Forgotten Coast Real Estate Rebounding?
An island known for its isolation may be the focal point of recovery for Franklin County.
Recovery for the Franklin County real estate business might just be over the horizon. And according to some experts on St. George Island, the recovery may begin on the slender barrier island.
“Personally, I think we’ve gotten through the fire,” said Travis Stanley, a real estate broker for Fickling & Company. “Homes … are simply more affordable than they’ve been in recent times.”
St. George is well known for its upscale houses, most nestled close to the Gulf of Mexico on the island’s long stretch of beachfront property. Prices on some million-dollar homes have fallen drastically since 2006 — and because of the many foreclosed homes, prices are expected to remain low. For buyers encouraged by signs that the Great Recession may be ending, that’s seen as a major plus.
“The real question is, how far away is the horizon?” asked Pinki Jackel, a St. George Island resident, the owner of SeaSide Title Services, and a Franklin County commissioner whose district includes the island and neighboring Eastpoint. Her two occupations give her a unique perspective on the problem of decreased house prices that has plagued the area since about 2005, when Florida was emerging from devastating back-to-back hurricane seasons.
“The positives, from my perspective, are that we have great stuff,” she said. “We have beautiful white-sand beaches that are not overcrowded and over-commercialized. We have fantastic fishing inshore and offshore. We have a commodity that in average economic times there is a demand for and, as the saying goes, they aren’t making any more of it.”
Add to that the fact that the island is protected by low-density zoning regulations, strict building codes and height restrictions — meaning no high-rises.
“We’re optimistic that we have a product here you can’t find anywhere, and we believe our area will recover much sooner than other areas of the state,” said longtime St. George Realtor Alice Collins. “I think we’re getting there.”
End Users, Not Speculators
Crystal Landrum and husband Phil, a real estate attorney in Georgia, have been coming to St. George Island for nearly 20 years. They love the island’s natural beauty and the privacy it provides. Eager to someday buy their own slice of heaven, they’ve kept an eye on the island’s real estate market. She said they have watched it go from boom to bust, but these particular times are unlike any other.
“Neither of us has seen anything like the strangeness of the current market, either in Florida or the U.S.,” Crystal Landrum said.
However, with the prices as low as they are, it was the time to act. They recently bought their own piece of Gulf-front property at a “great price,” she said. What’s more, they’re going to use the property for years to come.
“We looked at this property as an investment in a place for our family to come to and enjoy over the next several years, as opposed to an investment we expect to cash in at three times its value six months later,” she said.
Stanley, of Fickling & Company, said he has noticed that there are more “end users” like the Landrums taking note of the low prices. There doesn’t seem to be as much interest from speculators and “flippers,” although that could change as the market improves.
“The bottom line is we have more interest from end users, people who are going to enjoy the area,” Stanley said. “That’s what we need to stabilize the market. Our transactions have been buyers whose intentions are to enjoy the home and the area, knowing full well this is a long-term investment,” he said.
At one stage, Collins said, nobody wanted to buy because “nobody knew what the bottom was going to be.” But since values have stopped wildly fluctuating, she sees it as a sign that perhaps the bottom has stabilized.
“There has been a recent sale of $775,000, so they’ve been in that range,” she said. “Because of supply and demand, they may stay in the 700s someplace, and then hopefully there will be a gradual increase. Vacant land has not sold well at all since 2005. Percentage-wise, those sales have been almost non-existent. In effect, people found they could buy an improved property for less than what they would have paid for a lot.”
Pinki Jackel — whose title business is directly connected to home sales — is keeping her ear to the ground these days and can only sigh in relief at the news.
“I am hearing from local Realtors that there is more interest lately than there has been in recent times,” she said. “They are optimistic about 2010, and if they are, I am. My business is directly tied to their business, so I like what I hear for this year in comparison to last year.”
Jackel’s concerns don’t end there. The Franklin County Commission has a vested interest in seeing prices return to normal on St. George Island.
“I cannot understate the importance of the island’s tax dollars to the bottom line of the county’s economic health,” Jackel said. “We have two industries in Franklin County — seafood and tourism. As economically challenged as we are, we need both of the industries to do very well. The exchange and construction of real estate creates an economic ripple across the county, from the banks to the grocers.”
The trickle-down effects are undeniable, Stanley said.
“Most of our local businesses are dependent on the short-term visitors who come to the beach during school holidays, as well as our winter snowbirds,” he said. “In that respect, it doesn’t matter if our vacationers are staying in a $1 million vacation home or a $500,000 home. I do believe there is a trickle-down effect of high real estate values, though, if only that it increases the county’s tax base.”
St. George Island has generally been the leader in the value appreciation category in Franklin County, Jackel said.
“Fortunately, though we have seen serious depreciation, our values have not dropped to the extent of other areas in the county,” she said. “As well, the island property tends to gain value back faster than most other areas in the county.”
By the Numbers
An inventory of the numbers and types of houses on the island reveals 1,822 single-family homes, 42 condos at the Villas of St. George, and 99 town homes in the beachfront community of 300 Ocean Mile. In addition, Collins estimates that there are probably 200 or so miscellaneous duplexes, triplexes and quads on the island, bringing the total to around 2,160 residences. There are approximately 1,000 vacation rentals in that number, and the good news there is that occupancy rates on St. George Island haven’t changed, Collins said.
“The vacation people are still coming,” she said. “Which is good news, because there are other areas (west of us) where vacation rental occupancy is down. But we have not seen a decrease in occupancy, and we have far more snowbirds here now than ever before.”
A four-bedroom, five-bath, 3,800-square-foot home on the Gulf side of St. George Plantation sold for $2.9 million in 2006; three years later, a comparable home sold for just under $1.9 million. And that’s the high end of the spectrum. A four-bedroom, four-bath, 2,375 square-foot home in the same area sold for $1.75 million in 2006; again, in 2009 a comparable four-bedroom, four-bath home sold for $900,000.
Homes located in the inland portions of St. George Plantation have fared no better in pricing. In 2006, a three-bedroom, three-bath, 2,188-square-foot home sold for $975,000, while a larger, 2,400-square-foot, five-bed, three-bath home sold for $1.2 million. In 2009, a three-bedroom, two-bath, 1,405-square-foot home sold for $219,000, while a four-bedroom, four-and-a-half-bath, 2,800-square-foot home sold for $650,000.
Those kinds of prices are a boon to new buyers, Realtors say.
“Fallen prices have made homes affordable to local buyers,” said Helen Spohrer of Prudential Resort Realty.
“It’s still a buyer’s market, definitely,” Collins agreed. “We are having some buyers who thought they’d never be able to own property here but now realize with the pricing they can.”
Yet there are still some nagging problems, Stanley warned.
“As far as a recovery is concerned, our actual inventory is skewed by properties that are on the market at unrealistic prices,” he said. “Our current absorption rate is 21 months — this is the time it would take to sell every active listing on St. George Island based on the average month’s sales. A healthy market has about six months’ absorption rate.”
Getting back to normal is a matter of “moving” the bank-owned properties and foreclosures, Stanley said. That means generating actual sales.
“People (are feeling) more confident about the values,” he said. “Interest (in property) is up, and people are looking. Property has become very affordable. Now the fence-sitters are off the fence and looking.”
Most of the sales now are bank-owned properties or short sales, Collins said.
“There are a few situations where people bought the property so many years ago that they can afford to sell it for the lower prices because they don’t owe anything on it,” she said. “They just won’t make the profit they would have made had they sold in 2004 or before.”
Jackel said she predicts that a “good number” of bank-owned properties will go under contract and close this year.
“This will begin the stabilization process that the market needs to make more buyers feel comfortable about the second-home and investment-home market,” she said. “Good markets are driven by consumer confidence, and we are lacking this quality from top to bottom in our present economy. A key factor in our recovery will be the loosening of credit restrictions.”
This is a type of market Collins said she never expected to see.
“We have had situations where the values would level out and kind of stabilize and then start rising again, but today it’s being driven by bank-owned properties and the short sales situation,” she said.
Stanley said that 30 percent of the active listings on St. George Island are “distressed” sales, and 30 percent of his company’s sold properties are “distressed.” He said that most people feel that the market won’t recover until those sales are all gone.
“If distressed properties sell at the same rate they are listed, the supply and demand of distressed sales are healthy and not the cause of high absorption rates,” he said. “The recovery will not be sustained until all properties are marketed at a realistic price or removed from the active market.”
Highs and Lows in St. George Island Real Estate
low sale to high sale
2006: $1.75 million to $2.9 million
2007: $1.1 million to $2 million
2008: $1 million to $2.6 million
2009: $900,000 to $1.8 million
East End Homes
2007: $1.9 million to $2.6 million
2008: $979,000 to $1.9 million
2009: $1.1 million to $1.3 million
Gulf Beaches Homes
2006: $1.1 million to $1.6 million
2007: $710,000 to $850,000
2008: $419,000 to $1.1 million
2009: $495,000 to $1.2 million
Source: CENTURY 21® Collins Realty, Inc.