THE COMMUNITIES OF ST. GEORGE ISLAND
As many of you may know, St. George Island is separated into 3 main subdivisions; The Plantation, The Gulf Beaches, and the East End. The purpose of this short article and bar chart on the back is to briefly describe each of these subdivisions and to show you the difference in Gulf Front home sales between the 3 areas.
The Plantation is located on the Westernmost side of the island and is an exclusive gated community. There are roughly 250 Gulf Front properties and most are one full acre with 100 feet of Gulf frontage. Stretching almost 3 miles in length and containing over 1,000 properties, this is thought by many to be the most desirable area of St. George Island.
The Gulf Beaches are in the middle section, extending two miles from each side of the bridge; it is where most of the businesses and tourist shops are located. There are roughly 250 Gulf Front properties typically on 1/3 of an acre with 100 feet of Gulf frontage. This is the most populated section of the island and has typically outpaced the other areas in overall sales, until more recently. If you like to be around the crowd or “part of the party”, this is the area for you!
The East End Tracts are located on the Eastern side and are a bit more private because they are less densely populated, due to the preponderance of 1 acre lots. There are only about 120 Gulf Front properties here. Also adding to the privacy is the adjoining state park, which spans to the Eastern-most end of St. George Island. This is truly a great place to own a home!
The first noticeable fact above is the amount of sales in the East End. You can see they are consistently less than the other 2 areas. The primary reason for this is the lesser number of homes; thus less sales. If you noticed, there were actually 0 Gulf Front East End sales in 2006! Gulf Beaches and the Plantation undoubtedly lead the way in Gulf Front sales.
Some may think the Plantation would have the most sales, but that is not always true. In the early 2000’s, the Gulf Beaches subdivision led the way with the most Gulf Front home sales. This was the inevitable result of ultra-low interest rates and the increase in the number of speculators looking for the best value to build a rental home. In 2008 the sales changed, though, and the Plantation has since outpaced the other two areas in Gulf Front sales every year (except 2009). Why? I believe this can be attributed to the perceived better value offered by the Plantation from the onset of the real estate price collapse. Buyers felt their money was better protected in the Plantation than anywhere else on the island. This trend is continuing in 2013 and I expect it to stay throughout the year.
I hope you enjoy seeing the differences in Gulf Front sales between these three areas over the years and as always – do not hesitate to contact us if you are considering buying or selling; we have the experience, knowledge and passion to meet your needs!
In my last newsletter we looked at sold homes on St. George Island. Now I would like to turn to vacant lot activity over the last 11 years. Take a look at the bar graph above; as you would expect, lots have experienced the same effect as homes and were actually selling at a higher rate than homes in the early 2000’s. This was partly because of the boom in construction and real estate investments, but the extra low interest rates for close to three years is what really ignited this fire! Money was so cheap during this period, construction and real estate sales were exploding at an unprecedented rate. The good times did not last, though; from 2004-2005 lot sales dropped almost 54%; and then plummeted more than 83% from 2005-2006!
The pie chart above depicts the location in which the lot sales were located. Lot locations on St. George Island can generally be divided into 4 distinct areas: 1 – Gulf Front; 2 – 1st Tier Gulf (directly behind Gulf Front); 3 – Interior; 4 – Bay Front. As one would expect, most of the sales took place on the interior because that is where the majority of lots are located. The interesting statistic here is 1st Tier at only 2%. Probably the two main reasons for this are: 1. The overall number of sold 1st tier lots is lower because there is less overall area, and there are less 1st Tier lots than Gulf Front lots. 2. Price disparity was much higher between Gulf Front and 1st Tier in the early 2000’s, which caused many buyers to purchase and build 1st Tier rather than fork out the extra cash for a Gulf Front lot. This directly led to the decrease of 1st Tier lots available today.
Lot sales are in the early stages of coming back, but will take much longer than homes. New houses for sale at a price far below replacement costs – due to foreclosures – have caused a decreased construction demand; furthermore, sellers unwilling to take a hit are yet another factor driving the slow recovery in lot sales… ~ David Carlton
If you are considering buying or selling, please contact Anchor Realty. We have the knowledge, experience and passion to meet your needs.
REAL ESTATE INVESTMENTS IN COMMERCIAL PROPERTIES
HOW TO AVOID RISKS AND REAP REWARDS
by Olivier Monod, CCIM; broker of Anchor Realty of St. George Island, Inc.
The mistakes most commonly made by investors new to the commercial real estate arena are to, either “fall in love” with a piece of commercial property, or speculate on anticipated increases in property values. Both approaches are a recipe for disaster. Our small markets have attracted, over time, buyers willing to try commercial investment in our “human scale” market. They have used residential properties’ standards to evaluate commercial properties. The few basic guidelines shared below should assist in avoiding costly mistakes. For a more proactive and investor-specific approach, you should contact a REALTOR qualified to assist you in your commercial ventures. One designation is the best guarantee to find adequate and professional services; it is the Certified Commercial Investment Member (CCIM).
Back to my opinion of investment qualities in the Forgotten Coast. I will rank them as *** the best; ** medium; and * low. “No Star” is what should be avoided, unless investor-specific reasons bring you to consider that location. Commercial properties should be valued for their ability to produce a safe and consistent income stream for the owner. At the end of the day, a commercial investment is nothing more than a rate of return on investment. Sorry for being so blunt; but I believe in doing my job for my clients. If you are interested in residential property; then the approach is very different and sentiments play a big role…But for commercial, it’s all about profit!
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