It's hard to beat a bike ride on the winding road that takes folks along the shores of the mighty "creek," as locals call the sprawling marsh leading to the Atlantic Ocean in Murrells Inlet, S.C., a seashore town that combines the quaintness of a once-thriving fishing village with upscale restaurants and homes. It's just one of the many communities that dot the 23 miles of Myrtle Beach, but its "arrogant shabbiness" and fresh marsh breezes have made it a favorite of retirees and home developers alike.

So it's no surprise that my friends, who have been renting in the area for years, really want to buy there when they retire and move from Connecticut at the end of the year. They hope to take the proceeds from their home sale-about $220,000-and buy a new three-bedroom, two-garage home on a golf course about a mile from the beach.

The question for advisors as the stock market continues its gyrations is simple: Should my friends do it? Or should they rent and wait until the market, which is marred by falling prices and glutted with new and existing inventory, gets closer to a bottom?

It's a question advisors and retirees should be taking a hard look at. When I traveled to Raymond James' headquarters in St. Petersburg, Fla., for their Women's Symposium last year, I was impressed with the spectacular array of condos being built along the bay. The problem? Eight months later, there are still about 70% vacant. "They'll never get their asking prices," a Raymond James executive and longtime St. Pete resident told me last October. Apparently, she was right.

In Myrtle Beach, sales have not only stalled, they are backsliding, right along with prices. Home sales are down some 27%, with condo sales down 38%, according to the South Carolina Association of Realtors, which reports that prices have fallen about 3.5% in the first quarter of 2008, after a 10% decline last year. Some homes have been sitting on the market more than 320 days, says Melanie Narla, a realtor with Coldwell Banker Chicora Realty in Myrtle Beach.

That's a new world order for those of us who were used to buying and selling real estate in a single afternoon.

Jim Spring, a realtor with Century 21, says the real estate situation in the sprawling beach community is a "stalemate." Buyers, reluctant to purchase during a downtrend, are holding fast, but sellers, refusing to "give their properties away," are staying firm, Spring says. "Sellers who were continuing to demand higher prices for their properties finally have had to reduce their prices below the 2005 market price or take their properties off the market."
What that means is sellers are prone to extremely large haircuts, especially in the condo market in Myrtle Beach. Case in point: Those who purchased a one-bedroom condo in Camelot by the Sea, a castle-themed, oceanfront development, in June 2005, would have paid $345,000. The same condos are now selling for $176,000. That's a $169,000 price reduction in three years time, and that's before the sellers pay their real estate agent the 6% to 7% sales commission that is the norm in Myrtle Beach. That would be painful for anyone, but especially for middle-class retirees who either need to sell or have to stay put because they can't afford to take the loss.

Making matters worse is inventory. There are 20% more homes on the market today in Myrtle Beach than there were at this time last year. And what is selling are new and pre-construction properties, not resales. With building planned for the next decade in Myrtle Beach, that brand new golf course home you buy this year may look dated and dingy to buyers just five years down the road.

So what does that mean for the real estate aspirations of our soon-to-retire Connecticut couple, who are hoping to continue to run their print brokerage business, albeit on a reduced and mostly virtual basis, from their new digs in Myrtle Beach? For any client, it depends on their assets, age, health and desire to say put, says Linda Leitz, founder and co-owner of Pinnacle Financial Concepts in Colorado Springs, Colo.

What we know about the Connecticut couple is this: They're currently age 60 and healthy and, all told, with the proceeds of their home sale, will have essentially $1 million. They hope to keep working, earning approximately $5,000 to $7,000 a month for at least five to seven years.
They truly like Myrtle Beach and have spent more than 15 years vacationing there. So as far as we can see, without a crystal ball, there are few surprises that could send them trekking back to Connecticut-not even Myrtle Beach's sauna-like Julys, the ever-increasing crowds or the two weeks of motorcycle fests when droves of Harley-Davidsons roar up and down the roads, clogging restaurants, bars and beaches every May. They've already experienced all that firsthand.