Thursday, January 31, 2013

2012 Market Recap & Looking Forward- Mexico Beach to Cape San Blas

Greetings from your Favorite Coast,
Market momentum from 2011 carried through the Mexico Beach to Cape San Blas market with 2012 recording the most sales of any year since 2005. 2011 was the previous best year since 2005 with 439 sales and 2012 saw a nice increase to 554 sales. A decrease that I'm happy to report is the number of properties on the market has gone down from an all-time high of 1732 in 2006 to the lowest number since 2004 with an average of 872 properties on the market in 2012. Supply and demand support the slight increase in prices that the market is seeing and the majority of economic factors point to rising values.
2012 Sales-554 Total Sales
# of Sales
Avg Residential
Avg Vacant Lot Sale
Mexico Beach - WindMark227$195,305 $62,445 $10K-$616,750
Cape San Blas-Indian Pass231$294,568 $76,178 $11K-$1,385,000
Port St. Joe96$108,743 $26,643 $10K-$265,000
Vacant lot prices have fallen more than any other property type since the market began to fall in late 2005. Reductions of 60-70% from the height of the market are common and premier subdivisions like WindMark and Ovation have had many lots sell for 10 cents on the dollar. These premier developments rose the most and have fallen the hardest. The developers drastically reduced prices in Ovation and 51 lots sold from May to July in just that one subdivision; which only has 120 total lots. A friend bought one of the originally released interior lots in Ovation for $235K and later bought an identical lot next to his first lot for the list price of $19,000 which was one of the 51 sales. I made the last sale in WindMark last year which was a first tier lot purchased for $80,000. The previous owner paid $810,000 in 2004.

These tremendous reductions in lot prices have led to a mini-boom of construction in the area. People interested in purchasing often find that they can buy a lot and build exactly what they want for cheaper than they can buy an existing home. The majority of well-priced homes have sold over the past few years and there often isn't much to choose from. Cape San Blas, Indian Pass and WindMark are experiencing by far the most construction and these areas have the highest average sale prices for our area. My parents actively shopped for a home for some time and finally came to the realization that it would actually cost less to build exactly what they wanted in WindMark rather than purchase one of the few existing homes on the market. We are not seeing much building in Port St. Joe where there are still many existing homes at prices far less than construction costs. Mexico Beach
has very little building as well, due to the lack of a big reduction in lot prices close to the beach.

I am friends with a number of builders and there were some very lean construction years from 2006 to 2011. There were many times with less than 7 homes under construction for the whole area compared to the 35 plus current permits for homes under construction now. The builders that have stuck out the slow times are busy once again. The optimism is strong enough that we've even got "spec" houses being built which is something we haven't seen in 6 years. The number one complaint I hear from the buyers I show around is the lack of newer single family homes on the market. The high values from the early and mid 2000's led to the development of many nice condos, townhouses, and subdivisions, but not single family homes. I'm happy to see all of this building that will add to an even higher quality of inventory in the future. Click either name below to see active listings for that area: Ovation on the left andWindMark on right.
Ovation and WindMark Beach

Do we still have a lot of foreclosures on the market? Not on residences, but there are still a fair amount of foreclosed vacant lots remaining. (Thus the good deals that have led to all of the building.) As of 1/29/13, there are 5 residential foreclosures from Mexico Beach to WindMark , 2 in Port St. Joe, and 4 from Cape San Blas to Indian Pass.This link will show the11 foreclosed homes on the market: The number of short sales is way down and here are the 11 homes currently listed as short sales. Banks are still holding a higher number of vacant lots and this will show the 45 vacant lots listed as foreclosures:

2013 looks like another year of many people looking to buy good deals in our area. I've seen predictions for price increases from 2%-7% for 2013 and I believe we will see somewhere around a healthy 5% increase. I do not forecast more sales this year than last. We are simply running out of the largely bank-held and troubled inventory that results in high sales volume. Tranquil Harbor and The Club in Mexico Beach may provide good buying opportunities for condos in Mexico Beach as there are large numbers of distressed properties held by banks/developers in each project. We could see much better if Port St. Joe lands any companies that it's hoping come to the area to provide job opportunities. Port St. Joe home prices are driven primarily by the local economy and job market while the Cape and Mexico Beach are predominantly influenced by the second home, retirement, and vacation rental markets.

 A very positive sign of the market was the beach front condo building that sat vacant in Mexico Beach for 6 plus years being bought by a group from Nashville and finished out very nicely. They renamed this project The Vue and have been closing units out for higher numbers than we have seen condos sell for since 2006. (Beach front units start at $360k and the majority have sold or are under contract.)
Rental Market- The long term and short term rental markets are as strong as they have been since I started in 2004. Bed tax collections for vacation rental and motel stays set another record in Mexico Beach and Gulf County with each Board reporting gains over 12% for their financial year. The upswing in rental income is certainly leading to more people purchasing and justifying values from a rental income perspective. More vacationers are good for values and it's a fact that more people are coming each year and enjoying our area.
There is an extreme shortage of long term rentals so owners have been able to increase rates 10%-20% over what they could charge just a year or two ago. 98 Real Estate Group is strictly a sales company and we still average five calls a week from people that can't find anything on the long term rental market and are desperately hoping we might know of something. My sister recently moved here from Rhode Island and is working at Tyndall Air Force Base. She had reasonable expectations and looked very hard for something to rent for a few months prior to moving. She couldn't find anything and lived with me for 5 weeks before something became available. (She has dogs and this made her case a little harder than most, but it's tough for anybody to find a long term rental these days.)

How's 98 Real Estate Group doing? We are doing well and will celebrate being open two years next month. We've grown by adding Grant Terry, Regina Gossett, Gene Cline, and John Sherwood since opening. We haven't finished as the top sales company, but we have been close and with a few of the projects and strategic alliances we now have in the works, I'm hopeful we finish 2013 as thetop sales company for the area. Since opening, we have sold 164 properties totaling right at $27 million.
The potential impact of the money that Gulf County and Mexico Beach look like they will receive from fines BP is paying for the 2010 Oil Spill through the RESTORE Act could have a huge positive effect for the area. I feel like I need tomention it since the areas are projected to receive an infusion of capital like nothing seen here before. There are many different "pots" of money to be used for various projects and still many unknown factors. I hope our local leaders can guide the community and make the best of this situation as their decisions will have the possibility of doing great things for the area.Here's a link to read more about the RESTORE ACT.
Please let me know if I can help with any of your real estate needs. Don't forget theMexico Beach Gumbo Cookoff is coming up on February 16th. The 98 Real Estate cooking team will see you there as we defend our title. We are also planning the 3rd Annual 98 Real Estate Group Ling Ding fishing tournament to be held every weekend in April with a kickoff party on April 5th. Details will be out shortly.
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Zach Childs
Broker/Owner 98 Real Estate Group
Cell:  850.819.0833
Fax:  888.382.9608
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