3 Year After Hurricane Michael - Mexico Beach Real Estate Market Report - 2021

 

10/10/21 marked the 3-year anniversary of Hurricane Michael devastating Mexico Beach and the surrounding areas. It’s been a busy 3 years, and our real estate market got caught up in the frenzy seen in many parts of the country in 2021. After going up in the 3-5% per year seen since the market started rebounding in 2012-2013, we’ve witnessed much larger gains in 2021 with an average increase in value closer to 20%-30%. Specific, harder to find properties have seen larger increases as the inventory has been at extremely low numbers with many properties seeing multiple offers and bidding wars. This year has been unlike anything seen in the market since 2003-2005. I’ll get to more details on the real estate market later in this report but will first focus on how Mexico Beach and the surrounding areas are doing overall. I’m going to share some of the answers to topics I’m most commonly asked and also share some insight from talking with my friend, Mayor Al Cathey. I appreciate his time and understanding of what’s going on in Mexico Beach. I hear so many rumors about Mexico Beach that it’s nice to have someone that knows what’s actually going on. Our conversation is paraphrased below in italics. I first asked Mr. Al about our financial status as I hear many people worried about rumors that the city is in bad financial shape. While Mexico Beach was hit the hardest by Michael, we were one of the only cities around that didn’t go into private debt over Michael. We’re in very solid financial shape. We don’t owe a dollar to anyone at this time related to Michael, and the city council actually recently voted to lower the millage rate! We’ve received $80 million from FEMA with another $20 million obligated. Approximately 6 months ago Governor Desantis contributed to a local match program which helped with the city’s FEMA obligation. This was a huge help. Most water lines, sewer lines/lift stations are new and in better shape than pre storm. Roads are still being paved, but overall are in good shape. Phase 2 of canal dredging($7 million) should start in about a month. Sunset Park which is next to El Governor, the pavilion at the end of Canal Pkwy, and new bathrooms at the boat ramp should be open by Spring of 2022. The beach itself is in great shape and looks better than ever.  There are 3 main projects that haven’t reached the stage yet where the money is obligated; the pier, the fire/police/civic center, and the jetties at the mouth of the canal. We’ve made a lot of progress on the pier and think we’ll have a very nice concrete pier, but that one is still in the environmental stage of the process. Mr. Al feels certain that these projects will be funded; but everything just moves slowly with the Federal Government. Zach’s estimate from everything he's heard about the pier is that it will start in about 2 years and be a larger and better concrete version of what was here before. There are new grants and funds constantly evolving, and the city is active in taking advantage of those programs. City Council knows the businesses destroyed need more time to rebuild and voted this month to extend the grandfather timeline for commercial structures destroyed by Michael, and those can now rebuild in their original footprint through October of 2023. (Very important for Gulf Foods, Toucan’s, and others that couldn’t realistically rebuild without this being extended) The St. Joe Company remains a good neighbor and have donated 25 acres off of Joe Road/15th Street for the city to have a municipal area that will include the fire/police/civic center area once funded. They also donated 3 more acres near the boat ramp that will be used for additional parking, and the city obtained a separate CDBG grant to add a 3rd boat launch lane.  The St. Joe Company is currently building a 32 lot subdivision on the West end of town past the boat launch. They do still plan to build apartments as well in a joint venture with Home Corp and is currently on hold. St. Joe does plan to have a modest commercial area near the boat ramp at some point. Any development on the south side of 98 is years away in St. Joe’s most recent plans and not in any kind of active permitting or development plan. I appreciate Mr. Al’s time and feel we’re in even better shape than I realized after our conversation. I’d like to thank the city council and staff for being very responsible and doing a great job navigating an extremely challenging situation. A small town of 1,200 residents that was almost completely destroyed and operating on about a $4 million/year budget pre-storm has accomplished quite a monumental task. Many skeptics thought the city couldn’t survive Michael financially and would have to incorporate with Bay County and default to their zoning laws that would allow high rises etc. I don't think this was ever realistic, but this clearly shouldn’t be a concern any longer. Below are some of the other common questions I am asked and wanted to share my thoughts. Is everything rebuilt and open? Not at all. The residential rebuild has gone much faster than the commercial rebuilding. I hear often how nice all the new homes are looking, and it’s definitely a big upgrade as many destroyed cinder block beach houses built 50-70 years ago are now much larger brand-new properties. We only have a small temporary grocery store and the property where Gulf Foods was located was recently put on the market for $3,000,000. None of the completely destroyed restaurants have rebuilt, and there isn’t a motel room ready yet for occupancy. We did finally get a gas station this year, and the renovated Mango Marley’s restaurant is open. Surprisingly to me, the lack of commercial options hasn’t slowed down the residential market at all at this point. There is a light at the end of the tunnel with our motels as The El Governor hopes to complete it’s remodel in 2022, and the brand new Driftwood and Gulf View motel also hope to open in 2022. Toucan’s Restaurant is hoping to start construction by Spring of 2022 by the same owners that owned pre-Michael. There were concerns after Michael that Mexico Beach zoning would change and it would become over commercialized. Good or bad, we’ve so far seen the opposite and will have a lower ratio of commercial businesses to homes than we did pre-Michael for the foreseeable future. I don’t see this changing inside “Old Mexico Beach” as it’s complicated and expensive to meet commercial building requirements on our small commercial lots with limited availability. Mexico Beach could see growth and commercial businesses on this 87 acre tract I sold for the previous owners this June. The 87 acre owners plan to have about 100 canal front lots to sell along with a nice size commercial area on the land behind the Ace/MB Shopping center. This is according to their last presentation to the city council, and this project is still in the permitting phases.   The St. Joe Company owns a significant amount of undeveloped land to the West of Mexico Beach and bordering Sugar Sands development which borders Tyndall Air Force Base. Sugar Sands is a beachside 64 lot subdivision outside of Mexico Beach where most lots were originally sold by the developers in 2018 and 2019. There are currently 4 homes under construction and a completed pool and pool house. These developers own additional land across Hwy 98 from Sugar Sands and previously sold a small portion that is under construction to be an Inland Sunstop gas station. Tyndall Air Force Base whose property starts next to Sugar Sands on the other side is in the early stages of a $5 billion dollar rebuild that Air Force is touting as the base of the future. I think Tyndall will be a bigger and bigger positive factor for the real estate market for years to come.    How are Gulf County and Port St. Joe doing? These areas didn’t get wiped out as bad as Mexico Beach and have definitely grown in residential and commercial growth. Port St. Joe is thriving and has become an acceptable option about 10 miles away for restaurants and shopping for many people that have recently bought in Mexico Beach. Our great office manager, Kristy Lee, says there are more restaurants and businesses open than anytime in the approximately 40 years she’s lived here. We’re also seeing growth in the Simmons Bayou area with a new restaurant, and a new hotel is under construction by the owner’s of Black’s Island. This is the largest construction project in the area in the last 15 years. I am on the Gulf County Planning and Zoning Board and see more and more people wanting to be a part of the area.  D R Horton is selling homes as fast as they can build them in WindMark Beach that is between Port St. Joe and Mexico Beach. The Town Center of WindMark is bustling compared to past years with a new bar/store open recently and a pizza restaurant set to open soon. St. Joe Company owns WindMark and has been rapidly developing new phases and selling lots to Horton, who has hit a price point that’s been a lot of bang for the buck with a beach house. Truland homes has focused more in Port St. Joe, and those two builders are significantly larger and more production type builders that can hit much lower price points than our custom builders. Truland has built 79 homes with lots acquired to build another 100 plus homes and Horton has closed out 158 homes with plans for at least another 200 homes in WindMark. These two groups have been selling homes in the $350k-$550K range and have seen tremendous success due to price points in my opinion. A new development called Arrazo, which is unrelated to Truland or Horton, is planning to build 84 homes/duplexes in a neighborhood they have built in Port St. Joe. Here is a link to show the homes currently for sale with these three groups. Our agents can help you buy homes from all of of these companies.  How much does it cost to build a beach house? I hate this question as it’s kind of like asking how much a car costs. Are we talking a used Kia or new Mercedes? The short answer my builder friends say to give is that a custom home is starting around $250/sq ft. Horton and Truland build their plans on their lots and are totally different than an individual buying a lot and building a home. There are at least 10 custom home building companies with great reputations. These are much smaller operations at the mercy of labor shortages and high material prices. The custom builders remain booked with some quoting they are 2 years out on new clients. It feels like there are high end custom homes going up everywhere along 98 in Mexico Beach and on Cape San Blas. Almost every one of these custom homes is being built for the owner of the lot and is not or will not be for sale. A common misconception is that the homes people see custom builders building will be for sale when done.  When you combine the costs of building with the timeframe and permitting/regulation headaches that often come with building, it’s pushed the value of anything existing and move in ready higher and higher. Vacant land has gone up as well with properties close to or on the beach that are more scarce seeing the largest increases in values. We haven’t seen vacant land prices eclipse those of 2005. Home sales prices on the other hand are at all time record highs in 2021 for our coastal markets.  The average price of a single family home on North Cape San Blas in 2021 is $1,078,710 at the time this newsletter was prepared. For comparison, Mexico Beach is $428,873 and the City of Port St. Joe is $305,819. The North Cape market is arguably the hottest in the area and has been very popular along with Mexico Beach for those escaping the crowds of the Panama City Beach/C-30/Destin areas. The Mexico Beach average price is lower than it would be if more of the owners closer to the beach wanted to sell, but there hasn’t been one beachfront single family home on the market since Michael, and there was only one beachside single family that has come for sale in all of 2021. We sit around and wonder what a nice beachfront home really is worth. Everyone has to guess as it’s been 3 plus years since one has been for sale in Mexico Beach. How is 98 Real Estate doing? It’s felt like a weird year and we’ve had countless buyers that have grown frustrated at the lack of available properties. It’s been so bad we’ve had walk-ins think we are lying and not telling them about everything for sale. It’s the first year I’ve had what seemed like reasonable buyers that are qualified/often cash buyers, and we’ve yet to be able to get them a home. Those looking closer to the beach have had a few that were acceptable, but we’ve lost in bidding wars with cash offers over asking price with no contingencies. The flip side is that it’s been a great year for sellers, and we’ve sold pretty much everything that we’ve listed if it’s been priced near any actual sales. It’s not as crazy as it was this summer, but market priced inventory is still moving relatively quickly. We are $19 million ahead of our closest competitor in the Mexico Beach to WindMark Market, 2021 will be our 9th year in a row as the number one brokerage for the area if we stay in 1st place. We’ve got 22 agents now and are already having by far our best year ever with over $80 Million in closed sales. I’m personally at my best year with almost $30 Million successfully closed. We’ve got an agent that can help with whatever you’re wanting to buy or sell in Mexico Beach or Gulf County.  Below are links to what is currently for sale: Mexico Beach to WindMark Beach Port St. Joe Cape San Blas to Indian Pass Here is everything that has sold in the last 180 days I used to end newsletters with my projections with what I thought the market would do in the future. I am scared to do so after being so wrong on Covid and seeing how it actually boosted the market instead of hurting it as I and many predicted last Spring. Rental rates are high for owners, interest rates are low, cash buyers are abundant, and more and more people want to be a part of this area. It’s hard to see the market slowing down, but I openly admit my crystal ball is broken and try and give customers the facts the best that I can so they can make their own informed decisions on buying and selling.  Personally, life is great. Ollie is 14 months and Hudson is in Pre-K and keeping us on our toes at all times. Michelle and I really enjoy our small town atmosphere and raising our kids here.

Cheers, Zach Childs  Broker/Owner- 98 Real Estate Group #1 Producing Real Estate Company Located in Mexico Beach- 2013, 2014, 2015, 2016, 2017, 2018, & 2019 850.819.0833 zachchilds@gmail.com

Two Years After Hurricane Michael – Mexico Beach Real Estate Market Report

What a two years it’s been since Hurricane Michael ravaged our area and flipped the lives of so many people upside down.  Unbelievable amounts of cleanup, infrastructure repairs, and rebuilding have taken place since the storm.  The rebuilding process is far from complete and much work left to do.  Our market remains very strong with an influx of new buyers and money that want to be a part of the future in the area.  We’ve had many buyers that are only purchasing here after Michael put Mexico Beach and Gulf County on the map for them.  The flip side is that it’s clear the rebuild won’t be quick and many people that lived here prior to the storm have decided to sell and not wait for the time when things are more “normal”.  Lower priced homes and long term rentals have been nearly non-existent and there’s no doubt some good, hard working people that lost their homes have been priced out of the market.  There have been 400 homes and 349 lots sell since Michael from Mexico Beach to WindMark Beach.  A number of these lots once had homes on them that were destroyed in the storm.  I’ve helped numerous owners sell their property that felt selling and leaving was bittersweet, but the best option for them at their current stage of life. After two years, we still don’t have a gas station, traditional grocery store, motel, or a restaurant with inside dining open in Mexico Beach. We do have five restaurants operating out of food trucks at the beaches with some tasty options and you won’t starve to death if you decide to visit. (Mango Marley’s, La Chaparitta, Killer Seafood, Mr. G’s, and Krispy Krunchy Chicken) We didn’t have a bank until 2 weeks ago when Centennial Bank’s rebuilt branch opened.  It’s not as convenient as it once was, but you can get everything most people need 12 miles away in Port St. Joe.  Port St. Joe and Gulf County are thriving.  This has helped ease the inconvenience of not having as many commercial options and services available yet in Mexico Beach.  The Mexico Beach Marina is offering grocery items and there is a small grocery store operating next to the post office as well.  Still, no traditional grocery store, no gas stations, and a lack of restaurants are the biggest complaints I hear.  St. Joe Beach is located right next to Mexico Beach and between Mexico Beach and Port St. Joe.  It has a Dollar General, Lookout Lounge, and Shipwreck Raw Bar which have all been open for some time.     I’ve called a few different Mexico Beach commercial business owners that I know in the last week and asked if I could share an update on the status of their businesses.  The Express Lane, located behind where Toucan’s was located, has started construction and the same owners are hoping to start rebuilding their St. Joe Beach location in the next couple of months.  They plan for their Mexico Beach location to be open by early Spring.  Toucan’s is moving forward with design and permitting and those owners hope to start construction by next Summer.  Mango Marley’s is nearing completion and the owners are shooting for serving their famous wings and cold beer by the end of this month inside their renovated building.  The brand new Shell Shack is looking great and those owners are hoping to be open around January. I volunteered to sell the property for the city where the Civic Center was once located and that property sold last month to a group stating they intend to put in a pharmacy.  Al Cathey and his son Lee have been operating Ace Hardware out of a temporary location behind their old store and hope to be open in their brand new store by early next year.  According to updates on their Facebook page, the El Governor Campground hopes to be open later this year while the motel remodel is taking longer and they hope to be open sometime in 2021.  The Driftwood Inn has also posted updates that they hope to rebuild and they’ve shared a beautiful rendering of their new design on their Facebook page.  Mr. Ike with Gulf Foods said they are still battling through insurance, but hope to start rebuilding next year. Most of the other owners I talked to are on hold for a variety of different reasons.    

I asked my friend Al Cathey, who is the mayor of Mexico Beach, if I could ask him a few questions for this report.  I am going to paraphrase his answers to the questions I asked him on 10/12/20.  All main infrastructure is complete and has been for some time and is functioning well.  The pier is going to be one of the last projects completed as it’s a large project and also an amenity.  It is on the city’s “sooner than later” radar and bids for engineering services are currently being collected.  The city has recently voted to go back to using the 100-year floodplain instead of the 500-year floodplain that was adopted after Michael.  This will lower the cost of rebuilding by allowing future homebuilders and owners to build lower to the ground than required for the last 18 months; if they desire.  The mayor was proud that there have now been 150 people complete or pull permits for brand new construction of homes or commercial businesses since Michael.  The city’s finances remain complicated since Michael, but Mr. Al is proud of how well money has been managed and pointed out we are one of the few municipalities impacted by Michael that has not taken out private loans to pay expenses.  There are still many moving parts dealing with FEMA to rebuild and move forward, but they are very conscious of finances and the City is in a solvent financial position.  They will continue to work on the many grants and funding options available to communities like Mexico Beach that were so severely impacted by a natural disaster.  The St. Joe Company owns a large tract of land on the west side of Mexico Beach that they are starting to develop.  They are going to start with building 104 apartments for full time residents in a location near the boat ramp.  Now that this phase has been approved by Mexico Beach, they are in their permitting and environmental stages and hope to start construction in 2021.  St. Joe does plan to do a commercial and residential phase down the road and these plans have not been finalized.  The phases don’t sound like they’ll be anything we’ll see soon and St. Joe estimated this site would be developed over the next 20 years.

My crystal ball sure didn’t predict that Covid would lead to a boom in the real estate market.  It’s done that and led to higher sales prices in this area and throughout the country in vacation towns.  2020 started moderately slow with buyers being frustrated at the pace of progress in the area, cost of construction, and lack of housing choices.  In March when Covid was really taking over the news and the stock market was crashing, many believed 2nd home markets, like Mexico Beach, would fall as people didn’t have jobs and money for luxuries like a beach house.  That seemed like a realistic outcome of a pandemic and the market stalled as most buyers went on hold with contracts being cancelled or extended left and right.  I heard very educated investors worry that Covid would lead to coastal and vacation markets crashing.  The exact opposite has happened to this point.  After a few months, people started realizing they didn’t have to work from a busy city they didn’t really like living in and they could work from small resort area that they love visiting.  “Zoomtowns” became a term where people could now buy and work from home in areas where they formerly only could vacation and that’s a been a tremendous boost for our whole area.  An uncrowded, beautiful beach area became more appealing to some escaping Covid and large populations.  Our biggest influx of full time buyers are people leaving Atlanta.  A huge portion of our customers buying second homes previously owned in Destin and 30A and are tired of the large crowds.  These factors have led to a banner rental year for vacation rentals and certain schools being online only has kept vacation rentals occupied with families that could normally not be at the beach this time of year.  Our small family friendly beach atmosphere is at an all-time high in popularity with end user buyers wanting to be here.  The market is near levels it was in 2003 which was a great year, but not the insane market of 2004 and 2005.  Prices are much lower than seen in 2005.  The difference now is all of these buyers are buying to be here, not buying vacant or condo for the sole purpose of hoping to flip them.  This recent article about The St. Joe Company (NYSE:JOE) reminds me of 2003 as well.    

The market for existing homes is absolutely on fire right now and has been for about the last 5 months.   This isn’t unique for Mexico Beach and every broker I’ve talked to in other areas along the coast has reported the same.  Interest rates being at, or near, all-time lows are also a contributing factor.  The only reason we aren’t selling more homes is that we don’t have them to sell.  I don’t have one move in ready home listed.  If we’ve listed them in the last 6 months, we’ve sold them.  I have sold every lot that I listed in 2020 except for this one that I volunteered to list for the City of Mexico Beach.  98 Real Estate Group is on track for a record year and has closed over $50 million in sales for 2020.  We’ve ironically sold 98 homes at the time of this report in 2020. Market priced inventory on undamaged homes is at a 15 year low.  If a home is sitting on the market; much more than 60 days right now, it probably falls into one of three categories.  The property probably needs significant work, is a condo that has a lien, or is priced 10%, 20%, 30% or more over recent sold comps and where it would appraise.  The majority of our larger condo developments are still dealing with insurance claims and liens from contractors like Express and Serve Pro.  Some sellers reaching for higher price points have started to have success and price points are definitely moving up on all property types.  DR Horton is selling their homes in WindMark Beach as fast as they can build them.  Stewart Haire, with DR Horton, informed me that they sold 57 homes in 2019, 56 homes so far this year and are planning to build approximately 70 more homes between now and the end of next year.  WindMark has as much momentum as it’s ever had and The View on 98 opened last month in the upstairs restaurant space that sat vacant for years. I’ve had a great dining experience each time I’ve dined there and encourage you to give it a try.  Truland Homes has also moved into the Port St. Joe area and is looking for more properties as they’ve also had great success with spec homes.  Both of these builders have been offering homes primarily in the mid $300K to low $400’s price points.  These are the first large builders we’ve had in the area and they are only building homes on their lots at this time.  

Mexico Beach / Beacon Hill / St. Joe Beach / WindMark Beach

• 198 Sold Homes in 2020
• 51 Available Homes
• 159 Sold Lots in 2020
• 115 Available Lots
• 65 Under Contract Properties

Best Values on the Market – Top 25 Homes and Top 15 Lots  

The inventory of move in ready homes is so low that custom home building is remaining a popular option.  Build prices are higher than they’ve historically been with my average customer building in the $200-$300 per square foot range.  The vacant lot selection has also been much larger than existing home choices and pretty much your only choice if you want to be close to the beach.  For example, we haven’t had one single family beachfront home in Mexico Beach come on the market in the last 2 years.  There are owners still fighting insurance or waiting to make repairs for a combination of reasons that are now getting pressured to move forward fixing them up by Gulf County and Mexico Beach.  I think you could see an increase in the number of damaged homes on the market in the next few months.  Our custom home builders remain very busy with some booked up for the next 2 years.  The larger builders prefer new construction and finding help for large remodels remains a challenge that needs to be considered if you’re looking at a potential big project.  

98 Real Estate Group was able to move back into our Mexico Beach office in the Summer of 2019;  thanks to a lot of favors from our friends at Big Fish Construction who helped with the fastest full commercial remodel in Mexico Beach.  We’ve been humming along this year and are on pace to finish as the top producing office in Mexico Beach for the 8th consecutive year.  We’ve outsold our closest competitor by over $60 million since 2013 in the Mexico Beach to WindMark Beach region and are proud to be the market leaders in an area we love so much.  I am very thankful for all of the support we continue to enjoy.  We have 17 agents and work the Port St. Joe and Cape San Blas markets as well.  Michael whacked our agent’s personal homes and 13 out of 17 agents working with us in 2018 had their homes either severely damaged or destroyed.  4 of these agents are still living in temporary housing as they navigate the slow rebuilding process.  We’ve learned first hand the challenges people face with destruction like Michael and pray for those areas that have been hit with storms recently.  I mentioned that Port St. Joe and Gulf County are thriving and those markets have had terrific years as well.  The hurricane did not hit quite as hard in these areas and a fair amount of buyers originally considering Mexico Beach decided to settle in these less damaged areas instead.

Port St. Joe

• 100 Sold Homes in 2020
• 17 Available Homes
• 69 Sold Lots in 2020
• 50 Available Lots
• 38 Under Contract Properties  

Cape San Blas / Indian Pass

• 106 Sold Homes in 2020
• 84 Available Homes
• 146 Sold Lots in 2020
• 184 Available Lots
• 60 Under Contract Properties

Hurricane Michael also severely impacted Tyndall Air Force Base that borders Mexico Beach to the west.  While the base never stopped operating, it’s just getting going on the rebuild to make it a “base of the future”.  I read different articles saying the Air Force is going to spend in the $4 to $5 billion dollar range on this base.  There is a massive workforce that will be employed for the construction that will ensure many jobs at the base for the foreseeable future during the construction phase and beyond.  This impact will be extremely positive on real estate and create many high paying, somewhat “recession proof” jobs in the area. I think Tyndall’s impact will be felt more starting in 2021 and moving forward and should be mentioned.  I have a few customers and friends that work higher up the chain of command at Tyndall and they all feel the rebuild will happen 100% and is fully funded as articles like this support.  

My family is growing and in August, Michelle and I welcomed our 2nd son into the world.  Hudson is now 3 and wide open all the time.  We’ve got two happy and healthy boys and for that I could not be more thankful.  When it was recommended this Spring that we close our office to the public due to Covid, I took up golf and joined the St. Joe Bay Golf Club.  The course was taken over by Gulf County about a year ago and a large amount of money has been infused into the course and the new greens are awesome with more improvements in the works.  I can’t make the ball do what it’s supposed to do, but it’s been a lot of fun and there’s also a good restaurant operating from the club called The Shaggy Bay Supper Club.  The restaurant and course are open to the public.  As a sports fan and Georgia native, we’re on the right track with the Braves this week.  It sure would be nice if the Bulldogs could beat Alabama on Saturday.  I’m just glad we’re able to watch sports as crazy as 2020 has been and hope you’re all having as good of a 2020 as possible.  The fishing here remains great and there are some bonus red snapper days this fall if you’re looking for a fun day on the water.  I pride myself on understanding the real estate market and giving honest and sincere advice.  If you’re looking to buy or sell in this area, I’d love the opportunity to speak with you and see if we’re a good fit to work together.  

Cheers,

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

850.819.0833
zachchilds@gmail.com