2008 Market Recap and Good Start to 2009

I planned to send out a detailed 2008 report last month. Fortunately, I’ve been surprisingly busy showing property and helping buyers and sellers negotiate deals. I have 8 properties currently under contract! There are a lot of people looking at property and making offers. There were as many Realtors showing property last weekend as there usually are during a typical weekend in July. I’ve already shown close to the number of people property in the last 3 months that I did the rest of last year. I think it’s a combination of the big price reductions and foreclosures hitting the market that is causing the increased buyer activity. The sellers are also realizing that they must compete with the foreclosures, and they are starting to take lower offers than they would have even a few months ago. The properties getting the most attention are the seriously discounted vacant lots and residences that have good rental potential. Not all of the people purchasing these properties with good rental potential are planning to rent them. It’s often just knowing that these properties could rent well if they need to be rented that’s helping them sell.

Port St. Joe Realty is starting the year off very well, and one of my favorite weekends is coming up next weekend. The Mexico Beach Gumbo Festival being held on February 14th is always a lot of fun. I can’t take any of the credit for Port St. Joe Realty being the defending champion in the amateur division. I don’t know if we will be able to enter a team this year because everyone is so busy. I’m showing property to a different potential buyer the day before, day of, and possibly the day after the Gumbo Festival. The El Governor is offering rooms for $50/night that weekend and you need to hurry to make your reservation as they are almost completely booked: http://www.elgovernormotel.net/ Another great lodging offer for that weekend is the discovery packages that Windmark Beach is offering. http://windmarkbeach.com/specialOffer.htm


In 2008, there were more sales than most people realize, especially in the Mexico Beach/St. Joe Beach/Windmark Market. It looked like sellers were done reducing and then came the unforeseen number foreclosures hitting the market. I was looking back over an old newsletter that I sent out at the end 2006, and I was still not aware of a foreclosure in the Mexico Beach Area at that time. Now there are enough foreclosures and short sales that their sales prices are setting the market. (Short sales are much different and often misleading, more on that later) For the most part, the banks are pricing foreclosures aggressively, and they are selling relatively quickly. This process isn’t entirely negative and is actually helping the local economy in a way. For example, in one community there were 2 spec houses that were foreclosed on. Now, these homes are occupied by happy new owners who are spending money and paying taxes in the local economy. I recently listed a 3rd foreclosure, and it’s the best deal yet in the Sea-grass Community. Most of the people buying the lots that have been foreclosed on are planning to build on them in the near future and that will also help the local economy.


2008 Sales Totals on MLS
(Our MLS Service only Shows 50 properties per link, the most recent 50 are displayed)
Mexico Beach Area: 105 Sales (72 Residences and 32 Vacant Lots)
Port St. Joe Area: 27 Sales (18 Residences, 6 Vacant lots, and 3 Commercial Properties)
Cape San Blas/Indian Pass: 59 Sales (40 Residences and 19 Vacant Lots)
St. George Island: 55 Sales (45 Residences and 10 Vacant Lots)


Not all sales are foreclosures or short-sales and some sellers are offering better prices than the banks. I have 3 bank owned properties under contract, 1 short sale, and 4 “regular” properties under contract. All types of properties are not being foreclosed on as well. For example, I have still not seen a single family gulf front home or vacant lot foreclosed on in Mexico Beach or St. Joe Beach. (The first possible foreclosure of this type may be in the auction mentioned below) I know of around 15 potential gulf front single family home buyers between my clients and buyers that other Realtors are working with. They all know the best deals are 2 homes built in the 90’s that are at $749K and $750K. Both of these homes could be very nice and just need the standard updating a beach house built 10 years ago typically needs. (Replace the infamous green carpet, paint, etc) Because of foreclosures bringing prices down on Cape San Blas, it is the first time I am aware of that you could now actually get a better deal on a new Gulf front home on Cape San Blas for less than the Mexico Beach Area.

“I am not comfortable buying on the Cape because of flood zone issues”. I have heard that 1000 times and completely understand. Here’s a cheat sheet for the Cape. The best flood zone for the Cape, Mexico Beach, or anywhere in Florida is “X”. If you are not in zone “X” on Cape San Blas, you will be required to carry private flood insurance if you have a mortgage on a home, which is usually pretty expensive. Private flood insurance for a nice gulf front home on the Cape can easily be $10,000-$20,000. That’s a whole lot extra vs. $0 for a home in the “X” Flood zone. The private flood insurance is not required on vacant lots and I’m afraid a lot of people did not realize the huge difference when they bought lots in flood zones. When they tried to resale to end users, these people found out what a discount it takes to sell a lot in a flood zone and many of these are in foreclosure. The last gulf front lots in the “X” flood zone sold a few months ago for $550K and $575K. These sold at the top of the market for as high as $1,600,000. There was an “X” flood zone just listed for $399K. With the cost of building as low as it is, you could have an incredible gulf front house with $100K/year rental potential for around $700K. The best deal by far for a gulf front home in a flood zone is this one at $599K which actually has reasonably priced flood insurance.

There haven’t been as many foreclosures in the Mexico Beach Area as there have been on Cape San Blas. When comparing apples to apples the best we can, the Cape market was higher than the MB market and now it’s a little lower because of the foreclosures being priced for quick sales. There have been and are a few of the really good deals on Cape San Blas. These really good deals are what buyers are looking for and consequently I’m spending more and more time on the Cape. The beach re-nourishment project is complete and the beach ranked # 1 in America by Dr. Beach in 2002 has some positive momentum going into spring. Check out these pictures of the beautiful beach taken from the $399K lot. This link will show a cool video of Cape San Blas and Gulf County. I am working on a new Cape San Blas search website that I hope is complete by next month.


Now back to Mexico Beach. There are a lot of people looking for the “deals” in the Mexico Beach area. Two of my listings went under contract last week, and another is being shown regularly after taking a big price reduction. This home originally listed at $649K is now listed at $299,000! This bank owned lot listed for $179,000 was purchased in November of 2004 for $460,000. Casuna lots were originally released prior to the boom for $50K and quickly went up over the next 4 years to over $200K. Now you can buy one again for $50K.

Financing terms are varying substantially for homes vs. vacant lots. Buyers are finding lenders eager to lend on personal and second homes and are finding solid 30-year fixed mortgages with 10% down in the 5% interest range. Finding financing for vacant lots is much harder to obtain and I am seeing strong borrowers having difficulty finding anyone requiring less than 35% down! If you know of someone offering better terms on lot loans, please let me know. It’s driving me crazy how much easier it is for someone to borrow $350K for a home than it is for the same person to try and get $100K for a lot. There are some exceptions that make lending on lots less stringent if the borrower plans to start building within the next 6-12 months. It’s far different from a few years ago when you could “state” your income and receive 100% interest only financing on vacant lots.

What is the difference between a short sale and a foreclosure? There is a huge difference. A short sale is when someone is trying to sell for less than they owe, and they are trying to get the bank to forgive the difference. These can be very frustrating to deal with and often take months to get some kind of an answer from the lender, which is often “no”. Many times the sellers need an offer before the lender will negotiate so they reduce the price until they get an offer. This price is usually not yet approved by the lender and often buyers will make full price offers that the banks won’t accept. This is very frustrating for buyers and myself. A buyer that’s only here once every three months will come down and focus on a property and then leave and make a full price offer and be told no. There are great deals occasionally on short sales, but it’s a process that needs to be understood.

Bank Owned Foreclosures are a totally different story. I enjoy working with both the banks and the buyers on purchasing foreclosures. Once the bank has foreclosed on a property, they are in 100% control of the property. For example, a bank in New York is not in the business of owning a lot in St. Joe Beach. Once they are in possession, they then assign it to an asset manager that usually assigns it to an Realtor that is told to price it aggressively enough to sell it within 90 days. The whole process is handled by professionals with the job of getting the property sold quickly. It is usually much easier to purchase a foreclosure than a short sale.

Windmark Beach and The St. Joe Company are being forced to make some tough decisions. I don’t know when that community will finally take off and start getting “rooftops” as they like to say. What is certain is that they have built an incredible development that will one day be the most prestigious community in this area. Keep an eye on their progress and you should drive through there if you haven’t done so in a while to see all of their improvements and additions. I like the leadership of Joe Rentfro. He and the other customer-oriented employees like Kristy Grove have that community going in the right direction. They are now offering a price guarantee on lots that’s pretty interesting. Phase I is active with foreclosures, but St. Joe controls over 99% of the inventory in phase 2 and there hasn’t been a foreclosure in phase 2. Their momentum will temporarily be slowed down if Brennan’s Restaurant does not reopen in the spring. I hope they are able to resolve that and/or find a better solution for the community at least by this summer. They have opened a first class gym in Windmark and I believe that a new women’s clothing store called “The Fuss” will be opening later this year.

Another exciting date could be auction of Toucan’s Restaurant being held on March 12th. I am skeptical of these auctions because no property has actually sold at the last 4 that I have attended, but who knows, this may be the one where you get a great deal. There are neighboring property owners adding their property to the auction including a very nice gulf front home. Here’s a link with more info: http://www.roebuckauctions.com/


Take Care,

Season's Greetings, Foreclosures and Eagles on the Beach

Season’s Greetings,

National banks and mortgage companies have started selling their inventory of foreclosed properties and providing incredible opportunities for buyers. Sales volume has remained steady as bargain hunters purchase these and other properties that individual sellers have reduced to stay competitive with the foreclosure listings. At one time a few weeks ago, Port St. Joe Realty had 8 properties under contract. (All 8 are still on track to close or have already closed) I helped two sets of buyers this month purchase two of the best deals in the last five years. In my last newsletter, I talked about my #1 pick on http://www.mexicobeachsales.com/ . It was a large, 2nd tier, gulf view, newer, 4 BR/4BA, single family home w/ over 4000 total sq ft that the sellers purchased for $835K. I told everyone last month that the sellers thought their bank may take a very low offer. The buyers purchased this home that sold for $835K on 10/04/2005 for $350,000. It also came completely furnished and equipped.

These buyers are good friends of mine that I met while helping them purchase their first property here two years ago. They had been patiently waiting to purchase a 2nd property to place on the rental market. I knew what they were looking for and after they looked once at this house, they made an offer. As I have been saying about rental income potential, it is possible when marketed properly. Their rental company is projecting this home to gross $45,000 in rental income for 2009. (It grossed $35K this year and wasn’t placed on a rental program until April)

A misconception about this market is that the cost of property insurance is extremely high. It was higher in 2005, but has come down substantially. I would give Andy Smith at Hannon Insurance a call if your policy hasn’t come down (850-258-5128). The home above was insured for around $1500/year and the next home I’m going to tell you about was insured for under 900/year. Taxes are also way down due to assessed values coming down with the market.

The other home I sold this month had been foreclosed on earlier this year. It’s a very neat house built in 2005 that’s a short walk to the beach and it’s pictured below. This home had 3 offers made on it within 3 days of it hitting the market. The buyers I was working with ended up purchasing it for $244,000. There is not an abundance of deals with low asking prices on the market. When one is listed at a great price, it’s selling fast and usually getting multiple offers. Both of these homes had relatively quick closings and were both financed through Amber Lowery at Vision Bank. Amber did a wonderful job and had great rates (850-227-4492). Speaking of great rates, I’ve been emailed quotes this week as low as 4.5% for a 30 year fixed mortgage.



I have been working along with Steve Newman on listing a number of foreclosures. We listed a vacant lot on Cape San Blas for $99,000 that was purchased in 2005 for $380,000. It quickly received multiple offers and went under contract. We also listed a lot in Highland View for $24,999 that was purchased in 2005 for $205,000!!! The deals are coming and you need to be ready. I am doing the paperwork and pre-market analysis for a number of other foreclosures. Since they usually sell quickly, I need to know what you are looking for if you want me to contact you when they are listed.

Another Great Deal that recently closed is the Gulf front home below that had an asking price of $800,000. It ended up selling for $520,000. It’s was built in 1980 and needs some work/updating. However, it’s the first Gulf Front home in this area on MLS to close under $800,000 in at least 4 years. Two Gulf front homes both listed at $1,500,000 went under contract as I was writing this. It will be interesting to see what these 2 homes rumored to be going into foreclosure end up selling for.

With the number of foreclosures in the pipeline to hit the market, there are going to continue to be tremendous values for buyers. The best new deal on the market is a great beach house that sits right across the street from the beach in St. Joe Beach. Vacant lots similar to the one this house sits on sold for over $600,000. It is now listed for $329,000. There are two foreclosure homes that I think someone may get a very good deal on. One is a home in phase 1 of Windmark Beach that was purchased for $1,400,000. It’s now on the market at $559,000. For comparison to other properties in Windmark Beach, it’s the only home listed under $1,000,000. The second home is located across from the dedicated beach in Mexico Beach. The previous buyers paid $1,100,000 and now it is on the market for $649,000. Both of these are owned by National banks that are motivated to sell. I am very curious to see what the banks would actually take for them. There is also a great lot in the Casuna Subdivision on the market for $59,000. Possibly the best long term investment is the 3 acres of commercial land available in Mexico Beach for $449,000. (An identical piece sold for $1,600,000 in 2006)

Best Deals in Port St. Joe
Best Deals on Homes in Indian Pass and Cape San Blas
Best Deals on Vacant lots in Indian Pass and Cape San Blas


Below are the sales that have taken place in the last 90 days as well as the properties that are currently under contract.

Mexico Beach 30: http://rafsg.net/RAFSGReports/listings.asp?ID=1206191089
Cape San Blas 21: http://rafsg.net/RAFSGReports/listings.asp?ID=1206190551
Port St. Joe 9: http://rafsg.net/RAFSGReports/listings.asp?ID=1206190553
North Gulf County 12: http://rafsg.net/RAFSGReports/listings.asp?ID=1206190554
St. George Island 26: http://rafsg.net/RAFSGReports/listings.asp?ID=1206190555
Apalachicola 10: http://rafsg.net/RAFSGReports/listings.asp?ID=1206190556
Carrabelle: 16: http://rafsg.net/RAFSGReports/listings.asp?ID=1206190557

I will be sending out a thorough analysis recapping the market in 2008 and giving my projection for 2009 in the coming weeks.

Occasionally I’ve been taking a small camera with me while I jog in the morning. I was lucky enough to have my camera the morning this bald eagle was out cruising the beach

Fall Market Update

Of course our market is affected by the mortgage/financial crisis. The cheapest properties on the market in 2005 sold for $200,000. Some of these same properties are now available in the high $50’s. I have spoken with real estate professionals in other areas and some of them report almost no sales. Their sellers have only reduced 10%-20% and they feel they are giving it away. Our market has taken the huge reductions necessary to move properties. This has rapidly driven prices down 25 to 70% over the past three years. You’ll see some these tremendous reductions on my new Top 25.

From July 1st to October 5th of this year, 32 properties have sold and another 10 are currently under contract in the Mexico Beach Area. In comparison to the same time period in previous years: 43 sold in 07’, 33 in 06’, and only 53 at the top of the market in 2005. My point is that in spite of horrible news, people are buying. Port St. Joe Realty has been very fortunate and had 9 closings during this time. It takes guts to buy when the market is down and confidence low, but fundamentally this is the time to buy. It’s ironic how we are all comfortable paying more than the last guy in a good market and scared to pay less in a bad one.

My advice remains the same. There are too many opportunities on the horizon to purchase a marginal deal. Be patient with the market, understand you may have to offer on numerous properties, and you will find what you are looking for. Just remember, you are not the only one looking for these great deals. They will go fast once people know about them and you need to be ready to act.

There are deals too good to pass up. A single family home in a nice area sold for $87,000. It needed a lot of work, but that was solid. Especially considering that a non-mobile single family home has not sold for less than $175,000 in the last few years. Check out my maybe #1 pick. It’s a short/sale foreclosure that the buyers purchased for $825K. There is a rumor that their bank is willing to take in the low $400’s. Furthermore, check back for a development opportunity that should hit the market next week. It’s a 3 acre commercial/high density (18 units/acre) tract with huge development potential. An identical tract was purchased in 2006 for $1,600,000. This tract may hit the market under $450K. It would be a great one to buy and hold until the market recovers. We also placed 1 of our 4 offices on the market. This office/house is priced right and located in the peaceful Beacon Hill area better suited for residential use. We plan to move to a higher traffic location in Mexico Beach.

I watch the news and hear how tough loans are to obtain. However, the majority of people I am dealing with are not having that much trouble borrowing for primary or secondary homes. I have seen regular borrowers get 30 year mortgages in the 5.5% range lately. With 20% down on a $250,000 house, principal and interest payments would only be $1,135/month. That’s awesome. (I added a great new mortgage calculator to http://www.mexicobeachsales.com/) Lot and mobile home loans seem to be a little tougher to obtain and owner financing is remaining attractive to buyers. Three of my listings that recently sold offered owner financing and the sellers were able to charge an interest rate over 7%.

In hindsight, banks see that lots were a more speculative investment than homes. If the average single family home is down 30%, then the average lot is down 60%. More borrowers have stopped paying on lot loans. In these cases, the banks are way upside down on a non-income producing investment if they have to foreclose. I am working with 2 different couples right now looking for nice single family homes 2-3 blocks from the beach. There is one brand new competitively priced home in this area that hit the market last week. With an exception to it, they will be able to buy a lot and build exactly what they want for $25K-$75K less than they would spend if they purchased the best deal at listing price for an existing resale home. Normally the opposite is true.

Building costs (labor and materials) are down substantially and this is another variable that is making building such and attractive option. These factors and great customer service are two of the reasons that Big Fish Construction is continuing to build a number of new homes for their clients. Bo and Steve are easy and fun to work with. If you have any questions about building, give these guys a call and you may be pleasantly surprised at your options. Steve Newman 850-527-5117 or Bo Spring 850-527-0194.

In the midst of the banking failures, I am asked almost daily about the strength of the local banks. I don’t know the complete financial situation of any banks. I will share what I know and who I enjoy working with. To start with, you need to understand that banks sell a large portion of the loans they originate. Many of the bad loans are the “bad paper” you hear about in the news. I’m saying this to address the concerns that the local banks have all of the loans on foreclosed coastal properties. That’s not true. I also remember during 2005 that many people were using mortgage brokers who shopped hundreds of national programs. For example, the lot loans I remember most people using were from Royal Bank of Canada.

Sure, all of the local banks have their share of bad loans. Vision Bank has a solid community presence. I regularly work with and highly recommend Jim Norton, Johanna White, Kyle Adkison, and Karen Fontaine as top notch bankers. Vision is owned by the conservative Park National Corp out of Ohio. Their stock (PRK) is trading at $77/share as I write this and they have over a BILLION dollar market cap. The other banker that I enjoy working with is Sam Tyus at Superior. Superior operates in the Southeast and they have a good common sense approach at the local level. They are also publicly traded. (SUPR).

Discussions abound whether the volatility and losses in the stock market and banking concerns help or hurt real estate. One side of the argument is that as people lose money in the stock market, they have less to spend on real estate. The other side to the argument is that as the stock market struggles, people move money into real estate for a safer investment. There are properties selling for a low as $.30 on the dollar that are generating solid returns from rental income. There are listings that are safely grossing 8-10% of their purchase prices in yearly rental income. 24 out of the 83 buyers in the Mexico Beach Area this year have paid cash. After the owners take advantage of the expenses and depreciation allowed as income tax deductions, the properties are yielding an effective return over 10% in some situations. That sure beats 3.5% in a bank and seems less risky than the stock market in times of financial uncertainty. Check out a few of the potential high income properties currently on the market.

I’m not sure anybody has all of the answers right now. I can tell you that this fall has been absolutely beautiful. I hope you have been able to come and enjoy this wonderful place that I’m lucky enough to call home. We don’t have a traffic light and the only crowds this time of year are seagulls and seashells. I don’t think you can find a more relaxing place. If you need an excuse to visit, the Art and Wine Festival is October 18th.

Below are links to see the closings for other areas that have occurred since July 1st. The Mexico Beach Area remained the most popular choice with buyers and had almost twice the number of closings compared to all of the other areas.
Cape San Blas 18: http://rafsg.net/RAFSGReports/listings.asp?ID=1206172106
Carrabelle 16: http://rafsg.net/RAFSGReports/listings.asp?ID=1206172110
Port St. Joe 10: http://rafsg.net/RAFSGReports/listings.asp?ID=1206172107
St. George Island 10: http://rafsg.net/RAFSGReports/listings.asp?ID=1206172108
Apalachicola 8: http://rafsg.net/RAFSGReports/listings.asp?ID=1206172109
North Gulf County 7: http://rafsg.net/RAFSGReports/listings.asp?ID=1206172111



Take Care,

Sacred Heart Hospital Update

FOR IMMEDIATE RELEASE Contact: Mike Burke
September 12, 2008 850-969-1319

Construction Proceeding on Target for New Hospital
In Port St. Joe

Construction is continuing on the new $35 million Sacred Heart Hospital being built along Highway 98 in Port St. Joe. The new hospital and adjacent medical office building will bring quality healthcare to Gulf and Franklin counties and will provide as many as 150 new jobs.
"The construction is progressing nicely, and we have been fortunate not to be impacted by any inclement weather, which could delay the project. We are still on target to open the hospital in the fall of 2009,” said Brian Matson, vice president of strategic planning for Sacred Heart Health System.
Work on the foundation and excavation of retention ponds on the 27-acre site is now complete. Installation of underground electrical and plumbing infrastructures is underway, and vertical construction of the building is slated to begin the first week in October. Construction of the adjacent medical office building is anticipated to begin in the next 60 days, and is scheduled to open with the new hospital.
“Offering a medical office building on the hospital campus will provide patients convenient access both to physicians and any required diagnostic services,” said Peter Heckathorn, executive vice president, Sacred Heart Health System.
Sacred Heart has provided radiology services in local area for more than a year and recently began offering rehabilitation services in both the Port St. Joe and Beacon Hill communities. "Sacred Heart is pleased to show our commitment to the local community by offering these services in advance of our hospital opening," said Sidney Scarborough, vice president of ambulatory care, Sacred Heart Heath System. "Response to the rehab clinics and radiology services has been encouraging, and the physicians have been extremely supportive." The new Sacred Heart Hospital will provide residents of Gulf and Franklin counties with healthcare facilities that include:
A community hospital with private rooms, an 24-hour emergency department and operating rooms
A full complement of diagnostic and laboratory services
A medical office building with space for primary care and specialty physicians, as well as various outpatient services
A helipad to be used by Sacred Heart's AirHeart helicopter, providing rapid transport for trauma patients and other critically-ill patients
For more information about Sacred Heart Health System, visit www.sacred-heart.org.

Gustav- No Damage, Cool Surfers

Thanks to Denise Nichols for taking these pictures from my deck. It's rare we have waves big enough for surfers and this was a treat for all of us. We couldn't believe it, but surfers had flown in all the way from Hawaii. We had a photographer for Surfer Magazine taking pictures in front of the house.

Fay and Market Update

We boarded up windows and got ready for a storm that luckily decided to skip us over. I’m getting lots of calls from people with damage in South Georgia and other areas of Florida. There is no damage in our direct area. We had a little bit of wind and maybe 1-2 inches of rain. I took a jog down the beach this morning and could not tell there had been a storm. It’s a beautiful day and kids are playing on the beach. If you are worried about your property, I will be glad to check it out and send you a picture if you would like one.

The biggest impact the storm had on Mexico Beach was the rescheduling of the MBARA Kingfish Tournament that my father puts on every year. The new date is September 13th. The tournament is a lot of fun for everyone and brings a big crowd to the area with nearly 200 boats entering each year.

The Mexico Beach Market has quietly been active the last 30 days. There are 36 properties that have sold or that are currently under contract! The main sellers have been interior (2-3 blocks from the beach) single family homes for under $300K. There were starting to be a lot of good deals in this category and I predicted last month that these would start selling. There has also been a run on the single family lots 1.5-3 blocks from the beach priced under $75,000. This link will show you all 36 properties: http://rafsg.net/RAFSGReports/listings.asp?ID=1206160066 .

Top Picks #3, #4, #7, #10, and #17 went under contract in the last few weeks. All 6 of the lots that have sold or gone under contract recently were featured on my Top 15 lots. Last month, I talked about an unobstructed gulf view lot being reduced from $385K to $200K. It received 3 offers in a matter of days and ended up closing above asking price at $205K. The 2 lots I talked about being such a great deal in Mexico Beach that were purchased for $125K each were resold for $160K and $170K.

The Cape and Port St. Joe haven’t seen as big of a spike in activity over the last 30 days, but they are seeing activity. The Cape has had 14 properties and Port St. Joe 11 properties that have sold or are currently under contract.
Cape San Blas 14: http://rafsg.net/RAFSGReports/listings.asp?ID=1206160067
Port St. Joe 11: http://rafsg.net/RAFSGReports/listings.asp?ID=1206160068

Be sure to check out www.mexicobeachsales.com . I updated the Top 25 this morning. I’ve added a few foreclosures, short sales, and other aggressively priced properties including; a newer gulf front home for $750,000, the lowest priced Surfside unit EVER, 4 Apartments bringing in $31,000/year for $299K, and a newer gulf view beach house reduced from $549K to $349K.

Take Care,

Zach

Mid Summer Market Report

Be sure to check out www.mexicobeachsales.com. After many requests, I have gone back to ranking the Top 25 deals on the Market. You can also click the “what’s selling?” button to see the last 50 properties that have sold in the Mexico Beach/ St. Joe Beach/Windmark Beach Area.

I think we had the largest crowd ever in Mexico Beach on The 4th of July. The beach looked great and the weather was perfect. Every motel room and vacation rental, including the many new units now on rental programs were rented. Most of these are also rented for the majority of July and lots of people are looking at property. The message I am trying to communicate this month is that there will be a low number of sales this year despite the increase in numbers of people looking to purchase. There are more people looking than in 2006 or 2007.

Closings comparisons for May 1st to July 12th from 2003 to 2008.
Mexico Beach Area
Currently Under Contract 15: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152034
Number of Properties on the Market: 528
Number of Closings
5/1/08-7/12/08 24: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152047
5/1/07-7/12/07 36: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152046
5/1/06-7/12/06 20: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152041
5/1/05-7/12/05 52: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152040
5/1/04-7/12/04 89
5/1/03-7/12/03 76

Cape San Blas
Currently Under Contract 4: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152031
Number of Properties on the Market: 481
Number of Closings
5/1/08-7/12/08 10 http://rafsg.net/RAFSGReports/listings.asp?ID=1206152048
5/1/07-7/12/07 17 http://rafsg.net/RAFSGReports/listings.asp?ID=1206152045
5/1/06-7/12/06 8: http://rafsg.net/RAFSGReports/listings.asp?ID=1206149180
5/1/05-7/12/05 72: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152039
5/1/04-7/12/04 116
5/1/03-7/12/03 76

Port St. Joe
Currently Under Contract 8: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152030
Number of Properties on the Market: 213
Number of Closings
5/1/08-7/12/08 4 http://rafsg.net/RAFSGReports/listings.asp?ID=1206152049
5/1/07-7/12/07 10 http://rafsg.net/RAFSGReports/listings.asp?ID=1206152044
5/1/06-7/12/06 14: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152043
5/1/05-7/12/05 37: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152036
5/1/04-7/12/04 68
5/1/03-7/12/03 43

Here’s my simple theory on the current market and explanation as to why there are so few properties selling this season. To get a feeling for the market, put yourself in the shoes of a prospective buyer. You love the beach and want a place to enjoy. You understand this is a big investment and prices have been falling since the summer of 2005. You and every other buyer want to make sure you get the best deal in the last 5 years. You are an educated buyer and know that the last property like the one you are looking for sold for $200,000 three months ago. 9 out of 10 buyers in this market have a mindset that they are not buying unless they can get a better deal than the last guy. Even though this $200,000 property was worth $400,000 3 years ago, your thinking is to not pay more than $175,000. The bottom line is that these potential buyers are hesitant to buy. They only purchase if they feel like they are getting a great deal.

This has been the mindset of buyers since the market started coming down in 2005. The market is running out of sellers that can afford to sell for less. While I do not think that we are at the bottom of the market, this is a good sign that we are getting closer to the bottom. With so many properties on the market, there will be a few sellers that have to sell quickly. Individuals forced to sell for whatever they can get quickly and banks that have to sell foreclosed properties will continue to result in low sale prices. There are not many of these stand out deals. Do not pass them up if they are what you’re looking for.

Earlier this year there were 8 Gulf-side townhouses that stood out from the other similar properties as solid deals. There were multiple buyers sitting back waiting on them to reduce more. Once one of them went under contract all 8 of them sold within 2 ½ months. The result is not that people have paid more; rather not one unit like these 8 has sold since May. There are 4 other similar units that are short sales that have been under contract for a while. These short sales often take a few months to get the terms worked out with the banks. (Short sales are sales where the seller is trying to get the bank to allow him to sell for less than is owed on the mortgage) There is a similar situation to the townhouses right now with a number of single family homes with asking prices from the $180’s to $400’s. http://rafsg.net/RAFSGReports/listings.asp?ID=1206150826 A few of these listings are getting shown 4 and 5 times a week. That is a ton of activity.

I think once one of these goes under contract that at least 4 or 5 of them will sell before summer is over. There are a few townhouses that have started to see activity after reducing their prices as well. One of the eight units that was purchased earlier this year for a very good price was put back on the market with a new asking price over $100,000 more than was paid a few months ago. It went under contract while I was writing this report. Not many people know the market well enough to successfully flip property. The key to being successful is to purchase it for such a good deal that you can resell it for a great deal to the next guy and still make a profit. (Minutes before I sent this the $125K lot in the next paragraph looks like it went under contract for considerably more than the buyer paid a few weeks ago)

It’s ironic with so many more sellers than buyers that buyers are starting to become frustrated because they can’t find what they consider a super deal. I could probably sell 10 of the beachside lots looking down the canal that had an asking price of $375K and sold for $125K. That’s the kind of deals people are looking for but now they can’t find anything comparable under $215K. With the $125K lot in the back of their minds, the other lots on the market seem overpriced and the result is no sales. There was a lot in St. Joe Beach just reduced from $385K to $200K. It sits right across from the beach with unobstructed views and I know that there were 3 offers submitted within 24 hours of it being reduced. Similar lots to this one start at $350K. I truly believe that the buyer will be getting a great deal. http://rafsg.net/RAFSGReports/listings.asp?ID=1206152035

The negative side to this is that it makes every other similar lot look severely overpriced. The result will again be very few sales. There will be 10 people that want a lot like this for $200K, but these lots sold for $600-$700K three years ago. There aren’t many sellers that can afford to sell that low. I don’t know if you consider it helping or hurting the overall market, but that’s how these very good deals reduce the number properties that sell. If the current rate of sales continues, I estimate that less than 1 out of 9 properties on the market will sell this year.

We have not been exempt from the foreclosures and it has forced banks into raising their lending requirements. This makes it harder and harder for people that want to buy to get loans. This has started leading to more sellers offering owner financing. It’s not as easy and clean as a quick close, but it seems to be a win/win in many situations for the buyer and seller. I was not involved in 1 owner financing transaction from 2005-2007 and I heard of very few. I was involved in one earlier this year and I am currently in negotiations with 2 other sellers that have attracted buyers by offering owner financing. Owner financing looks like a trend that will become more common. I am now advising sellers to at least consider offering this to attract buyers.

I have no doubt that properties purchased between 2004 and 2006 will continue to be foreclosed on through this year and into 2009. Port St. Joe Realty is very connected with local banks and has national connections as well that enable us to quickly get information about foreclosures to our clients. The majority of banks are continuing to ask more for their foreclosed inventory than they can sell for in the current market. However, there have been 6 or 7 foreclosed properties have been great deals this year and sold in a matter of days. Our 4 offices continue to perform well despite the market conditions. This link will show you some of our recent sales including 3 properties that we currently have under contract. http://rafsg.net/RAFSGReports/listings.asp?ID=1206149385

I often get calls from people asking me to refer them to attorneys and appraisers. I’d like to tell you about 2 friends that have recently opened their own businesses. Jeremy Novak has experience as a Realtor and in property management. He has recently opened his own law firm in Port St. Joe located next to our Port St. Joe Realty office on 7th Street. Jeremy offers great personal service for real estate closings and other legal matters. Matt Terry has recently started The Appraisal Group of North Florida and can help with any of your appraisal needs. Another trustworthy appraiser is Greg Norris. Jeremy Novak: 850-527-9121, Matt Terry: 850-227-6478, Greg Norris: 850-596-6505.


Total 2008 Sales:
Mexico Beach 54 (43 Residences and 11 Vacant Lots)
43 Residences http://rafsg.net/RAFSGReports/listings.asp?ID=1206152057
11 Vacant lots http://rafsg.net/RAFSGReports/listings.asp?ID=1206152058
Port St. Joe 13: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152055
Cape San Blas: 35 http://rafsg.net/RAFSGReports/listings.asp?ID=1206152056
Carrabelle: 41: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152050
St. George Island: 39: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152051
Apalachicola 21: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152052
North Gulf County 12: http://rafsg.net/RAFSGReports/listings.asp?ID=1206152054
Eastpoint: 13 http://rafsg.net/RAFSGReports/listings.asp?ID=1206152053

Take care,

Zach Childs