It's really no different than most of the vacation communities up and down the SC coast. There is a mountain of overpriced inventory hanging over the market that is showing no sign clearing. Everyone seems to think that they will be the lucky one to pick off the odd uninformed buyer that floats by, but for the most part only severely discounted and low-end properties are selling.
Prices have come down dramatically from the peak (30, maybe 40%?), which is what most home sellers would like you to focus on. But what must be understood is that *the peak wasn't real*, it was just a mirage (although the affects on those fortunate enough to have profited or unfortunate enough to have bought into the bubble is very real for them on a personal level). Only by comparing the market to the pre-bubble prices does it become clear how grossly overpriced the market still is today. Only then does 5+ YEARS worth of inventory, as we see in some segments of the market, begin to make perfect sense.
The market will be back in balance when property owners and the real estate professionals who represent them accept this reality and this is a long and difficult process for obvious reasons. In some areas this is happening involuntarily (foreclosures and ultimately REO sales), and those are the places where you see condos at 60%+ below peak price (Myrtle Beach). Places like Fripp Island, with its cash buyers and historically high down payments, are going to the same place. They will just take longer to get there.
My advice is to find a knowledgeable Realtor who you like and trust to keep you up to date on new listings and price reductions for what you are looking for specifically. This is important, especially if you don't know the area well. Communication should be electronic and automated where possible. You do not want to waste their time and you do not want them to waste your time. And if you don't want to overpay you will likely be waiting a while to buy.
Just remember, buying at 2003-04 levels is only a deal compared to buying at the height of the bubble. Properties were already obscenely overpriced by 2004, up 300+% over the preceding 10 years in many cases.