In 2022, a company called MBSC Property South paid $16.9 million for 169 units at the Sandcastle Oceanfront Resort on South Ocean Boulevard. The plan was straightforward: convert the short-term rental units into long-term leases, partner with the Myrtle Beach Housing Authority on housing vouchers, and turn a resort building into workforce housing. The city said no. Not through a single vote, but through a sequence of denials that ended in a federal lawsuit that is still open today.
Most oceanfront condo buyers assume a kind of insurance policy sits behind every rental purchase. If nightly bookings soften, you switch the unit to a twelve-month lease and collect steadier, if smaller, rent. In a specific stretch of Myrtle Beach, that insurance policy doesn't exist. The city closed it off by ordinance in December 2024, and the fight over whether the city was allowed to do that hasn't ended. If you're evaluating a condo in this corridor, the zoning file matters more right now than the price per square foot.
The Overlay That Runs From Kings Highway to the Water
The rule is called the Short-Term Rental Conversion Overlay, and it does something unusual for a zoning ordinance: it protects short-term rentals rather than restricting them. Adopted by Myrtle Beach City Council in December 2024, it applies to any building of more than two units that was constructed for, or has been used as, a visitor accommodation, meaning a short-term rental of under 90 continuous days. Inside the overlay, that kind of building cannot be converted to leases of 90 days or longer. Stringing together a series of shorter bookings to keep one occupant in place longer counts as a violation too.
The corridor itself runs roughly 114 city blocks east from Kings Highway to the Atlantic, covering the stretch that, as MyHorryNews reported, runs from around 29th Avenue South up through 82nd Avenue North, which is where the bulk of the city's short-term rental inventory sits. There is one carve-out. If a building's owner already held a long-term rental business license before the ordinance took effect, that license can be renewed and the long-term use can continue. Everyone else in a qualifying building is locked into short-term use unless they can show they were doing something else first. The city's own zoning FAQ lays out the broader rental zoning framework that sits underneath this overlay, including which districts allow visitor accommodations at all.
A Deal That Ran Into the Line
MBSC's timeline shows how the rule actually bites. The company says it had the correct zoning for a long-term conversion and applied for a business license in early 2024. As The Post and Courier reported, the city rejected that application in March 2024, saying the property needed to come into compliance with codes governing a change of use from hotel to long-term residential. While MBSC worked through that, it applied to the Myrtle Beach Housing Authority in April 2024 for Project-Based Housing Choice Vouchers. The Housing Authority denied that application too, citing a moratorium the city had just imposed on May 14, 2024, which paused all short-term-to-long-term conversions.
That moratorium was supposed to expire in January 2025. Before it did, the city made the freeze permanent with the December 2024 overlay ordinance, passing the second reading unanimously. A study the city commissioned from Arnett & Muldrow Associates during the moratorium period estimated that for every 1,000 units converted from short-term to long-term use, the city loses roughly $2.48 million in accommodations taxes and the county loses another $1.19 million, for a combined local and state revenue hit the study put at $7.6 million. That's the fiscal argument the city has used to defend the rule.
MBSC's lawsuit, filed in February 2025, argues the ordinance cost it nearly $6.5 million in projected profit and close to $10 million once interest, carrying costs, and legal fees are added in. The complaint leans on due process, equal protection, and takings claims under both the U.S. and South Carolina constitutions, plus a Fair Housing Act claim and a state constitutional claim under Article I, Section 13, which bars government from taking private property for private use without the owner's consent.
Not every resident in the affected buildings saw it MBSC's way. At a council meeting before the vote, Ocean View Towers resident Nora Hutchison, who held her own short-term rental license, worried about losing the flexibility to rent to snowbirds staying several months at a time. As WBTW reported, her objection to the city's posture toward that kind of guest was blunt: "You're telling them, 'we don't want your business here.'" Another Ocean View Towers owner, Jack Hill, framed his objection around the right to sell his unit to a buyer who might want to lease it long-term instead.
The Ordinance Is Still Being Litigated
The case, MBSC Property South, LLC v. City of Myrtle Beach, moved to federal court in South Carolina in March 2025. On August 28, 2025, U.S. District Judge Joseph Dawson III ruled on the city's motion to dismiss, and the outcome was mixed rather than final. The court dismissed MBSC's claims for spot zoning, unauthorized taxation, impairment of contract rights, and vested rights with prejudice, meaning those theories are done. But the court let the rest proceed. MBSC's declaratory judgment claims under the South Carolina Planning Act survive in part, and the court found MBSC had plausibly alleged violations of due process, equal protection, and takings guarantees under both constitutions, along with disparate treatment and disparate impact claims under the federal Fair Housing Act. The full opinion is public through CourtListener and worth reading directly if you want the court's own language rather than a summary.
What that ruling means for a buyer today is narrower than it sounds. The overlay is not struck down. It's still the rule in the corridor as of this writing. But a federal judge has already found the constitutional and fair housing arguments strong enough to go to discovery rather than get thrown out at the earliest stage, which means the rule that governs whether you can convert a rental could still change depending on how that case resolves. You are not just buying subject to a zoning ordinance. You are buying subject to an ordinance whose validity is an open question in federal court.
What the Numbers Around It Look Like Right Now
The overlay matters more in a softening short-term rental market than in a booming one, because a soft market is exactly when an owner wants the long-term lease as a backup. As of July 2026, Myrtle Beach had roughly 19,903 active short-term rental listings, down 6.0% from a year earlier, according to AirDNA data. Average annual revenue per listing fell 2.3% to about $26,100, and occupancy dropped 5.3% to 53%. At the same time, the average daily rate climbed 8.4% to $280, and revenue per available night rose 1.2% to $147. Fewer units are staying in the game, and fewer nights are getting booked, but the ones still operating are charging more per stay. That's a market thinning out at the edges, which is precisely the condition under which an owner facing a run of empty weeks would normally want to switch a unit to a steady, non-seasonal tenant. Inside the overlay corridor, that switch isn't available to most owners.
Meanwhile the condo entry price has come down. The Myrtle Beach townhouse and condo median sale price was $208,500 in April 2026 according to CCAR MLS data, down 12.4% year over year. A lower purchase price makes the math on a rental property look more forgiving on paper. It says nothing about whether you can change the use of that property if the short-term numbers don't hold up. The Coastal Carolinas Association of Realtors publishes ongoing market statistics if you want to track how condo pricing and inventory are moving month to month.
Checking Before You Write the Offer
A few steps are worth taking before an offer goes in on any condo in a building of more than two units east of Kings Highway:
- Confirm the parcel's zoning district and whether the address sits inside the mapped STRC Overlay corridor. The city's Planning and Zoning Department can verify this against the specific address rather than a general description of the boundary.
- Ask whether the building held a long-term rental business license before December 2024. That's the only documented path to the grandfather exception.
- Get the HOA's rental policy in writing, separate from city zoning. A building can sit in a district where short-term rental is legal under the ordinance while the HOA's own master deed still caps or bans it, and the overlay works the same way in reverse: HOA permission does not override the city's conversion ban.
- If the building runs a mandatory rental program, confirm with your lender whether that pushes the loan into investment-property or commercial financing rather than a conventional owner-occupant mortgage.
- Request the last 12 months of HOA meeting minutes for any discussion of insurance costs or reserve funding. Reserve contributions below certain thresholds can affect a building's financing eligibility on a separate track from anything related to rental rules.
None of this applies to single-family homes or duplexes, which the ordinance exempts regardless of location. And none of it restricts your ability to live in the unit full time. The conversion ban is about changing a short-term rental into a long-term rental, not about ownership or occupancy.
Frequently Asked Questions
Does the overlay apply to every condo building in Myrtle Beach? No. It applies to buildings of more than two units, located between Kings Highway and the Atlantic Ocean in the mapped corridor, that were constructed for or used as short-term rentals. Buildings outside that corridor, and single-family homes or duplexes anywhere, are not covered by this specific ordinance.
If I buy in the overlay corridor and only want to live there, does this rule affect me? No. The ordinance restricts converting a unit's rental use from short-term to long-term. It doesn't restrict owner-occupancy.
Is the ordinance still in effect while the lawsuit is pending? Yes. As of the August 2025 ruling, the overlay remains in place. The lawsuit challenges its validity, but no court has voided it, and the case is continuing in federal court.
Checking an address against the overlay map, and pulling a building's rental license history, is exactly the kind of groundwork that belongs in due diligence before an offer rather than after closing. If you're weighing a specific building in this corridor, Liat Edri can help you pull the zoning file and the building's rental record before you write the number.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
