Market and Oil Update- Our Coast is Still Clear

We have constantly talked and worried about the threat of oil for the last 3 months. We have claims offices and clean up workers everywhere, but thankfully, no oil. I think the news has scared us all and we’ve watched and waited but still have not had any confirmed oil arrive at Mexico Beach or any of the Gulf County beaches. Despite this, we battle the perception that there is oil on our beaches. The good news is that it looks like we are going to salvage a pretty good summer. The crowds are down a little, but it hasn’t been disastrous. I know one of the larger rental companies is on track to have their best year yet. These visitors aren’t buying real estate right now, but at least our restaurants, motels, and stores that depend so heavily on the summer season have been doing okay. We’ve even gotten a fair share of new vacationers who came from places where there was oil, and many are planning to come back. Many others vacationers and second home owners keep coming each chance they get just in case there is oil in the future. If you have plans to come to the beach right now, there doesn’t seem to be any reason to change those plans at least for the next several weeks. This is a local website that gives updates and shows a number of beach cameras showing the “Coast is Clear”.

Scallop season opened early this year and most people are finding all that they want. Fishing has been great, and it may be the best year I can remember. I love going fishing and have had some great trips. Below are a pictures from the last few weeks, including one of my dad and an 84# cubera snapper & my 43# wahoo.

How’s the market? It’s not dead, but it’s not the great summer it looked like we were going to have prior to the oil threat. Everything pointed to a ton of property selling this summer before the oil threat began. I think my situation gives a good representation of the current market. In May, I had roughly 15 buyers that were ready to purchase as soon as we could find the right property. 12 of the 15 adopted a “wait and see” attitude about what is going to happen with the oil. I’m getting some sales calls and new inquiries, but most people just want information and have no plans to purchase until the oil situation is resolved. There were so many buyers looking to purchase at the beginning of this summer that even with the majority on hold, there have been more closings this summer than last summer. Last year from May 1st to July 14th there were 56 closings. This year for the same time period, there have been 62 closings. That's amazing to me that the majority of buyers are on hold and we've still had more closings. There were going to be a lot of sales this summer if not for the oil. It’s most unfortunate for the sellers who looked like they would sell this summer without having to give further discounts. There’s still property selling, but the volume is not what it was in March and April when there were more and more buyers, and almost every good deal was getting multiple offers. Those of you who follow the market closely will be surprised at some of the deals that have not sold on my Top 25 at Mexicobeachsales.com.

The one positive effect from the oil threat on the market has been on long term rentals. BP has hired hundreds of workers to be here in case they need to clean up oil. These people need places to stay, and many have been paying very high rental rates. I have seen a number of places which normally rent for $1,200/month that are now renting for $3,000/month. (The renters do get all of their utilities included at this price.) The downside is that these workers must be allowed to cancel with just a 15 day cancellation notice because they need to move if the oil doesn’t get here or they are needed in other areas. I hope they all have to cancel their leases. On a very positive note, I’ve met a lot of these workers, and the majority are under the impression that it’s not going to get bad here.

What about these super low prices on Condos? There have been and are some new condos priced in the $50K range. They are located about ¼ mile from the beach in a development called Palmetto Plantation. It’s an unfortunate situation that’s a good example of a worst-case scenario in a condo/homeowner’s association. Most of the condo projects did certain things to save owners and developers money. One way they do this is to have one water meter with the city, and the water payment is included in HOA dues. This saves everybody. However, when an HOA lacks sufficient funds, this is a big problem. A number of owners weren’t paying their mortgages, much less their HOA dues. The HOA didn’t have the money then to pay the city for water. After months of failure to pay, the water was turned off by the city. Insurance was also combined and included in the HOA dues. I’m told this wasn’t being paid either. Since there was no water, the buildings were condemned because of fire codes. This project has had some new owners buy in and work out some items with the city. There are now two functioning buildings that do have water. It’s risky buying in these, but also maybe a great deal. These units are getting tons of interest by people who want a cheap place at the beach, but they can’t get loans on them. There is a good chance cash buyers will end up buying multiple units in this project and wait until they can get other paying owners to work together to resolve all of the issues.

Keep in mind that a bank will not give a mortgage on any project that is not in good standing. The Summerhouse project is right across from the beach in a good location with attractive, well-built units. There is a concern about this project failing next since the developer that owned about ½ the units filed bankruptcy. Prices have plummeted here, and there’s one 3 BR short sale now listed at $135,000. However, projects don’t always fail when it looks bad. Waterside Village was shaky a year ago and now looks very healthy with 24 units selling this year.
Rates on 30 and 15 year mortgages are near 50-year lows. Amber Lowry at Vision Bank told me this morning that she can do 30-year loans at 4.5% and 15-year loans at 4.125%. Even if you’re not looking to buy, it is a great time to consider refinancing. Her cell phone number is 850-227-4492 or you can email her at: alowry@visionbankfl.com. Superior Bank is another good local lender and you can reach Sam Tyus at 850-509-2442 or Sam.Tyus@superiorbank.com.

Short Sales vs. Foreclosures: This is confusing to many people. I try to address it each year in a newsletter since many of you have been added this year. A foreclosure is a property that a bank has foreclosed on and is now owned by the bank. A short sale is when the individual who owns a property tries to sell for less than they owe a bank. Short sales usually require quite a bit of negotiations with the seller's bank and are not all the time successful. Just because a short sale is listed at $399,000, that does not mean the seller’s bank is going to accept that amount. I know that can be very frustrating, and it can drive realtors and buyers crazy. You can often get a great deal on a short sale, but you may need to be patient as it often takes months to try and work out the details. A foreclosed property is different. Once it’s been foreclosed on and the bank owns it, it's a usually a much simpler process to purchase these properties. There are presently 76 foreclosed properties on the market. There are 19 foreclosed residences and 57 foreclosed vacant lots on the market. There are an additional 88 properties listed as short sales, 51 are residences and 37 are vacant lots. You can find these updated daily on the foreclosure link at MexicoBeachsales.com.

Best Deals on the Market
Mexico Beach/St. Joe Beach/ Windmark
Residences
Vacant lots
Cape San Blas/Indian Pass
Residences
Vacant lots
Port St. Joe
Residences

It was great to hear the reports last night that the oil has been stopped for the first time. Let's all hope the fix works and we can begin moving forward.

Take care,

Zach Childs
Broker- Port St. Joe Realty
Cell: 850-819-0833
WWW.MEXICOBEACHSALES.COM