The following is an interesting article titled Doom, Gloom and Reality. The author is discussing St. George Island, but that market is very similar to ours. I lived through the cycles Olivier mentions when I owned a home on Cape San Blas. Time will tell if his predictions are correct.
By Olivier Monod, CCIM
Special to Business Matters
All of us have heard that the real estate market at the coast is depressed - and it is. All of us have heard stories of people making millions of dollars, by accident, after buying a beachfront lot in 1991 for $100,000 - a lot now worth $2.2 million - and these stories are true!
Wouldn't we all be wealthy if we had known long ago what would happen to the Forgotten Coast? We all want a sneak preview of the future, yet it seems impossible to unveil.
Now, returning to the main topic of real estate: Was it really hard to forecast, 15 years ago, that prices would grow by a factor of 22 for a beachfront lot in the Plantation of St. George Island from $100,000 to $2,200,000?
Actually, not. In 1991, wealthy buyers already were paying $2 million plus for beachfront lots in trendier Florida areas. In 1991, demographers could have told you about the forthcoming retirement of baby-boomers. Even then, all of us already knew that the Sun Belt in general, and Florida in particular, was the place to retire. It was a time when the general public started to appreciate nature vs. overdevelopment. We knew all of the elements of the puzzle, but most of us had failed to put them together to recognize the obvious.
Is reading into the future so difficult? Not if you take the time to make a list of determining factors and draw logical conclusions.
Real estate, like most markets, goes through cycles. In my experience, since 1988, we went through three depressed phases. They lasted between six months and two years each. During these times, the prophets of doom-and-gloom were asserting that prices had maxed out and that nothing good would ever come again from the coast. I remember in 1997 when beachfront lots were trading at $350,000, some people thought it was high time to sell before the market collapsed. These lots do now appraise for $2.2 million!
Let's take a broader view to the Florida coastal real estate market. Some buyers are paying between $100,000 and $125,000 per front beach foot in some other areas. This would translate to a Plantation beachfront lot selling for $10 to $12.5 million. Lunacy? No. Reality? Probably yes, in 5 to 8 years.
If our market aspires one day to command such prices, our beaches and region must offer major and unique benefits. What are they?
Here's my list:
Small villages vs. suburbia
Nature vs. man-made
Low density vs. packed housing
Single family homes vs. high rise condos
In short, space is the ultimate luxury. When money is not the object, buyers seek their own private island or by default, very large lots for privacy. The Forgotten Coast offers this commodity. It's just a matter of time before the $12 million buyers discover us. -
Now, let's get back to our future. Of course, today, the coastal market is slow. Therefore, now is the time to buy because you can pick and choose the best values and the best properties for a fraction of the prices they will command in a few years. A beachfront lot worth $12 million seems absurd today in the same way a beachfront lot worth $2 million seemed insane when they were selling for $100,000.
It is a human trait to look elsewhere for the treasures buried in our own back yard. When (not if) the market picks back up, possibly as early as next month and most probably before the end of next year is over, expect beachfront lots to break the $3 million, $4 million and $5 million benchmarks-quickly... and the $10 million threshold is likely to be reached as the new decade begins.
By Olivier Monod, CCIM
Special to Business Matters
All of us have heard that the real estate market at the coast is depressed - and it is. All of us have heard stories of people making millions of dollars, by accident, after buying a beachfront lot in 1991 for $100,000 - a lot now worth $2.2 million - and these stories are true!
Wouldn't we all be wealthy if we had known long ago what would happen to the Forgotten Coast? We all want a sneak preview of the future, yet it seems impossible to unveil.
Now, returning to the main topic of real estate: Was it really hard to forecast, 15 years ago, that prices would grow by a factor of 22 for a beachfront lot in the Plantation of St. George Island from $100,000 to $2,200,000?
Actually, not. In 1991, wealthy buyers already were paying $2 million plus for beachfront lots in trendier Florida areas. In 1991, demographers could have told you about the forthcoming retirement of baby-boomers. Even then, all of us already knew that the Sun Belt in general, and Florida in particular, was the place to retire. It was a time when the general public started to appreciate nature vs. overdevelopment. We knew all of the elements of the puzzle, but most of us had failed to put them together to recognize the obvious.
Is reading into the future so difficult? Not if you take the time to make a list of determining factors and draw logical conclusions.
Real estate, like most markets, goes through cycles. In my experience, since 1988, we went through three depressed phases. They lasted between six months and two years each. During these times, the prophets of doom-and-gloom were asserting that prices had maxed out and that nothing good would ever come again from the coast. I remember in 1997 when beachfront lots were trading at $350,000, some people thought it was high time to sell before the market collapsed. These lots do now appraise for $2.2 million!
Let's take a broader view to the Florida coastal real estate market. Some buyers are paying between $100,000 and $125,000 per front beach foot in some other areas. This would translate to a Plantation beachfront lot selling for $10 to $12.5 million. Lunacy? No. Reality? Probably yes, in 5 to 8 years.
If our market aspires one day to command such prices, our beaches and region must offer major and unique benefits. What are they?
Here's my list:
Small villages vs. suburbia
Nature vs. man-made
Low density vs. packed housing
Single family homes vs. high rise condos
In short, space is the ultimate luxury. When money is not the object, buyers seek their own private island or by default, very large lots for privacy. The Forgotten Coast offers this commodity. It's just a matter of time before the $12 million buyers discover us. -
Now, let's get back to our future. Of course, today, the coastal market is slow. Therefore, now is the time to buy because you can pick and choose the best values and the best properties for a fraction of the prices they will command in a few years. A beachfront lot worth $12 million seems absurd today in the same way a beachfront lot worth $2 million seemed insane when they were selling for $100,000.
It is a human trait to look elsewhere for the treasures buried in our own back yard. When (not if) the market picks back up, possibly as early as next month and most probably before the end of next year is over, expect beachfront lots to break the $3 million, $4 million and $5 million benchmarks-quickly... and the $10 million threshold is likely to be reached as the new decade begins.
. Ah yes, another happy thought! 
