Is South Walton As A Luxury Locale Good Or Bad?
July 28, 2016 by Jason Polancich
This past week I drove my daughter to the airport so she could visit a friend out of state. On the short drive I passed a blazing red Lamborghini and a sparkling silver Ferrari California on highway 98. Amazingly, the entire drive home to Santa Rosa Beach I was behind an impressive McLaren 570S. A McLaren. On highway 98.
For those of you who aren’t car people, suffice to say that’s pretty tough to do in Beverly Hills on an average day.
It begs the question, in my mind at least, what’s going on in our beloved SoWal that would produce over $1M worth of automobiles on a random day out on a sweltering highway 98 in Northwest Florida?
As a partner in a real estate business here, and having spent my previous career analyzing intelligence for the US Intelligence Community, I took to digging through home market data for an answer to the question.
And I didn’t have to dig very far - or do much analysis at all. As of today, the number of homes in the Walton County real estate MLS available for sale at over $1M comes in at 40%. That’s a “4” and a “0,” folks.
That’s a staggering number for a place that, for most of my 47 years of life, was a slowly developing community largely unknown outside SEC football country.
I grew up spending all my summers here back when Scenic 30A was still quaint. There was nothing around short of some cottages at Seagrove where we always stayed, and "way down the coast" at Grayton Beach.
But that’s all changing and the area has come a long way.
For certain, it’s a long way from where prices were just 10 or 20 years ago. My father sold a good piece of land here right beside the emerald green waters of the Gulf back in the 1980s for less than $20,000. Today, there are dozens of homes here right along 30A where I played as a child with nary another person in sight on the market now for 5, 10 or even 15 million dollars.
So what’s driving all this luxury?
For starters, there are many possible reasons for this “luxification” of our stretch of Emerald Coast. Much like gentrification, where poorer urban areas are renewed by an often inexplicable influx of wealthier residents, the causes of this luxification of Walton County, as I’m calling it, can’t exactly be pinned down to one thing.
Most often, this kind of thing is caused by a supply and demand situation where prices and values drop so low in a given area, investors and buyers flow in to grab property at low cost. This buying trend itself then eventually causes prices to rise as an attractive area is gobbled up. It also brings along with it a higher standard (and cost) of living for those residing in the area.
In the case Walton County, perhaps the BP oil spill back in 2010 actually kick-started this process for what was already a uniquely beautiful and mostly undiscovered part of our country. Deepwater Horizon coincided with a deep growth recession for the whole country.
After both? A healthy influx of investment via our area’s prized real estate as prices bottom out - the rise.
Certainly, if you look back at data for the last 5 years, the lines on typical real estate charts start in the lower left and rise to the top right in almost every category, from closed sales to average price.
Median Home Price Index - Walton County, Last 5 Years
But these are not the only explanations or contributing factors. Along the way through this luxification of South Walton, what is typically a slow and gradual change in the case of gentrification has spiked here on the demand side of things. But why?
Well, it’s likely due in part to one or more of a variety of popular culture trends that has spurred people to move or buy here. My favorite example is one I like to call the “Nashville Effect.”
Country music popularity has exploded in recent years and with it lots of press and media focus on the personalities that make this genre of music great. For many of them, they grew up coming to Destin and Panama City (and beautiful South Walton in between) and are now coming back to the area as wealthy consumers.
The likes of Zac Brown, Jason Aldean, Faith Hill, Taylor Swift and many more have all bought here. Just a few weeks ago, Luke Bryan even opened a cigar bar in Santa Rosa Beach. It’s probably also not a coincidence either that the tag on that McLaren I followed down 98 was from Nashville.
More than just increased media attention on the area, trendiness begets trendiness in a sort of luxury “keeping up with the Joneses.” One person buys, then everyone else wonders what they’ve found and buys too just to be sure they’re trend-compliant.
Recently, I’ve personally seen the likes of Eddie George, Reese Witherspoon, Jerry Jones and dozens of NFL, NBA and other celebrity types - and of course their entourages of friends and handlers - around Seaside and on the beaches. In fact, it’s so common of late, the agents at our real estate firm regularly hear things like “what’s available for sale by _______ (insert celebrity name here)? I hear he lives near Old Florida Fish House?
A bigger part of the reason for all this may just be simple economics. Back to speaking of that recession we had that peaked 4-5 years ago, economic downturns of magnitude tend to actually make the richest folks richer. Over the last five years, many of our nation’s wealthiest have been sitting on huge piles of cash they’ve been wary to invest. But, as we all know, if you don’t eventually put your money to work for you, you don’t make money.
What’s one of the safest ways to invest? Prime real estate, of course. And our bit of paradise in South Walton is full of it. As a result, wealthy people from the Midwest and Northeast have certainly noticed. So what effect is this having on our beloved South Walton?
Certainly, you most notice the scenic difference along 30A. From otherworldly Alys Beach to enormous modern homes popping up all along the coastline, luxury homes are everywhere. Several new planned communities that emphasize luxury living are in progress.
Big, luxury hotels are going up in several spots throughout the county. We’ve now got bona fide luxury spas and resorts in places like Rosemary Beach. We’ve got “real” chefs flooding in to existing and new restaurants all throughout the county. Charities are flourishing and existing schools are benefiting (with new private schools popping up too). Even on the sleepy Choctawhatchee Bay, multi-million dollar homes are being completed and new, luxury subdivisions breaking ground.
But, as is always the case, these positive impacts may have a downside.
Across South Walton, investors and development groups are swarming over any available land and old houses. Seasonal rental prices are way up. There are no long-term rentals available at any cost. That means the workforce that supports all these cigar bars and pet salons and such can’t find places to live.
Speaking of labor, there are a lot of open blue collar jobs. Cheaper, often illegal labor is flooding into the county. And traffic? Well, don’t get me started on that. Even if it is McLarens and Ferraris, I left the DC area to move back to my home in the South for a reason and let’s just say some days I actually feel PTSD here (Post Traffic Stress Disorder).
However you feel about it, the luxification of Walton County has begun. As long as we have turquoise waters, sugar sand beaches and our invigorating weather, I don’t expect it to stop anytime soon.