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St. George Island Realty News Thoughts on the St. George Island Real Estate Market April 12, 2008 By: John Shelby, Broker, St. George Island Realty
The St. George Island real estate market may have been one of the most over-heated markets anywhere in the Country in 2004. It was fueled by the sub-prime mortgages and “Liar loans” so prevalent back then. Consequently, we were one of the first markets to see our bubble burst in the second quarter of 2005. The rest of the Country felt the bubble burst a year later in 2006. Now the national news media is using national market statistics to measure the extent of the crash, and to predict its progress. The problem is that real estate markets are local, so the national news tells you nothing about specific markets, especially, second-home, resort destination, markets like St. George Island. The national news focuses on primary homes in suburban, any-town USA. We all hear predictions that the “housing market” (referring to this imaginary national housing market) won’t begin to recover for another year. The first step in the recovery of a local housing market is to see the decline in property values stop. Most people refer to this as seeing the local real estate market “bottom out”.
The three signs one looks for to see if a localized real estate market has started bottoming out are: 1. Increased Sales; 2. Decreased Inventory (fewer listings); 3. Properties priced at the values of the new bottom selling quickly.
During the first quarter of 2008, St. George Island saw a 24.9% increase in sales over the average number of sales for the last 9 quarters. The highest number of listings in 2006 was over 575. Today that number is down to 326, and declining steadily. Many of the sales recorded in the first quarter of this year were recent listings that were priced to reflect today's values. I can't guarantee that St. George has hit bottom, but the market indicators are suggesting that we are close enough to the bottom that further significant market declines aren't very likely. Timing a real estate market is impossible to do. One only really knows when a market has hit bottom after it has hit bottom and the values start to go up. Buying into a market at the absolute bottom is really a matter of luck, not skill. I believe we are so close to the bottom, that Buyers are now taking a greater risk of the market turning suddenly in the Seller's favor than they are of Buying and seeing the values decline a lot more.
Recent lot sales suggest that property values on St. George Island have declined by more than 55%. Surprisingly, these sales were not fueled by foreclosure sales. Most of the Sellers had enough equity in the property that they could sell and still be happy with significant returns on their original investment. Take a look at the lot sales on St. George Island since July 1, 2007, and the comparison of the value decline to the highest sales of comparable properties:
St. George Island Lot Sales since July 1, 2007 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 2nd 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 1st and W. Pine Aveat 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. 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.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. 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. 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 (4th of July) brings out the biggest crowd of the year. The beach looks like one long fireworks display. After the 4th, 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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