5 beachfront resort areas with hot real estate deals
The following is a guest post by Lou Carlozo. The opinions expressed are his own.
All statistics show a still-depressed real estate market. The Standard & Poor’s/Case-Shiller Home Price Index shows housing costs down 4.2 percent in the first quarter of 2011 — and at their lowest since mid-2002. And the Federal Reserve isn’t raising interest rates anytime soon; on Tuesday it voted unanimously to leave its benchmark rate between zero and 0.25 percent, where it’s been parked since December 2008.
Translation: Next time you hit the beach, scope those “For Sale” signs.
“In our lifetime, we won’t see these prices again,” says Jeffrey Rogers, President and COO of Integra Realty Resources, a New York-based independent commercial real estate valuation and consulting firm. “Despite the economic downturn, we still have positive GDP growth and interest rates are at historical lows, too. This is just an excellent time to buy.”
Rogers and a host of real estate experts weighed in on the best resort towns to buy in, based on factors from large percentage price drops to community infrastructure, and prospects for long-term value gains. Overbuilding also indicates a potential bargain, though prospective buyers should temper enthusiasm with caution. “If there are an abundance of foreclosures, avoid the area until you can see some signs of recovery,” says Dolores Conway, a professor of real estate economics and statistics at the University of Rochester. ”You have to wait for the bottom; it’s like catching a falling knife.”
What’s more, ideal conditions don’t mean the toniest resorts are giving property away. You’ll still pay close-to-peak prices in eternal hot spots such as Martha’s Vineyard, for example.
That said, great buys for those with the means aren’t far away. “Vacation communities are still seeing the results of a depressed real estate market and we don’t expect a rebound in the next two quarters,” says Edward Mermelstein, co-founder of international real estate law firm Rheem Bell & Mermelstein LLP.
Five top spots named by real estate watchers include:
1) Miami Beach, Florida:
Among all waterfront states, Florida got hardest hit by the real estate downturn. “In the Miami Beach area, we saw the market drop as much as 40 or 50 percent,” Mermelstein says. Even with a slight rebound, bargains are still out there.
“Definitely with some of the triple-A properties on the ocean, prices have decreased significantly from 2008 — about 20 to 25 percent,” says Michael Sadov, sales director for Canyon Ranch condominium development in Miami Beach. “This is definitely the best time to buy real estate in South Florida, and you’re starting to see an uptick in the market.” At Canyon Ranch, which includes an on-site spa and health and wellness facilities, prices range from $400,000 to $3.3 million. More than 90 condo units have sold since mid-October.
2) Ft. Myers, Florida:
On Florida’s gulf coast about two hours south of Tampa, Ft. Myers has been especially socked by the downturn. “It’s 55 percent off the peak,” says Rogers. “It’s going to be years before they recover; nobody knows exactly when. Ft. Myers has had a tough time stabilizing its prices, and people going into that market are looking for bargains.” Still Rogers bets on this Lee County seat of 65,000, once a winter getaway for Henry Ford and Thomas Edison. “Ft. Myers will recover, it’s going to be a matter of time.” Median prices are around $115,000, according to Rogers.
3) West Palm Beach, Florida:
With a population just shy of 100,000, West Palm Beach “is a great community, a great place to buy and still hurting,” Rogers says. “Prices are about 39 percent off the peak, so that’s pretty substantial.” The median price of a home in Palm Beach County, where West Palm Beach serves as the county seat, is $214,000, according to Florida Realtors. With prices that low (down eight percent from last year) it’s no wonder home sales in May 2011 shot up 26 percent over the same time last year, while sales statewide remained flat. Right on the beach, expect to see more seven-figure price tags, but also quite a few deals.
4) San Diego, California:
This haven for retired military is a major U.S. city and won’t go away anytime soon, though its prices are more affordable than in years past. “It’s 37 percent off its peak.” Rogers says. “It’s beautiful and one of the best convention towns in the United States. And the weather is just phenomenal.” Adds Conway: “San Diego had a fair amount of condominium building right on the ocean, and there was some depressed prices, but they do seem to be recovering.” Median asking price for home: $375,000.
5) Lewes, Rehoboth Beach and Dewey Beach, Delaware:
While corporations love Delaware for its pro-business climate, the state’s oceanfront communities such as Lewes, Rehoboth Beach and Dewey Beach offer some great opportunities for those with means. In those towns, prices are 30 to 40 percent off peak for homes and lots, says Jeff Dawson, a developer and principal of the Lewes Building Company. The result: a 3000-3500 sq. ft. home on a half-acre now sells for under $700,000. “In 2006, it would’ve sold for $1 million to $1.2 million at least,”Dawson says. “Builders are taking lower margins these days. We can build a lot-home package for $650,000 and the value will instantly be about $750,000.”