Friday, October 11, 2019

One Year After Hurricane Michael- Mexico Beach Real Estate Market Report

What a year it has been in Mexico Beach.  Hurricane Michael devastated Mexico Beach beyond imagination.  It's hard to describe the devastation the area faced to those that haven't been here, but we've proved resilient and are looking forward to a bright future.  Massive cleanup and rebuilding efforts have been underway for the past year.  While there's been tons of progress, it's also become clear that this is going to be a slow process.  It's going to take years before the new version of Mexico Beach is rebuilt completely.  The town incurred so much destruction that it will never be the same.  Most of us here loved what we had, but we're having to start over in many areas, and we might as well make things better.  There is a great deal of excitement about the future of a town that essentially has a new beginning.  Many owners have decided to sell and move on for various reasons, but we've also seen more new buyers wanting to be a part of the future in Mexico Beach than we've ever seen in the past as well.  This large number of buyers have held property values remarkably well with many properties currently selling for more than they would have before the storm. 

The City of Mexico Beach and also local government in Gulf County have done a great job repairing and replacing the damaged main infrastructure rather quickly with almost all utilities including sewer and water being restored by this past June.  The rebuilding of the private infrastructure including homes and commercial properties has been slower than many had hoped.  The beaches have been rebuilt and many say they look better than ever.  In addition, the canal is open and fishing has been great.  Other amenities like our pier and some of the parks and green-spaces are still potentially years from starting construction.  Waiting on insurance payments/fighting with insurance and a shortage of building contractors and laborers in general is further complicating and slowing many private rebuilds.  While there are many individual homes under construction, we've yet to see a completely destroyed commercial property in Mexico Beach start to rebuild other than Shell Shack which started this month.  None of the destroyed multi-family properties have begun construction either.  It could realistically be 2021 before there is a hotel room to stay in, a rebuilt restaurant, or a gas station. (Mango Marley's has been repairing their building and hope to be open by early Spring) The single family home construction is really starting to take off and I'm looking at 9 new homes under construction out of my office window as I write this report.      

We've seen the market have a number of trends since the storm.  There was almost zero interest from buyers ready to close for the first few months after the storm.  We were getting tons of inquiries from buyers hoping for big reductions, but few buyers willing to pull the trigger on slight reductions.  Only 6 out of the over 2,500 parcels in Mexico Beach sold in the remaining 3 months of 2018 after the storm.  The town during the first few months was filled with debris removal trucks, government agencies, and volunteer groups helping the area.  You couldn't even get into Mexico Beach without being a property owner or resident and had to go through a National Guard checkpoint after the storm to enter the city.   January and February started to see more buyers closing on properties.  Buyers in this time were getting some slight reductions from pre-storm values in the first months after the storm.  So many uncertainties existed for the area, but at the same time, interest was building from more and more buyers excited about the future of a beachside town where almost everything in it would be new.  If you had a home not damaged or in livable condition that you wanted to sell, we started seeing these sell quickly with prices rising.  There were lots of buyers that lost their homes completely, so they needed a place to live, and they had their insurance payouts.  There weren't and still aren't a lot of options for move in ready homes in Mexico Beach and areas like WindMark with all of the DR Horton homes started selling quickly to displaced residents.  There are currently only these 12 homes in Mexico Beach on the market.  There are 25 in St. Joe Beach/Beacon Hill9 in WindMark, and 26 in PSJ that do not need repairing.

By March and April, there had a been a light switch go off in buyer's minds, and we were almost getting overrun by buyers wanting to be a part of the future as they felt the current prices were good deals.  Their overwhelming thought is that everything is going to be brand new, thus it's going to be very nice once rebuilt.  A remarkable number of these buyers had only come to Mexico Beach because of the news of the storm.  We are still seeing most buyers from the traditional markets in the southeast with Atlanta residents leading the way, but we've also seen an ever increasing number of people trying to escape the crowds of Panama City Beach, 30A, and Destin.  Inventory was still very low in the Spring and bidding wars were common on anything listed near or on the beach. 

If we take a $100K vacant lot for example, people could have purchased this in the first few months after the storm in the $90K range.  By late Spring, this same property would have been up to $110K-$115K.  It looked like prices would keep going and going up, but things had tempered by Summer due to an increase in the number of sellers.  There were still buyers, but we had started to go from almost nothing to sell, to a somewhat flooded market.  Many owners had finally dealt with insurance and combined with the high sales prices and other factors, they decided it was time to sell. (One example is beachfront and beachside single family lots, which are considered by most people our most desired properties.)  We averaged less than 3 on the market for the first 5 months after the storm, today there are these 14 listed.  It's a good time to be in the market for a premium lot with sellers having to compete for buyers.  We averaged less than 2 of these type lots on the market pre-storm, but now the increase is coming from owners whose homes were destroyed.  We've seen prices level off and even go back a little on vacant lots with the increases in supply/sellers.  Our $100K lot pre-storm saw a dip to $90K, rose to $115K, and has settled back around $105K-$110K at this point.  Most homes are also seeing moderate 5-10% increases from pre-storm values currently.  The big reductions many buyers and investors hoped for were never seen.  My list of buyers hoping beachfront lots went from $500K to under $200K and canal front lots from the $250K plus range to under $100K grew to over 100 hopeful potential customers.  We didn't know what was realistic a year ago, but now see we have a very confident and solid market making these type purchases unrealistic.  The lowest a single family beachfront lot reached was $400K and the lowest canal front lot reached was $235K. 

There have been just over 200 total sales since the storm in Mexico Beach, which is about one out of every 12 parcels.  That stat should dispel the rumor that half the people here decided to sell.   There have been an additional 735 sales in Gulf County since Michael on MLS.  There are a lot of 2nd homeowners still in the wait-and-see mode along with many long time owners excited about the future of the town.  Who are the buyers?  The storm put Mexico Beach on the map for many people.  I'm selling to people that had never heard of Mexico Beach before the storm that were intrigued to visit after the storm and want to be part of the future.  The buyers have been mostly end users looking to live here or a have a 2nd home or vacation rental in the area.  Prices never got low enough for the large investors hoping to purchase multiple properties at reduced values because there have been so many end users/retail buyers.   I am very happy to report that we've dealt with very few sellers that were forced to sell.  Our company has sold 214 properties since the storm in either Mexico Beach or Gulf County and less than 5 people were in bad financial positions from the storm and were forced to sell.  The vast majority of sellers netted a substantial amount more than they could have sold for prior to the storm when insurance and sales proceeds were combined.  A lot of these sellers stayed in the area and moved up or to an area they preferred more than their previous situation.     
Sold links and totals below are from properties listed on MLS.  There are additional private sales not included in the below data 

         Properties sold on MLS from 10/10/2018 - 10/10/2019

        Mexico Beach - 162 sales 

Construction is a huge factor moving forward that will have a big influence on the market.  Even leading up to Michael, it was getting harder and harder to find a builder.  Building had been a popular option with costs going up for the past 4 or 5 years.  It's hard to pinpoint exactly why building costs have gone up, but everything is a little more expensive these days than it was in the past.  Labor is substantially more expensive and harder to find.  I know out of area builders have seen the opportunity as I've met at least 5 that planned to move to the area and start a construction company.  None of these 5 companies have been able to get one house off the ground.  They can't find the local labor/subcontractors that they hoped to find, and those that have wanted to bring their own work crews here can't find housing for them.  It's not uncommon for workers to be driving 2 hours each way as that's the closest place they could find with somewhat affordable housing.  We need a lot more labor to help the rebuild go quicker, but I see no end in sight for our affordable housing shortage. 

This shortage combined with the amount of people settling with insurance that are ready to build points to construction prices getting higher rather than lower over at least the next 2-3 years.  For an example: a middle of the road, but nice 1,700 sq ft home on pilings that would have cost $135-$150/sq ft 5-10 years ago had gotten up to $175-$185 sq ft before the storm.  That home is now costing an owner $210-$225/sq ft.  This means the same home that could have been built not long ago in the $230K range is costing closer to $380K.  High building costs make many of the existing homes and fixer-uppers that can be repaired a more cost effective option right now.  I've got a number of customers that lost their home and planned to rebuild.  Now that they've designed and priced their new proposed home, the price is so high that they've bought a temporary home while they wait and hope building costs come back down.   Others that are building are downsizing and modifying to try and reach budgets. Even with these increased costs, most builders have a significant waiting list of clients ready to start construction.  Some of the established builders are telling me they've got their next 2-3 years of work already lined up.  There are almost no spec houses being built by builders right now for two reasons.  The first is they are worried their costs are too high to hit established price points, and the second reason is why take on the risk when they've got years worth of clients lined up and happy to pay the going rates.           

I believe the high construction costs are really going to help the values of existing homes over the next couple of years.  This will be true of condos, townhouses, and single family homes as the market prices rise to equal land plus construction costs.  Many of the large condo buildings in Mexico Beach have been under repair since right after the storm, and some of them are getting close to finishing repairs with owners allowed back in a few of them.  There should be a few hundred condo units getting completed and ready to be lived in by sometime next year.  I think these repaired buildings will be very popular products looking forward and looked at as values.  On the other hand, I can see vacant lots losing some value if more and more come on the market and construction costs continue to rise.    

These increased costs are not primarily due to new building codes.  The building codes have changed very little since the storm.  Most people can rebuild about the same house they could have built 10 years ago.  This house may have to be quite a bit different than the homes built in the 90's and before, but the only big change due to the hurricane relates to flood zones.  FEMA came in and reevaluated all the flood maps in the area, and there are many properties that will have to be elevated a couple of feet more than they would have had to pre-storm.  Requiring homes to elevate that could have built on the ground is a pretty big added expense that can add 5-10% to costs.  Individual insurance premiums on average have gone up some, but not a huge amount that many feared would come after the storm.  I've averaged about 10% increases on my properties. The biggest negative impact has come from those now in a worse flood zone situation than before. 

There has been quite a bit of turnover with the city staff in Mexico Beach.  We had a temporary city manager at the time of the storm as the previous city manager had recently resigned to take another job.  Tanya Castro did a fantastic job in my opinion and went above and beyond in her temporary role.  Andy Andrews, the new city manager, started in late August.  Our city clerk, Adrian Welle also resigned this Summer to work in the private field.  Tanya and Adrian have been staying involved helping out their replacements and trying to help them get up to speed.  Mexico Beach has a strong mayor that I'm happy to have and a good city council that are helping to guide the new staff.   The building department saw probably a 1000% increase in questions and permit requests due to the storm.  There were some rocky times getting answers and the same question would often yield 3 different answers if asked to 3 different people in the department.  The company that runs the building department (EPCI) hired some very competent new staff, headed by Gena Johnson.  This department is getting much more consistent with a streamlined process worked out.  Everything isn't ironed out as we've found ourselves in an evolving situation with new questions coming monthly from the unique rebuilding situation going on.  95% of the questions we're having to learn the new answers to relate to the destroyed multi-family properties.  The way Mexico Beach grandfathered in every owner that had a home to build on their previous footprint has made some lot specific challenges, but I think it was the best rule that could have been made given the circumstances.  Full lots are pretty simple to deal with, be very careful with what you can do on these partial lots is my advice.   

Is Mexico Beach okay financially is a question I'm asked at least weekly.  When your budget is under $4 million a year, and you have in excess of $250 million of damage, things do become difficult.  Fortunately, many Federal and State programs are in place that help cities in events like this.  Mexico Beach will be responsible for less than 5% of it's costs incurred from cleanup and rebuilding.  FEMA and the State cover the rest, not counting additional grants and credits the city gets for other factors.  The Governor has been here 4 times, and it's clear the state government isn't going to let Mexico Beach fail.  A few million more dollars of aid were announced yesterday for the area on the one year anniversary of the storm.  The next couple of years won't be easy and we'll often be waiting on the next much needed check from FEMA and the State of Florida.  We'll be counting pennies on some items and every dollar raised and grant received will make things easier, but we will be okay.  We're nowhere near any kind of bankruptcy or even considering consolidating with Bay County.  The City Council did vote to have the Bay County Sheriff's office take over the police department duties.  The pros to this decision are a huge increase in professional resources that are controlled by the Sheriff's office and slight cost savings.  Some residents see the cons as losing control of a Mexico Beach controlled service to Bay County, and a fear there will be a less personal relationship than currently exists with the Mexico Beach officers. 
There have been no big changes in Gulf County zoning except their RV ordinance.  This has been changed numerous times in recent years, and a moratorium was put on RV permits this Summer and then rescinded last month.  There are lots of people on both sides of the RV rules, but they are allowed for now in most county areas that meet the RV lot regulations.  

This report was obviously focused much more on Mexico Beach than Port St. Joe and Cape San Blas.  I'm happy to report that both of these areas that received much less damage are thriving.  Port St. Joe is vibrant these days with about 90% of businesses reopened with new businesses coming to the area as well.  This is a great asset for Mexico Beach to have so many services available about 10 miles away.  The Cape is abuzz with a very strong market as well in 2019.  The much needed and postponed beach re-nourishment project started last month and the North Cape is looking amazing.  With almost nowhere to rent in Mexico Beach in 2019, but the Cape and PSJ hosted many previous Mexico Beach vacationers, with many of them liking what they saw and purchasing. 

Michael has been classified as a Category 5 Storm which is extremely rare with a chance of hitting an area once every 500 years.  We pray this is correct and that we never see anything like Hurricane Michael again.  13 out of our 17 agents and staff either lost their homes completely or had significant damage.  We graciously worked from a foldout table at Big Fish Construction for 8 months and out of our vehicles while our office was being repaired.  It was a challenging year for everyone dealing with the personal situations while working.  I am very thankful and appreciative for the success we've had.  Our office has set a company record in 2019 and ranks #1 out of 64 brokerages along the Forgotten Coast with $52,133,549 in sales.  We are committed to the area for the long haul and look forward to helping many more customers and a bright future.   

Cheers to a better Year,

Zach Childs 
Broker/Owner- 98 Real Estate Group
#1 Producing Real Estate Company Located in Mexico Beach-
2013, 2014, 2015, 2016, 2017, 2018, & 2019

Friday, February 08, 2019

Post Michael - 2nd Edition Market Report - Mexico Beach to Cape San Blas, FL

I hope everyone is having a good start to 2019.  Conditions continue to improve each day as we recover from Hurricane Michael.  There is a lot going on in the area and most of the news to report is rather positive.  I'm happy to share this update and will try to touch on the most common questions I'm receiving about the area and market.  This region has never been through a storm with this kind of destruction in modern times, and we're dealing in uncharted territory since the storm.  There were many questions about how the area can move forward, and we all weren't sure what to expect.  If the City of Mexico Beach could survive this disaster was a real question 3 months ago. We've seen huge improvements in Mexico Beach and don't know all the answers about the future, but feel good about the plans moving forward at this point.  We've seemed to move out of the scared and uncertain phase that existed for the first month or two after the storm.  The new mindset seems to be that we understand the recovery is going to take time and a ton of effort and money, but the area will recover and probably be better and stronger than ever in a few years.

The zoning and rules for Gulf County and Port St. Joe have been set, and there are no big changes on the table from the local governments.  I've been to each of the regular weekly city council meetings for Mexico Beach, and there are no substantial changes on the table for the final set of rules to be adopted later today.  The moratorium on new construction will be lifted and you can start building new properties on Monday. The height limits will remain in effect in all areas, and there are no proposals to allow any greater density than existed prior to the storm.  The only big change to the zoning laws made by the  Mexico Beach City Council has to do with a grandfathering provision.  If they had not passed this change, 100 plus owners (mostly older townhouses, duplexes, and condos on the beachside of Hwy 98) would not have met the 2001 codes and been allowed to rebuild.  The local municipalities do not determine flood zones because this is something done by FEMA, who is updating their flood zone maps for the whole area.  Here's a link to see the new proposed Mexico Beach flood zones.  There were fears that "everything" would have to be built on pilings.  Everything won't have to be built on pilings, but there will be higher elevation requirements than there were before the storm and with the new flood zones.  A few examples of the new requirements were given at one of the recent council meetings and Gulf Foods and Killer Seafood will only have to build half a foot off the ground were two examples.  Sharon's Cafe will have be elevated 2 1/2 feet and there are areas where you previously could have built on the ground that will have to be elevated 4 to 5 feet.

In regards to the real estate market after Michael, it's become abundantly clear that many people want to purchase in Mexico Beach and the surrounding areas.  There's a stronger market than I anticipated and trends are starting to shape up and give us a good idea of what to expect for 2019 and beyond.  The people wanting to purchase right now are confident the area will be better than it was before the storm, and they want to get a property before they believe prices will rise in coming years.  The destruction hasn't been near the deterrent I thought it might be and most active buyers have a longer range vision.  With  local officials committed to keeping the small town charm in tact as much as possible, this is what most buyers hoped to see from local government.  This has comforted potential buyers that liked what was here before the storm.  Prices are holding high enough that most potential developers are realizing acquiring multiple properties at large discounts is unrealistic, and they've moved on.  Prices are also high enough that many looking to invest at largely reduced prices have become frustrated and moved on.  We are nothing short of busy with realistic buyers making purchases.  At one point in mid-January, 98 Real Estate had 6 properties listed in Mexico Beachbetween Hwy 98 and the beach and all are under contract or have sold.  Properties selling within a couple days have become common. There were only 25 sales so far this year in the Mexico Beach market, but things are getting much busier now with more sellers deciding to sell and more buyers confidently ready to purchase.  There are 56 properties under contract today in the Mexico Beach/St Joe Beach market.

I didn't talk much about Port St. Joe or Cape San Blas in my last report and I'm pleased to share that these areas are on the fast track to recovery.   They were significantly damaged by Michael, but not in the magnitude that Mexico Beach and St. Joe Beach were impacted.  In Port St. Joe, the schools, hospital, grocery stores, pharmacies, hardware, auto stores, etc. received minimal damage and have been open for some time.  I believe about 80-85% of businesses are back operational.  The average resident of Port St. Joe has convenient access to the majority of services and products that they used before the storm.  They are starting to live pretty "normal" lives if their home wasn't damaged or is repaired.  Not all properties survived and were as fortunate.  Michael's destruction changed the future landscape of Port St. Joe.  Sunset Coastal Grill was damaged beyond repair, and Burger King is now a vacant lot.  The Shell Station is heavily damaged as well as the Exxon.  The Exxon has had new pumps installed and you can get fuel there as well as JV Gander on Garrison.  The marina received enough damage that the "rumor" is the owners (The St. Joe Company) are going to go ahead and redesign it and make a larger and nicer, with a grand re-opening approximately 2 years out.  The Baptist and Methodist churches near the water both received major damage.  The Port Inn is closed for repairs and upgrades along with Hungry Howies.  Subway is closed with no repairs underway.  I'm sure there are other businesses closed not mentioned.

The damage in Port St Joe along the bay, particularly on the east side of town was intense and many of the classic homes along the highway have had to be demolished.  The surge was also larger than anything ever seen in the town's modern history and reached deep into the city.  A large portion of the homes located between the bay and the south side of Marvin Avenue, which is a few blocks from the bay were flooded.  Homes in these areas may look normal on the outside, but entire neighborhoods flooded.  The homes have had to be gutted and reconstructed on the interiors.  I'll often show homes in Port St. Joe and all of the choices are gutted down the to the studs.  These flooded homes that sellers are selling "as is" have created an interesting new market and turnover.  Here's a link to the 43 flood damaged homes in Port St. Joe that are on the market or have sold since the storm.

My point here is that despite the destruction in Port St. Joe, it is doing great, and it's night and day from nearby Mexico Beach.  You can park on Reid Avenue in Port St. Joe and choose from 10 different restaurants to walk to that are open for lunch.   When I'm showing someone property that's looking in both areas, they can't believe the difference from Port St. Joe to Mexico Beach/ St. Joe Beach.  It is also great that Mexico Beach/ St. Joe Beach residents have access to Port St. Joe and all of these services just 10-15 miles away.  I hear often Mexico Beach residents talking about being thankful the storm didn't damage Port St. Joe like it did the beaches.  The recovery would be much harder and more difficult if Port St. Joe was in the same shape as Mexico Beach and St. Joe Beach.

The Cape San Blas and Indian Pass Area is comprised of a much higher percentage of 2nd homes and rental homes compared to Port St. Joe. This area also has the most newer and elevated construction,  which fared well in the storm.  You can tour some of the newer neighborhoods and see very minimal signs of damage.  That's not to say there weren't major casualties from the storm, and the North end saw same particular devastation with the Cape Shoals townhouses being washed/blown away as an example.  The South Cape saw less damage and Indian Pass did pretty well in regards to wind damage, but had huge areas flooded.  These Cape markets seemed to take a deep breath and pause with little buyer interest after the storm, but are now getting back to where they were October 9th.  The Trading Post, Scallop Cove, and Indian Pass General Store have all been open, but 3 restaurants are still closed.  Tripletails received significant damage, and The Raw Bar had extreme flooding.   St. Joe Shrimp in Simmon's Bayou was wiped out and Conehead's is still closed.  It seems the majority of the residential properties were much luckier than the handful of commercial properties in these areas.  The Scallop Republic fared well and is open for a cold beer and good music.  The Sandbucket restaurant is also back open.  The T. H. Stone State Park reopened in mid-January.

The owners and rental companies for the Cape that I've talked to say spring and summer rentals look strong for the homes that are rental ready.  Many guests that stayed in Mexico Beach are booking the Cape this year, and the few vacation rental homes on the rental market in Mexico Beach have reported they are set for very strong summers as well.  The beach is on track to be completely cleaned in Mexico Beach by the end of March and the canal looks like it will be open by later in the Spring.  Many of the guests are booking this year and telling their rental companies they really want to help and support the local economies this year, and they are fine with fewer commercial options being available.  I'm somewhat surprised with the demand to vacation in Mexico Beach this year, but the guests want to help out however they can.  I've heard a few say that they came to Mexico Beach for the beach and the fishing and both of those will be same as they were before, but they'll have less competition with other guests for their favorite fishing spots. Canal front properties remain in high demand with the lowest sale to date a $235K home that will most likely be demolished.

Insurance is one of the hottest topics in the area and is a big factor shaping up the post hurricane market.  Many of the sellers with destroyed or flooded homes are far from desperate and unhappy owners that buyers seem to picture in their minds.  A majority of the sellers so far have actually been in an opposite situation. Due to their insurance payouts and current vacant lot/flooded home prices, they are pleased as they are getting far more between insurance and their current values than they could have sold for pre-hurricane.  A few common examples are flooded homes in Port St. Joe and completely destroyed beachside homes in Mexico Beach.  Let's take a Port St. Joe home that was worth $250K before Michael that flooded and had some additional wind damage as our first example.  This owner had flood insurance with a $150,000 payout and then a homeowners payout of another $40,000 for their damaged roof, windows and fence.  They then sell for $120K "as is" and walk away with $95K more than they could have received before the storm. The buyer is also very happy as they paid $120K for a home they can remodel for $80K and then be in a $250K house for around $200K.  Certainly many of these owners don't want to leave their homes, and the ones doing well with insurance are upgrading their homes and will have a nicer home than they had before the storm with funds left over after their remodels are complete.  In Mexico Beach, we are seeing a number of sellers on the beachside where their homes were completely destroyed.  An average older single family home in this area could have sold for $350-$400K.  I'm seeing owners in this situation receive $300K in insurance and then sell their lots for $225K, which results in quite a bit more than they could have sold for pre-storm. This has been an active market with 5 sold and 7 currently listed with 6 under contract.  In recent years, buyers would only see 2 or 3 of these type of lots listed each year.

Dealing with insurance and losing your home is not a fun process. I hope we never see anything like Michael again, but I wanted to share that there are some sellers saying they will be better off financially due to the storm and it's not all bankruptcies and financial misery because of the storm.  There's a huge misconception about the current market.  I receive at least 10 calls a week that start the same way with potential buyers saying, "I don't want to take advantage of the situation down there, but I know there are lots of desperate sellers that have to sell, and I'd like to buy a massively discounted property."  I then explain that's not what's happening and many callers get upset and think we are lying as they are sure they should be able to buy a "cheap", distressed property.

By no means is everyone with damaged properties making money or improving their financial situation due to insurance.  I gave the above example because one of the questions I'm asked almost everyday by buyers is who are these sellers and why are they selling.  In many cases, they are selling for positive reasons and are upgrading or moving to a different location 3 blocks away they always liked more and others always wanted to build a new home and are going that route.  Some 2nd home owners are certainly "cashing out" and are going to take a break from the market.  Our lack of available rental housing has caused many full time residents to have to move to areas like Tallahassee as it was the closest place they could find a decent home to rent while they rebuild.  I've taken a few phone calls I haven't liked recently as I hear they've decided they like the area where they are renting and don't plan to return.  I hate to see good residents not planning to move back.

Another question I get asked a lot is do you have to have insurance on a home?  The answer is no.  If you pay cash for a home, no one makes you get insurance.  If you get a loan, your lender requires homeowner's insurance and only requires flood insurance which is a completely separate policy if you are in a flood zone.  Most people here had some kind of insurance on their homes with the huge majority having some kind of homeowner's/wind policy.  What many people (including myself) did not have was flood insurance.  The massive storm surge caused deep flooding in areas that have never come close to having flood waters.  Flooded homes that didn't have flood insurance is where I'm seeing owners face big losses.  I'm also seeing most owners in this situation not selling at this point.  This is also where there are huge fights with insurance companies as they try to determine was the damage caused by flood or wind.  I didn't know what a public adjuster was on October 9th and now almost everyone with damaged homes has hired one or an attorney to help with their insurance claims.  The new storm lingo has moved from talking about your debris pile to talks about your adjuster/attorney.  The huge discrepancies in what owners are being paid with insurance claims will be an ongoing topic throughout 2019.   Those owners that are getting near full payouts are then able to have options in regards to their next steps, and their choices are influencing the future market.  We are also seeing a considerable number of owners with damaged homes close to the water choosing to move slightly further away from the coast inland a mile or so to areas that weren't damaged or had minimal damage.  We're seeing this shift quite a bit with Port St. Joe residents.

"What are properties selling for in the Mexico Beach area compared to before the storm?"  That is the question I'm asked most often.  We did not have damaged homes before the storm, so all I can really compare accurately is vacant lots and undamaged homes.  I'm seeing vacant lots sell on average within 10% of their pre-hurricane values.  So far buyers have been happy with the slight discount and things are selling quickly if priced in these ranges. The average vacant beachside lot priced in the mid $200's is lasting less than a week on the market.  The first beachfront lot since the storm to hit the market in Mexico Beach was a 100 foot lot listed on 1/18 for $649K.  It was quickly under contract by 1/21, and it will be an interesting barometer to see where beachfront values settle. There are a few more beachfront lots listed in SJB including this permitted lot at $479K, which is the lowest priced beachfront lot on the market (this lot has gone under contract while writing this report).  There haven't been many undamaged homes in Mexico Beach or Port St. Joe that owners wanted to sell, but those that have sold are seeing similar values to pre-storm or even a slight premium.  This is true for undamaged homes particularly in the $300K or less range as the buyer is probably someone with a destroyed home that is buying a new home with their insurance settlement.  The Mexico Beach City council did make some LDR changes that are going to allow everyone that had a home here before the storm to be able to rebuild by being grandfathered in even if there lot sizes aren't big enough for the current LDR codes.  This is very helpful to owners of many of the beachside townhouses that were destroyed.  This grandfathering provision has created a new market for partial lots/townhouses parcels for owners that don't want to rebuild.  There's been these 4 listed so far.  I expect quite a few more.

Who is a good contractor to help with my remodel?  I'm asked this almost daily and don't have a good answer.  The larger contractors I'm used to working with have been booked for months and are trying to stick to new construction vs. remodels, which is what their businesses focused on before the storm.  New construction was already very busy before the storm, and now you've got all of the owners with destroyed homes now planning to rebuild as well.  Very few lot owners planning to build prior to the storm have changed their minds about moving forward with their builds.  Part of this reason is construction is so busy that they don't want to lose their spot in line with their contractors.   I'd guess  we had 10-15 stable contractors that worked in the area before the storm.  We could use another 30 or so for the next year or two to get all the work done that owners want done.  About the same goes for electricians, drywall companies, carpenters, handymen, window companies, etc.

What's all this talk about new developments in Mexico Beach?  There are two developments that have each been in the works prior to the storm that are going to grow Mexico Beach to the north and to the west if they come to fruition.  Neither of these have anything to do with developers buying up distressed properties, and the owners have both owned them for decades.  I have an 87 acre tract listed that's been under contract since June 22, 2018.  These developers want to do a canal front development on this property and are in the early permitting stages.  The St. Joe Company owns 1,000 plus acres that border the rest of what is currently developed in Mexico Beach including an approximately 200 acre section to the west of town bordering the new boat ramp.  Their CEO did attend the December 13th Mexico Beach City Council meeting where he announced the company plansto move forward with developing this property into a new "residential and retail village." The St. Joe Company also owns the property directly to the west of the Mexico Beach canal where a development known as Bonfire Beach was approved in 2007, but they've yet to break ground and no plans for this were mentioned. The St. Joe Company has been bullish on development since the storm and are developing approximately just under 100 additional lots in WindMark Beach to sell to DR Horton who has had good success selling their homes in WindMark.  The storm did further help them as they have brand new homes ready for new owners, and these are some of the few options like this that exist near Mexico Beach.

I hope conditions continue to improve as much by my next report as they have since my last report.  If there is anything I can do to help in the meantime, please let me know.

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