As of April 2026, the median Myrtle Beach condo sold for $208,500, down 12.4 percent from a year earlier. Over roughly the same stretch, through July 2026, the average nightly rate for a Myrtle Beach short-term rental climbed 8.4 percent to $280, and revenue per available listing rose 1.2 percent to $147. A market where sale prices are falling and nightly rates are climbing at the same time isn't behaving like a market that's simply cooling off. It's behaving like a market where something changed how much a building is worth independent of what it can earn on any given weekend.
That something has an ordinance number attached to it, and a federal lawsuit that shows exactly what it costs to guess wrong about it.
A $16.9 Million Bet Against A Zoning Rule
In September 2022, a company called MBSC Property South LLC bought 165 of the 240 condominium units in the Sand Castle South Horizontal Property Regime for roughly $16.9 million. According to the company's federal court filing, the plan was to convert the units to long-term rentals, including affordable and workforce housing, in partnership with the Myrtle Beach Housing Authority. MBSC based that plan on the property's zoning, which at the time permitted multifamily residential use.
Then the city changed the rule underneath it.
On December 10, 2024, Myrtle Beach City Council passed Ordinance 2024-69, creating the Short-Term Rental Conversion Overlay Zone. The zone runs east of Kings Highway to the Atlantic Ocean, from 29th Avenue South to 82nd Avenue North, and it does one specific thing: any building of more than two units that was ever constructed for or used as a hotel or short-term rental can no longer be leased for 90 continuous days or more. Stringing together back-to-back short leases to keep the same tenant past 90 days is banned too, closing the obvious workaround.
MBSC's lawsuit against the city says the overlay killed its conversion plan and, with it, most of the value the company thought it was buying. The suit alleges that had the conversion gone through, the property would have been worth between $26 million and $30 million based on projected rental income and capitalization rates. Instead, the company says the city's action cost it between $4 million and $8 million in anticipated profit, leaves it with a basis of about $22 million against the property, comprising $16.1 million in debt and $6 million in equity, and puts foreclosure within reach absent relief from the court.
Whatever the court ultimately decides about that specific building, the case puts a real dollar figure on what the overlay does to a property once its history includes short-term use.
Why A Building's History Now Follows Its Deed
Before December 2024, an owner of an oceanfront condo in a building that had operated as a hotel or vacation rental could, in theory, switch to renting it long-term, subject to zoning and licensing. The overlay closes that option for any building inside its boundary that carries that history, with one narrow exception: an owner who already held a long-term rental business license when the ordinance passed can keep renting long-term, as long as that license stays current.
What the ordinance doesn't clearly settle is whether that exception travels with the unit to the next buyer. City staff described it differently at different points in the process. During the first council reading on December 3, 2024, an attorney explained that a new owner does not inherit an existing long-term license, calling that "part of the new statute." At the December 10 meeting where the final version passed, an assistant city manager described a different pathway for units that had served only as an owner's primary residence and had never been rented at all. Those are two separate descriptions of who keeps flexibility after a sale, and the gap between them is exactly the kind of thing worth confirming with the city's Planning and Zoning Department before assuming a currently long-term-leased unit will stay that way once it changes hands.
The city's stated reason for drawing this line at all is revenue. A study prepared by Arnett & Muldrow Associates during the moratorium that preceded the ordinance estimated that Myrtle Beach loses $2.48 million in accommodations tax, and Horry County loses another $1.19 million, for every 1,000 units converted from short-term to long-term use, with the combined city, county, and state loss reaching $7.61 million per 1,000 conversions. The same study estimated roughly 48 jobs lost for every 1,000 units converted. That's the reasoning the council pointed to when it made the overlay permanent rather than letting the moratorium, first put in place in April 2024, simply expire.
What This Means For The Discount You're Looking At
This is where the ordinance stops being a zoning curiosity and starts showing up in a buyer's financing options. Fannie Mae and Freddie Mac have required, since 2022, that a condo association put at least 10 percent of its annual assessments into reserves before a unit in that building qualifies for a conventional loan. Buildings that fall short of that threshold, or that require every owner to participate in a mandatory on-site rental program, generally aren't eligible for a standard mortgage at all. Buyers end up shopping for investment-property or commercial financing instead, which usually means a larger down payment and a higher rate.
Put the overlay and the financing rules side by side and a pattern shows up. A building locked permanently into short-term-only use by its own history, especially one that also runs into a reserve or mandatory-rental-program issue with Fannie Mae and Freddie Mac, is drawing from a narrower pool of buyers: cash purchasers, investors comfortable with short-term-rental income, and lenders who specialize in commercial condo paper. A building without that history, or one that can show it maintains a valid long-term license, keeps access to owner-occupants, retirees, and anyone using a conventional 30-year mortgage. That difference in buyer pool shows up in list price and days on market long before it shows up in any headline about the Grand Strand as a whole.
| Building with STR-only history, no financing exception | Building without that history, or with a maintained long-term license | |
|---|---|---|
| Eligible buyer pool | Cash, investors, commercial lenders | Owner-occupants, retirees, conventional mortgage buyers |
| Financing path | Investment-property or commercial loan | Standard mortgage, if reserves meet the 10 percent threshold |
| Resale flexibility | Locked to short-term rental use | Can hold long-term or short-term status depending on license |
| What a discount might mean | A structural limit on the buyer pool | Genuine negotiating room worth comparing to true comps |
What The Current Numbers Are Actually Showing
Layer the sales and rental data on top of that split and the softening condo median looks less like a broad retreat and more like a market absorbing buildings that lost flexibility. Condo inventory in Myrtle Beach was up 5.8 percent year over year to 1,475 units as of April 2026, even as the median price fell. Short-term rental data through July 2026 counted roughly 19,903 active listings in the market, down 6.0 percent from a year earlier, with average annual revenue per listing down 2.3 percent to $26,100 and occupancy down to 53 percent. Average daily rate still climbed 8.4 percent over the same period. Fewer listings, fewer booked nights, higher price per night booked is what a market looks like when the properties leaving are disproportionately the ones that could least afford to stay, not necessarily the ones performing worst.
One caution worth stating plainly: the geographic boundary used for short-term rental data and the MLS coverage area for Myrtle Beach's core ZIP codes aren't identical footprints. Any yield figure built by combining the two should be treated as directional, and the same caution applies to weighing any single building against these market-wide averages.
Three Questions Worth Asking Before You Read A Discount As A Deal
- Is the building east of Kings Highway between 29th Avenue South and 82nd Avenue North, and has it ever operated as a hotel or short-term rental? If so, converting it to a lease of 90 days or more isn't an option under current city code outside the narrow grandfather exception.
- Does the HOA's reserve funding meet the 10 percent of assessments threshold Fannie Mae and Freddie Mac require, and would this purchase require participation in a mandatory rental program? Either answer changes what kind of loan you should be shopping for.
- If the unit is currently rented long-term, is that status tied personally to the current owner's license, or does the city confirm it transfers at sale? That's a call to the Planning and Zoning Department, not an assumption to make from the listing sheet.
Two Questions This Raises
Does the overlay apply to single-family homes too? No. It applies specifically to buildings of more than two units, within its Kings Highway to oceanfront footprint, that were constructed for or used as a hotel or short-term rental. Single-family homes outside that area follow the city's separate residential zoning, which generally doesn't permit short-term rentals in traditional residential districts to begin with.
Is the Sand Castle South lawsuit resolved? Not as of this writing. The case remains active in federal court, and nothing here predicts how it will end. What it does show, regardless of outcome, is the dollar scale of what's at stake when a building's rental history runs into this ordinance.
None of this means an oceanfront condo in Myrtle Beach is a bad buy right now. It means the sticker price only tells part of the story, and the missing part is written into a zoning ordinance and an HOA's reserve ledger, not the listing description. Kirk Stalvey has spent his career working the Grand Strand building by building, and knows how to check a property's overlay status and financing eligibility before you fall for a number that looks better than it is. If you're comparing oceanfront buildings and want someone to run those specifics with you first, book an appointment and bring the address.
