Wednesday, November 21, 2018

Post Michael - Mexico Beach Real Estate Market Report

The area has obviously changed a great deal since my mid-year market update.  I was working on a 3rd Quarter update when Hurricane Michael came through and devastated our special place.  This area had been fortunate to never have had a direct impact from a huge storm. The storm damage everyone always talked about around here was Opal, which was a category 3 when it made landfall in 1995.  It wiped out some beachfront and low lying houses and has always been the benchmark the locals referred to when talking about hurricanes.  That has changed now that we took a direct hit from a category 4 storm that will probably be reclassified as a category 5. Mexico Beach through St. Joe Beach took the most severe damage and these are the areas I'll mostly focus on in this report.    This isn't at all saying that there aren't many destroyed homes and displaced families in Port St. Joe and Cape San Blas.  I'll focus more on these areas in my next update.            
The damage is significant, and I keep hearing from people seeing the area for the 1st time that it's much worse than they thought from the news.  The truth is, they are seeing a far cleaner version now than existed a month ago as a massive amount of debris has been removed and the roads are vastly improved.  Those properties closest to the beach took the hardest hit with a combination of extreme winds and a massive storm surge.  There's an official government marking attached to our office that says the surge was 19 feet at that location on 33rd Street.  The area has never seen anything like this and the wall of water washed away most beachside properties that weren't already blown away by the 200 mph winds.  I evacuated with my family safely to Alabama and came back 2 days after the storm.  There's barely a trace of many landmarks like Toucan's, The Lookout Lounge, Killer Seafood, Sharon's, and many other longstanding buildings.  I was trying to update owners on how their homes did and was going through neighborhoods I've been through thousands of times and was getting turned around.  Many of the homes I recognized were relocated a few streets over and about half the street signs were gone.  
There is some good news, and everything wasn't destroyed.  Utilities are almost fully restored and tons of clean up has taken place.  The roads are navigable and there's an army of workers and volunteers working daily.  The homes further from the beach fared much better, but many were flooded and fallen pine trees also destroyed countless others. Building codes were significantly updated in the early 2000's.  Newer homes withstood the storm on average much better than the older homes.  That's not to say some newer homes weren't destroyed, and some 1960's mobile homes didn't make it just fine, but in general, the newer homes are in much better shape.  Many homes located blocks further away than surges ever came near in previous storms survived the wind, but have flood damage.  The majority of these flooded homes aren't ruined though, and owners are getting back in at various speeds with some already remediated and remodeled with owners planning to be back in within a few months. 
The ten big condos in Mexico Beach like The Club, Paradise Shores, and West End Harbor which were all finished from 2005-2007 are all structurally sound with repairs underway.  The newer townhouse developments like Oceanside Village also fared moderately well, but will need new roofs and the interiors redone from the flooding.  In the subdivisions developed in the 2000's, part of the reason those homes held up better is they weren't surrounded by older homes that were blown into them.   Ocean Plantation, Casuna, Beacon by the Sea, Sunset Village, Sea Haven, Magnolia Bluff, and Barefoot Cottages all did well in regards to wind damage.  Ace Hardware relocated to one of their storage barns behind their building that wasn't destroyed, and Mango Marley's and Shipwreck weren't destroyed and are working hard to get back open.  Caribbean Coffee also sustained very little damage and is back open. 
Except for some slight flooding, the new Mexico Beach City Hall and the Public Works building are fine and have been fully operational since a day or two after the storm.  The MB City Council voted to allow existing restaurants to operate from food trucks, and a few of the owners plan to go this route until they've rebuilt.  RVs are also going to be allowed on a temporary basis in Mexico Beach and Gulf County changed their ordinances and allowed RVs a few months prior to the storm in Beacon Hill and St. Joe Beach.  It looks like we'll have more occupied homes and businesses operating by spring than originally thought.    The commercial space and residences in WindMark Beach held up very well, and The St. Joe Company, which owns the commercial space, has a big opportunity to capitalize on the situation.  There are multiple unoccupied commercial spaces including a high end restaurant that's been closed for years.  I hope the right people with the St. Joe Company get involved and work with businesses like Killer Seafood that are interested in locating in WindMark.  Hurricane Michael could be what finally jump starts the commercial area in WindMark. Killer is just one example, and they would ideally open in WindMark by the end of the year and then open a second location at their original location in Mexico Beach once rebuilt.     

Understanding Mexico Beach's plans for moving forward has been my top priority. I am attending the city council meetings in Mexico Beach and am usually the only Realtor in attendance.  The Mayor and City Clerk are good friends of mine, and I stop by and visit them regularly for updates.  I think he and the other 4 council members and 36 city employees have really been doing a great job.  The city desperately needs FEMA's help, particularly financially, and there are lots of regulations they are having to follow closely.  Many rumors are flying around that aren't near true.  For those of you worried about Mexico Beach changing a great deal, there is nothing on the table in regards to any big changes.  If your property isn't damaged more than 50%, you can get permits to repair it like normal. The biggest controversy right now seems to be related to people who are getting damage ratings past 50%, yet they and their insurance companies don't feel the homes are significantly damaged.  They want to repair vs rebuild and the city has vowed to work with these owners on a case by case basis.  There is a 90 day moratorium on permits for new construction and those properties damaged past 50%.  If you feel your home isn't 50% damaged, you're supposed to be able to appeal this decision and begin repairs immediately if your appeal is successful.  During this 90 day moratorium, building codes and flood zones are being evaluated for possible changes. This is a FEMA requirement if you want to be eligible for as much reimbursement as possible.  I think we will see Mexico Beach move to building codes similar to Gulf County with a slightly higher wind rating and the flood zones will probably change as well requiring future construction in some areas to be elevated where building on ground level was previously allowed. 
I have never had more calls in my 14 years of experience from people with an interest in buying property in Mexico Beach than I've experienced since the storm. How serious and realistic these buyers are is another question.  I've carried around a notepad since the storm and write down people's contact information after they call.  I'm at 130 buyers and counting that say they want to buy in Mexico Beach since the storm, and I've talked to 6 or 7 sellers that are probably going to sell.  None of these sellers are desperate, and all have said they are only selling if it makes sense financially.  The average call is from somebody that wants to invest in a "great deal" from a seller wanting to move on and sell their property for significantly less than it was worth on October 9th.  I don't know if those buyers will ever get to purchase at these discounts.  There hasn't been one of these sought after great deals yet.  There are also some very realistic buyers happy to pay pre-storm prices as well.  Some of these are buyers that lost their homes, they've gotten paid from insurance, and they are buying undamaged existing homes.  Others are those looking for a premium location.  There hasn't been a beachfront lot on the market in Mexico Beach in well over a year and the same goes for a lot on the canal.  I have buyers willing to pay pre-hurricane prices for these properties, and we haven't found anything yet at full price, so we are far from big discounts.  It is true that there are developers and investment groups looking in the area that would love to buy large tracts of Mexico Beach properties cheap, but they aren't finding anything at this time.  The entire city council is in full support of the current land development regulations that limits density and keeps the height restrictions.  Some hopeful "developers" have realized this and that buying lots of cheap properties and changing the zoning is unrealistic in this tight knit community.  I think they saw Mexico Beach on the news and pictured turning it into Miami, but have found on the ground that it's actually more like Mayberry.  
I think the best post hurricane values may come in damaged homes that are repairable with a lot of work that sellers aren't going to fix. Some are just going to take the insurance money, and others don't have insurance.  Keep in mind that a huge percentage of people that live in the area have damaged homes that they are trying to repair.  Finding labor to do work is becoming borderline impossible to find and prices seem to be going up weekly.  I'm saying this to caution buying one of these damaged homes if you think you're going to be easily able to find somebody to help you fix it up.  The same goes for new construction as demand was already very high before the storm, and it's through the roof now.  This supports the theory that existing, undamaged homes could see an increase in value vs any decline.  If you have an undamaged home that you don't want to sell, but would consider renting, there are literally hundreds of displaced residents looking for a home and countless numbers of construction related contractors trying to rent anything they can get their hands on.  This page on our website will show some of the reduced prices from damaged homes and other reductions that stand out including a home in PSJ reduced from $449K to $169K.  This is a new page on our website that will be updated as new listings come if you're in the market for these types of properties. 
If you want to come down and stay to look at properties in the near future in the Mexico Beach area, your closest options will probably be in Port St. Joe or Cape San Blas.  These are limited right now and some buyers are finding the closest available place to book a room is in Apalachicola or Panama City Beach.  If you want to plan your vacation for Spring or Summer in 2019 and usually come to Mexico Beach and want to support the area, my suggestion is to book in Port St. Joe or Cape San Blas.  The beach in Mexico Beach will be beautiful and the canal will be open.  The reason I'm suggesting booking in our neighboring communities in 2019 is that many of the typical vacation rental homes that are in good shape will be rented by full time residences that are displaced and rebuilding and finding a vacation rental will be difficult in Mexico Beach, but a big portion of the vacation rentals in PSJ and the Cape will be online as normal by Spring, with many already available.   Enjoy the neighboring communities and drive to Mexico Beach to enjoy the beach and support the businesses that are open.  There will be more businesses open than people think by the Spring.  Shops will be open and at least 3 restaurants will be back in their buildings with at least 3 others hoping to be open soon in food trucks.  You'll find closer to 80% of your favorite businesses in PSJ and the Cape already back open.    
Hurricane Michael has been and will be a humbling experience for most of us living through this situation.  The 98 Real Estate members personally suffered significant losses and are a good cross section of how people's homes in the community fared.  Regina Gossett, Bonita Thompson, Steve Newman, Jeff Mayle, and Gene Cline all had their homes destroyed.  The huge storm surge flooded to varying degrees the homes of Kristy Lee, Kaci Rhodes, Grant Terry,  Raz Castaneda, Clay Williams, Bo Spring, and Henry Jordan, as well as my home.  The office flooded and had part of the roof ripped off, but is structurally sound and repairs are underway.  As we approach Thanksgiving, I think we will all be appreciative for what we do have with a new perspective on what's important in life.  Things are certainly much different than they were on October 9th.  Our friends at Big Fish Construction allowed us to move in after the storm and we're very thankful to be working from there as a temporary satellite office.   We have been the top producing real estate company in Mexico Beach for the last 5 years and are here on the ground working and happy to help however we can at this time.  The situation in Mexico Beach is improving and changing weekly, if not daily.  Feel free to call my cell 850-819-0833 if I can help with any updates or advice.
Happy Thanksgiving,

Zach Childs 
Broker/Owner- 98 Real Estate Group
#1 Producing Real Estate Company Located in Mexico Beach-
2013, 2014, 2015, 2016, 2017 & 2018

Wednesday, July 11, 2018

Mid Year Market Recap - Mexico Beach to Cape San Blas, FL

Zach's Website        Top 25 Homes          98 Real Estate Group        Top 15 Lots
July 2018
We're already halfway through what is on track to be a very good year for real estate in the Mexico Beach, Port St. Joe, and Cape San Blas real estate markets.  In the first 6 months of 2018, there were 393 properties sold with a total sales volume of $104,256,450.  The average property was on the market 116 days before selling and sold for 95% of the asking price.  We aren't seeing any out of line sales, but a very consistent and solid market.  2018 is on pace to slightly have the most sales of any year since the 2004-2005 boom days.  The dollar volume will also be the highest since the boom with the highest average sales prices since the subsequent recession that saw prices finally start back up around 2011.  98 Real Estate is now 18 agents strong and continues to dominate the Mexico Beach to WindMark Market while also being one of the top real estate brokerages in Port St. Joe , Cape San Blas, and North Gulf County.  We have continued to produce for our customers and have sold 130 properties totaling $30,867,565 in MLS sales production.  We are on schedule for our best year in company history.  


200520112012201320142015201620172018 *as of 6/30

Properties Sold 
                                  192 - Mexico Beach / St Joe Beach / WindMark Beach                              

Homes on the Market

Lots on the Market

There's no doubt the overall economy is doing well with more and more people liking this area.  This has been a strong trend for the last 5 years, and many sellers have been able to successfully sell this year.  There are also many sellers that also haven't been able to sell.  While the market has seen some steady appreciation, many sellers have priced their properties substantially over recent selling prices and aren't having much luck.  Other than a few beachfront/canal front properties, we haven't seen buyers willing to pay much more than recent sales/appraised values.  It's a good market, but not a name your price market for 99% of properties.  There are some segments of the market that are holding steady but aren't seeing the price increases many sellers desire.   An average 3 bedroom gulf view condo in Mexico Beach is a good example.  These were $500K plus in 2005, sold for around $200K in 2011-2013 and have gone up to $280-$300K.  Most of them have been selling for about the same price since early in 2017.  (The Tranquil Harbor foreclosures sold last year are the big exception and were probably undersold. The 3 resales in 2018 have sold for approximately $50K more than last year.) The number of properties on the market has increased about 20% from the beginning of the year.  This is largely due to many sellers deciding to give selling a try at these higher prices that haven't been achieved yet and are leading to more and more properties on the market.   

I wanted to share a few more points and local headlines that are helping to drive the real estate market.

The Gulf County Property Appraiser turned in preliminary tax rolls for 2018 last week and his figures show values up 8.4% for fiscal year and a 5th year in a row of value increases.  Here's the Article "Property Values Continue Growth Spurt

Rental income from vacation rentals is continuing to go up as more and more people rent vacation properties in the area.  We are also seeing lots of people from areas further away than the traditional Georgia and Alabama markets.  Here's a recent article titled "Bed Tax Revenues Spike in May". 

I've had the largest private tract of land inside the traditional Mexico Beach city limits listed for a few years.  This beautiful 87 acre tract is now under contract with a group of developers.  This is one of the last undeveloped pieces of land around and it's future use will have an impact on the future of the area hopefully fill some housing and commercial needs for the area.

Beach Renourishment - North Cape San Blas -  This project has hit many funding and budget obstacles, but looks set to start August 1, 2018.   

Brothers Osbourne - Besides the award winning group naming their new Album Port St. Joe, the Nashville artist continue to help promote the area.  They recently filmed a national Dodge Ram Commercial that debuted during the CMA Awards on the beaches of Cape San Blas and at The Port Theatre, which they helped renovate.
DR Horton - It looks like Horton will have no problem building and selling homes on the 64 lots they bought from St. Joe in WindMark.  We can help you with these if you're interested.  Here's the 16 that have sold this year or are under contract and the one available home (They do have others under construction set to hit the market in the future).  

Eastern Shipbuilding held a groundbreaking ceremony at the old mill site in Port St. Joe on June 4th.   This isn't the groundbreaking for the big potential Coast Guard project, but is a good first step.  Here's a news video from the ceremony

The fishing is great in this area and remains one of the large attractions for many buyers.  I hear all the time that "my wife loves the beach and I love to fish, so we chose Mexico Beach or Port St. Joe."  While I don't get time to fish much these days, the fishing was a big part of why I moved here 15 years ago and I enjoy promoting the fishing and diving in the area.  Myself and a few friends put on the annual Mexico Beach GollyWhopper.  We've become the 2nd largest tournament in the area and had 64 boats enter our event last month. The seas were extremely rough this year, but here's a link to see the pictures from the weigh-in including some very large fish.  The biggest tournament in the area is  MBARA kingfish tournament, which my dad is the director for each year.  It's being held on August 25th. 

For those of you that like to inshore fish, the Bayou Bash is being held this Saturday.  For those that like to go offshore and troll, The Mexico Beach Offshore Classic is July 27th and 28thI did get to go fishing July 1st and caught this nice king.  Hudson turned 1 that week and he and Michelle are doing great.  

Remember the upcoming scallop season for Port St Joe Bay is starting later than usual in 2018 and will be from August 17 - September 30.  

Check out my favorite housing deals for the Mexico Beach to WindMark market on my Top 25.
I hope you all continue to enjoy a great summer.  


Zach Childs 
Broker/Owner- 98 Real Estate Group
#1 Producing Real Estate Company Located in Mexico Beach-
2013, 2014, 2015, 2016, 2017 & 2018

Thursday, April 05, 2018

1Q 2018 Market Recap - Mexico Beach to Cape San Blas, FL

We've seen a very solid start to the real estate market in 2018.  There have already been 166 closings totaling $43,672,039 in sales in the first 3 months of the year.  The price of homes is continuing to go up steadily throughout the area.  The average selling price of a home in the Cape San Blas area is now almost a 1/2 million dollars.  The average Mexico Beach area home has broken $300K, and Port St. Joe homes are still slightly under $200K.  Each of these areas is continuing to see steady growth.  All indications are pointing towards a positive 2018 with continued price increases.  98 Real Estate Group has had a great start with 66 closings and is the # 1 company for the MB and Gulf County market in the first quarter of 2018.

200520112012201320142015201620172018 *as of 3/31

The amount of new construction going on for single family homes is through the roof.  The vast majority of these homes are being custom built for the lot owners and are not on the market.  Buying a lot and building remains a very popular option for homeowners, particularly on Cape San Blas and in the higher value areas of the Mexico Beach market.  The overall housing quality in the area is greatly improving with all of these new custom homes.  There have been 63 lots sold this year

Insurance -  One positive worth pointing out is that there are a number of new insurance providers in the market, including flood insurance companies that are saving people lots of money.  I've had many customers recently re-quote their policies and go from paying $8K/year to under $3K on homeowners insurance.  The private flood insurance options on the Cape and non FEMA areas have helped people pay $2-$3K/year vs. $7-$10K plus.  It might be worth shopping your rates if you're not happy with your current insurance.  Many owners are even getting their current companies to shop their policy and are finding big savings. 

How's D R Horton doing in WindMark?  It seems like their product is being received well, and 7 of their first 10 homes are under contract prior to completion. Horton looks like they are in WindMark to stay and construction will continue on their other 54 lots. 

The Grammy nominated duo Brother's Osborne named their new album Port St. Joe where it was recorded.  The group will be having an album release party at WindMark Beach this Saturday.  This has generated lots of buzz for the area and should be a special event that helps create awareness of the area to more and more people.  Horton is one of the sponsors that helped land this event, and hopefully, their influence can continue.  Perhaps they can get the restaurant open and obtain some occupants in the commercial spaces in WindMark.  If you're interested in a free ticket to this event that sold out in 3 minutes, check out 98's Facebook Page. 

Do I see any negative signs that worry me?  Rates have gone up from around 3.75% on a 30 year fixed mortgage to about 4.5%.  I haven't seen this stop anyone from buying, and it's gotten others that are on the fence to go ahead and purchase as they believe rates will go higher.  However, if rates get to a certain point, it's got to slow down demand at some point.

I get asked a lot what I think could slow the market down.  I always say the national economy, particularly the Southeast economies where the majority of our owners live is the biggest factor.  If people are making money and doing well, they want to own 2nd homes and take vacations.  I hear investors joke that if Atlanta is doing well, Mexico Beach and Cape San Blas are doing well.  There's some truth to this as so many people from the Atlanta area choose this area as their preferred place to vacation and own 2nd homes.  Another factor that I always consider is the number of people that use vacation rental income to help subsidize the costs of their vacation homes.  It's a great fit and works well for many families all over the world.  The vacation rental market has remained strong, and I've seen no signs of weakness, but if something does happen, this could negatively hurt the model that so many owners rely on.  The long term rental demand remains at all time highs and this does give a very viable 2nd option for rental income for many properties if something does slow down the vacation rental market.

The Port and many groups in Gulf County are still trying hard to land what they hope starts with around 400 jobs in Gulf County.  This process has been going on for 10 plus years, and there are hopes that the next year or two will finally start to see the results of all this work and planning.  To the west of Mexico Beach, Tyndall Air Force has landed a huge program that's expected to bring 1,600 new Airmen to the base.  This is going to further help the Mexico Beach area long term rental market and sales to a smaller degree.  The base impacts Panama City much more, but it's a nice boost to the economy of Mexico Beach and some Airmen families choose Port St. Joe as well.    Here's more on the "Reaper" program
Upcoming events:  
Beach Blast Triathlon - April 28
Scallop Season for Gulf County is August 17 through September 30 


Zach Childs 
Broker/Owner- 98 Real Estate Group
#1 Producing Real Estate Company Located in Mexico Beach-
2013, 2014, 2015, & 2016