also not be a long-term trend.

The 2023-24 fiscal year has already started, and commercial construction projects for July 2023 were valued at $3.2 million compared to $16.6 million in July 2022.

But in August 2023, commercial construction was valued at $13.2 million compared to $10.3 million in August 2022.

South Carolina’s fiscal year begins July 1 and ends June 30 every year, according to the Legislature’s website. Horry County and Myrtle Beach’s fiscal years are the same.

The cost of some building materials is up

It’s unclear if the amount of development in the greater Grand Strand area is also facing a slowdown in building, but some say that the cost of some raw materials has gone up recently.

Jason Repak is the president of Hudson Custom Homebuilders and the Horry Georgetown Home Builders Association.

Hudson Custom Homebuilders designs properties specific to the owner’s wishes. Currently, the company is working on projects with prices between $600 thousand and $1.4 million. Repak said one $1.4 million house he built was Gatsby-esque as it sat on the water and had a large swimming pool, just like Jay Gatsby’s mansion had in the novel.

Repak said custom home sales had increased recently, and the demand in the broader housing market was outpacing supply. Currently, the United States is facing a housing shortage, and nationally, housing prices are up 40 percent compared to 2019, according to Axios.

Most people looking to buy a home are not purchasing bespoke homes, and Myrtle Beach is already dealing with an affordable housing problem.

Repak also said that building costs have risen recently, particularly regarding raw materials.

“Overall, the inflation on the cost of new homes or new home products and construction materials has stabilized,” Repak said. “But we are still seeing select cost increases in building materials. I know shingles and siding are a recent one.”

Repak added the price of concrete had also gone up.

“Concrete is up pretty substantially over the last three years,” Repak said. “The cost of diesel fuel doesn’t help because it’s such a heavy product... there’s only so many yards of concrete that a cement truck can carry, you ended up having multiple cement trucks per home, and per project. So as the cost of diesel has increased, so has the cost of delivery.”

The price of concrete has indeed gone up locally and nationally. Chad Dyson is a commercial sales manager at Thomas Concrete. The company, which has 73 plants in the Carolinas and Georgia, would not disclose the current price of concrete, but Dyson said prices have gone up recently.

“Five to seven percent is roughly what you’re looking at when you see these price increases that happen,” Dyson said.

Dyson also said that the price of diesel fuel and demand for more concrete by Grand Strand builders is partially what’s driving up the cost of concrete. He added that the number of times companies increased the price of concrete a year has gone up.

“On average, we have one price increase a year, and that’s pretty standard for the industry,” Dyson said. “In the recent couple of years, it’s been more the norm to say two to three price increases a year.”

In 2020 or 2021, the price of concrete rose in the United States, according to the Cumming Group consulting firm. In 2023, the cost of concrete & masonry increased by 15 percent, according to the construction data firm Gordian.