St. George Island Realty - St. George Island real estate, St. George Island FL

St. George Island Realty News

Four Trends to Measure the St. George Island Real Estate Market Recovery

August 17, 2008

With interest rates as low as 5.25% and not much higher than 7% from 2001 through 2003, most Americans who could qualify for a loan either bought a bigger house, a second home, or refinanced their existing home at a lower interest rate. By mid 2003, the demand for mortgages was diminishing because most Americans, who could qualify for a mortgage, already had the mortgage they wanted and needed. Meanwhile, Investors world wide wanted to invest in American Mortgage Backed Securities because the default rate was so low that it made them a very safe investment. Wall Street and Mortgage Bankers were frustrated with the fact that investment money was waiting impatiently for more new Mortgages to be created. To resolve this dilemma, Mortgage Bankers began lowering the qualification standards for Borrowers in 2003. With lower mortgage loan underwriting standards, less and less qualified Buyers were able to get Mortgages, while the Mortgage Bankers and Wall Street created more Mortgage Backed Securities to meet Investor demand. By late 2004, Mortgage Loan Underwriting standards became so lax that stated income loans became common place. Banks invite Borrowers to commit fraud by not requiring verification of sufficient income to make the payments. With easy credit available to unqualified Buyers, the number of sales of second homes soared from 2003 into 2005. With homes selling like hot-cakes on St. George Island, property values were artificially over stimulated to stratospheric heights. In late 2004 and early 2005, Investors were finding stated income loans at more than 100% of the purchase price, and using the cash intended for renovations to make their monthly payments until they could flip the house at a big profit a few months later. That scheme actually worked for a few Investors who got in and out early, but most were caught with a mortgage they couldn’t afford when the St. George Island Real Estate market imploded in March of 2005. These unqualified borrowers suddenly found that they couldn’t sell their house for the amount owed to the Bank. Finding themselves upside down in 2006, these Borrowers had no choice but to let the Bank foreclose. Some tried in vain to sell their houses and lots, but these unqualified Borrowers didn’t have enough cash to come to the closing to make up the difference between what they owed and the new lower property values. Thus, a glut of Listings (as many as 570 in the summer of 2006), effectively pounded a stake through the heart of the St. George Island real estate market.

Due to the huge number of Foreclosures, the glut of supply (listings), and slow sales, property values on St. George Island have been declining at an average pace of 1.66% per month for the last 40 months. It is impossible to predict whether the rate of decline will change, but at this rate, St. George Island property owners can expect their property to decline almost 10% in the next six months. Typically, the St. George Island real estate market sees more sales from March through September. For the past two years, sales have been strongest from November through February. Currently, only seven properties are “under contract” on St. George Island, only three of which are highly likely to close. Everyone seems to be sick and tired of all of the gloomy news from the St. George Island Real Estate Market.

Finally, some good news about the St. George Island Real Estate Market! The number of sales, as of today, are up year-to-date by 15.38%, from 33 on 8/17/2007 to 39 today. In 2007, we finished the year at 51 sales. If we can finish 2008 with a 15% increase, we will end the year with 58 or 59 sales. This doesn’t sound like much to cheer about, but after declining sales over the past three years (2004 - 378 sales; 2005 – 203 sales; 2006 – 53 sales; 2007 – 51 sales), an increase in the number of sales is one of the four market trends that must turn around in order to slow and stop the rapid decline in value.

The next important market trend that our real estate market must change, is to reduce the number of listings. Listings are the equivalent of Supply in economic terms. Too many Listings diminish Demand. Many of the St. George Island Owners understand this, and they have chosen to either take their property off the market or not list their property until such time that they can realize their targeted sales price. We should all thank these people because they have kept the property values from falling more precipitously. Currently, we have 340 listings on St. George Island, with only a small percentage of those listings reflecting the prices of recent comparable sales. Too many listings in any real estate market tend to take away the Buyer’s sense of urgency, allowing them to feel comfortable with a decision to wait until values drop even further. 200 or fewer listing on St. George Island have spurred sales on St. George, but at those times that we saw fewer than 150 listings, property values went up rapidly. The TRIM notices will be coming out soon, announcing the new valuation of property for tax purposes. These TRIM notices estimate the actual tax bill that will come to each property owner in November, and are based on 2007 sale prices. Upon receipt of these TRIM notices, many owners will be disgusted by the fact that their property is valued much higher than the current value. The result often leads to many of these disgusted owners wanting to list their property at the over assessed value. This results in a large number of new listings priced well above comparable sales in 2008. As stated before, more supply (listings that fail to reflect the current value) reduces demand by further reducing Buyer’s sense of urgency.

The third market trend that must be reversed is the huge number of foreclosures. Investors are waiting for the Banks to have to start unloading foreclosed properties at sacrificial prices. Investors anticipate a veritable Road-Kill Smorgasbord! Banks have only put a small percentage of the properties with troubled or defaulted loans on the market at prices that reflect the current market value. In fact, only a small percent of the troubled loans have become Bank owned properties. Most of the Banks are stalling the Foreclosure process through the use of formal or informal forbearance agreements and “short sale” listings. Few of the “short sale” listings are selling because the Banks could fail if they were to have to sell the properties at the actual current value. Most of the banks will allow the Owners to list their property at somewhere in the neighborhood of 20% below the pay-off figure. Unfortunately, the St. George Island property values have fallen more than 50%, so most of these “short sale” listings are priced so far above the current property value that Buyers don’t even want to look at them. Through the use of forbearance agreements and “short sales”, Banks can artificially prop up their net worth by keeping these troubled loans on their books at the full value of the loan. Our real estate market can not recover until a large percentage of these troubled loans and foreclosures are sold or resolved. This trend does not bode well for the hope of a speedy recovery in the next five years.

The fourth market trend that will help our market turn around involves the time it takes to sell houses and lots that are accurately priced to reflect the current market value. If a house or lot that is priced at the exact value of the property on the day it is listed fails to sell quickly, that listing will become more and more overpriced as time goes by if the property values continue to decline. Consequently, measuring the time it takes for those few properties priced to reflect the current values to be placed under contract becomes a very valuable Market assessment tool, in that it proves that Buyers recognize the urgency required to make a decision on properly priced listings. Fortunately, we are seeing properties priced at the precise current market value being placed under contract quickly and closing.

To sum up, two of the four sets of data that we can use to determine the direction of St. George Island market trends are moving in the right direction, while the other two are still heading in the wrong direction. Until we see a declining supply of listings, and the false promise of sacrificially priced foreclosure sales exposed, sales of St. George Island real estate will remain slow, with property values continuing to decline. If all four trends were moving in the right direction at the same time, property values would level and trend upward. Three out of four of these trends going in the right direction should be enough to slow the decline in values, and usher in the opportunity for our market to find its new floor. We as property owners of St. George Island can’t control the number of foreclosures caused by the indiscriminate use of “stated income” and other types of sub-prime loans. That is spilt milk. On the other hand, we as property Owners on St. George Island can refrain from increasing the supply of listings that fail to reflect the latest comparable sale prices. If each and every St. George Island property owner were to take responsibility for the SGI real estate market by NOT listing unless their property reflects the most recent comparable sales, the number of listings would decline to such a small number that Buyers would feel a sense of urgency, sales would increase, and property values would again begin to trend upward.

If you would like to know the prices on the latest sales comparable to your property, and/or the precise value of your St. George Island property before it gets any lower, contact John Shelby at St. George Island Realty for a Market Analysis. Contact me at: johnshelby@sgirealty.com or 800-344-7570

John Shelby

Broker

St. George Island Realty, LLC

St. George Island Lot Sales since July 1, 2007

Still up-to-date as of August 17, 2008

SGI Gulf Beaches
Lot Address Type Peak Value Sale Price Percent decline

732 Bayshore Interior $350,000 $125,000 64.2%

212 Nedley Interior $350,000 $125,000 64.2%

315 Howell Interior $350,000 $125,000 64.2%

933 W. Pine Gulf View $433,000 $134,000 69.0%

540 Sawyer Interior $350,000 $135,000 61.4%

333 W. Pine Gulf View $433,000 $144,000 66.7%

28 Gunn St

. Commercial $295,000 $160,000 45.7%

723 Randolph Canal Front $700,000 $401,000 42.7%

Average percentage of decline in Gulf Beaches 59.5%

Plantation

1252 Sea Dune Interior $550,000 $210,000 61.8%

1644 Ivy Way 2^nd Tier $850,000 $240,000 71.7%

2227 Coquina Bay Front $1,300,000 $700,000 46.1%

1628 Hawthorne Gulf Front $2,425,000 $1,050,000 56.7%

2315 Tally Ho Cut Front $2,425,000 $1,150,000 52.5%

1724 Kumquat Gulf Front $2,425,000 $1,200,000 50.5%

2278 Sailfish Gulf Front 50 $1,900,000 $825,000 56.5%

2280 Sailfish Gulf Front 50 $1,900,000 $825,000 56.5%

Average percentage of decline in Plantation 56.5%

No lot sales in East End since July 1, 2007

Currently, there are only a hand-full of lot listings that are priced at or slightly below these recent lot sales. These properties are likely to be the sales that will represent the “bargains at the bottom”, as our real estate market continues to show signs of bottoming out. Let me know if you are interested in seeing the short list of properties that reflect the current property values.

SEA-CHANGE

March 2008

By: John Shelby

The sub-prime mortgage fiasco has transformed the way real estate was bought and sold in the 2000’s. From roughly 2001 through 2006, borrowing money for homes and land became very easy. Lenders threw out time honored mortgage underwriting practices, and encouraged appraisers to value properties at Contract prices. Money to buy homes and land was so easy to obtain that cash Buyers had no advantage over Buyers who had to borrow money.

Those days are over. Lenders have their mortgage loan underwriters acting as if every borrower is a crook, and every appraisal is an over statement of the property value. This reminds me of my days as a mortgage loan underwriter in the post Savings and Loan debacle of the 1980’s. From that time until about 2001, mortgage loan underwriting was tight, and appraisals were all very conservative. Right now the pendulum may have swung into the overly cautious range for mortgage loan underwriting, but we can expect lenders to be stingy about any loan with any risk for at least 10 years.

This will impact St. George Island property values for many years into the future. Lenders are already turning down appraisals because they feel the appraisers have over valued the subject property. Lenders believe that values are still declining rapidly on St. George Island, so they are perceiving property values to be lower than the most recent sales. Consequently, they are rejecting loans that would have been easily approved three years ago, or requiring significantly larger down payments of 30% to 40%. This obviously eliminates many potential Buyers, which could lead to further value erosion.

Property owners on St. George Island can still sell their property in this brave new world of risk averse Lenders. By working with a Realtor like myself who has more experience in tight money real estate markets than easy money real estate markets, you will get sound advice that will attract Buyers and get the sale closed. Obviously, you have to price your property to reflect the current values or no lender will loan money to a Buyer of your property, even if you do find a Buyer dumb enough to pay too much.

With the certain knowledge that Lenders will be very disciplined in their lending habits, and that Appraisers will be ultra conservative in their valuation of real property for the next ten years, Sellers are going to have to seek out Realtors who will encourage careful pricing, and provide sound advice, based on1980’s and 1990’s experience, in order to get houses and lots sold on St. George Island. With 15 years of experience as a Realtor on St. George Island, and prior experience and training in mortgage loan underwriting and property valuation through the United States Dept. of Housing and Urban Development in the late 80’s and early 90’s, you can count on me to turn your currently illiquid Real Estate asset into cash. Let me know when you are ready to get serious about selling your property on St. George Island.

Summer Fun On St. George Island

(from Newsletter of June 2004)

Memorial Day weekend kicks off a steady stream of Summer Vacationers in the many second homes and rental homes on SGI. Those of us that live here also host friends and family, transforming our quiet island into a laid back Summer Resort.

Despite the fact that the number of people on the beach increases by 10 fold, it still doesn't seem crowded. The beach in front of the rental houses and second homes almost always has plenty of room for another umbrella and beach towel. If you want to see and be seen, hit the public beach area near The Blue Parrot where burgers and local seafood are served. The Blue Parrot hosts the annual Mullet Toss on Saturday, June 12.

The bike path is busy with bicycles, walkers, and runners. The 5K Summer Sizzler run is scheduled for Saturday, June 12, 2004 will start at the corner of 1^st and

W. Pine Ave at 7:30 PM. (Registration at 5:30 PM) Bring a bag of dog or cat food as a donation and the entry fee is reduced from $20 to $18 All proceeds go to the local Humane Society. Food and Beverages are served after the run.

Speaking of going to the dogs, St. George Island is one of the most dog friendly places south of Martha's Vineyard. We ask that dogs be on a leash, and that you carry a bag and large seashell to scoop up and carry off the dog-doo. Caught without a plastic grocery bag, at least bury it deep in the sand using a seashell.

Summer also means Sea Turtles nesting on our beaches. From May through September, Sea Turtles crawl onto the beach to lay their eggs. Approximately 60 days later the baby Sea Turtles hatch at night and are naturally attracted to the water because the horizon over the Gulf is usually brighter than the sky over the land. We humans can very easily disorient the baby turtles with outdoor and indoor lights from our beach houses, attracting them toward our houses instead of the water. Once disoriented, the baby turtles rapidly dehydrate and the crabs and seagulls finish them off. Please help us save the baby turtles by keeping all of the beachfront houses nice and dark every night until November. This entails closing drapes and blinds, and turning off all but turtle friendly porch lighting at dusk. This small inconvenience will save thousands of baby sea turtles!

During some summer storms riptides can occur. Please stay out of the heavy surf! If you find yourself unable to swim back toward the beach, calmly swim parallel to the beach, until you are out of the rip current. Never swim alone, and keep throwable and wearable flotation equipment nearby.

Late summer also brings Stingrays to the shallow waters so make sure you know and employ the Sting Ray Shuffle at all times. The Sting Ray Shuffle is the dance craze that's sweeping the beach! All you have to do is walk into the surf without picking up your feet. If you should bump into a Sting Ray buried just under the sand in shallow water, you will kick his side and he will fly away from you. On the other hand if you pick up your feet and step on the Sting Ray, their natural defense is to swing their incredibly strong tail with a very big, very poisonous barb, up and into your leg. Few things hurt worse. The first aid is to place the area that's stung into water slightly hotter than you can stand. Pouring Betadine solution into the water also helps. A five-gallon bucket under the spigot in a tub is a great way to deliver this pain relieving first aid. A visit to the emergency room is also strongly suggested after the initial pain subsides.

Some years we are visited by Jelly Fish. In calm water you can usually see and avoid them, but in the surf, their tentacles break off and stick to your body in the water, forming welts on the skin. The first aid is Unseasoned Adolph's Meat Tenderizer sprinkled on the damp welts. The Papain (from Papaya) neutralizes the toxins. Do not let the victim come near a grill for at least an hour after they have been tenderized.

Independence Day (4^th of July) brings out the biggest crowd of the year. The beach looks like one long fireworks display. After the 4^th, the Island attracts families enjoying their summer vacation at one of the many beach-houses. The air is full of the aroma of burgers and steaks cooking on the grill, sandcastles are built on the beach, and the fast pace of regular life is temporarily forgotten.

If you find yourself falling in love with St. George Island, please feel free to visit our office. We equip prospective Buyers with Plat maps and very current photocopied lists (unlike printed material) of the property for sale. We take a very low-key approach to getting you started on the quest for your dream home on SGI. Plotting the current listings on the plat map and driving around the Island looking and dreaming of your life here is great fun! Who knows, it could become a reality. Let us know if we can help.

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