Anchor’s The Way 1 – May, 2013
A Glance At The Past…
It is important to understand not only where the market is today, but also where the market has come from. Our whole country has endured rather extenuating economic conditions over the past decade and many people were caught in the middle of substantial investments, which they thought were a gold mine. I pray that was not you…
The chart you see above portrays two unique sets of numbers. The blue represents the total amount of sold homes on SGI while the green shows the correlating “gulf front” sales. It is important to note, these charts reflect all home sales on SGI (including condos/TH), but they do not reflect vacant land.
Let’s look, for a moment, at the above chart. As you would expect, sales hovered around a normal volume in the very early 00’s; ‘04 was the height of the real-estate boom and spiked to almost double the sales; and then ’05-’06 brought the infamous crash. ‘06, ’07, ’08, and ’09 were dismal to say the least. Sales on SGI went from almost 200/year to under 40! Because the Gulf Coast largely thrives on tourism, vacation rentals and second home owners, this recession had a deep impact on sales and local businesses. It was as if no one had any resources to buy, rent or vacation for a five year period.
Adding to the Gulf Coast’s crisis was the ‘10 explosion of BP’s DeepWater Horizon oil platform. This one accident arguably extended the Gulf Coast’s recession by an extra 1-2 years. If anyone had been planning a trip back to the gulf’s beautiful white sand and aqua water, it was now cancelled. Rumors floated wild and the real estate market sat stagnant in disarray. Most doubted whether the market would ever come back…
A Glance At The Past Continued…
Now look at the chart above. We see an interesting effect here, in that, while home sales on the previous chart dropped during the crash, the average price per sale skyrocketed. This was most likely caused by two important factors:
- From mid 2005 to around late 2010, SGI saw so little sales it made it extremely
difficult to value property. It still is this way in certain areas. Brokers conducting BPOs and appraisers calculating the value of residential homes chiefly rely on one thing to get their values and that is comparable sales. The shortage of sales meant no comparables and left property values all over the map – no-one had a clear understanding of the market.
- During this crash, the majority of buyers were “top of the line”. This included some high end investors who still thought they could flip a home for massive profit and some high end buyers who were just buying to have a vacation home. By this time, most of the smaller-end buyers were forced out. This type of market is directly proportional to the average price per sale and is why (along with point 1) we see the average price increase.
As you can see on the first chart, 2012 brought a return to pre-2004 sales levels and 2013 is on track to beat it! We already have more sales (YTD) than we did in all of ’06,’07 or ’08! Although gulf front sales have not quite caught up to their past levels, we believe they will and we believe the future is bright on the Forgotten Coast!
If you are considering buying or selling on St. George Island, please contact Anchor Realty. We have the knowledge, passion and experience to meet your needs.
~ David Carlton