What is in Store for the 2015 Island Real Estate Market? By Dale Rankin As we enter 2015 what is in store for the real estate market on The Island? We spoke to many real estate professionals this week to find out, and they agree on two key points. When prospective buyers around the world Google “Inexpensive Coastal Property in the United States” Padre Island” comes up at the top of the list. And second, right now the market is holding its breath awaiting the opening of the Schlitterbahn water park. “As far as homes on the coast are concerned, we are still a bargain,” said Cheri Sperling, realtor at Coastline Properties since 1995. “But The Island is going to change a lot in the next four to five years.” Sperling and Terry Cox, at Coldwell Bankers on The Island, both agree that the announcement of the new Schlitterbahn water park on The Island two years ago was a boost to prices of Island real estate. “Two years ago we saw prices start to go up,” Sperling said. “But they are still not back to where they were at the peak of the market in 2006 and 2007.” “But prices now are allowing some people who paid too much in 2006 and 2007 to get their money out,” said Island realtor Guy Davis. “But a lot of people are still reluctant to list their houses right now until they see what the opening of Schlitterbahn may do to the market.” The first to feel the impact of the Schlitterbahn announcement were condo prices as buyers raced to purchase overnight stay property in anticipation of the park’s opening. But reality soon put a damper on the expectations by those buyers. “One of the biggest misconceptions is that we (North Padre) are similar to Port Aransas with regards to nightly rentals,” Sperling said. “On North Padre Island the majority of property ownership association rules do not allow you to lease for less than thirty days.” She said as the post-Schlitterbahn-announcement market matured the demand for condos pinpointed the area directly across Commodores, within walking distance of the park. What is not known is what the demand for off-site overnight stay accommodations will be once the hotels inside the footprint of the waterpark are finished. According to current projections, when construction there is completed the number of overnight-stay accommodations will likely push the number of similar rooms near the current total of about 2400 in Port Aransas, leaving the demand for off-site stays unknown. “There are going to be some people who don’t want to pay the higher prices of hotels directly around the waterpark,” Cox said. “They won’t mind walking or driving to get to the park if they can save some money.” But what both Cox and Sperling agree on is that recent rumor of problems between the investors at Schlitterbahn (which we addressed in last week’s issue) have the real estate community on The Island holding its breath. “Prices are flat right now,” Sperling. “Owners are waiting to list their property until they see what is going to happen at Schlitterbahn.” “The rumors have definitely hurt,” Cox said. “But once the park opens I think you will see a lot of activity.” Davis says one of the immediate effects of the new development on The Island has been the emergence of demand for residential – both overnight-stay and long term rental – in the area near the seawall. He points to brisk business for condos, both old and new, in the area around Windward and Leeward drives. “What new construction in that area is telling us is that there will be a demand for overnight stay (accommodations) there,” Davis said. “Just like there will be some visitors who want to stay near the park and drive to the beach, there will also be visitors who want to stay near the beach and drive to the park.” Waterfront property varies greatly according to how much actual water frontage is has, how far it is from the main canals. “There are some $125,000 waterfront lots but some of them are hard to sell because the houses around them are fairly old,” Cox said. “Someone who pays that much for a lot is apt to be picky about the houses around them.” This phenomenon first surfaced when Commodores Point was built several years ago and 42 lots there were sold in 72 hours. The reason, according to realtors, is that the rules for the homeowners were strict and guaranteed that only homes of like value would be built nearby. “People who pay $600,000 and up for a house tend to want to stick together,” said Davis. “In that price range people want to protect their investment.” The realtors we spoke to agreed there are some intangibles that could put downward pressure on real estate prices, both immediately and over the next decade as construction between the Michael J. Ellis Seawall and the Schlitterbahn site matures and those variable all come from the governmental side; quickly rising property tax valuations, quickly rising property tax rates (just under 20% tax hikes from both the City of Corpus Christi and Nueces County Commissioners Court in just the past two years), and Windstorm Insurance rates which stand to take a large jump if the Texas Legislature fails to pass new rules in the session which begins in Austin in January. Property tax rates per $100 of value in Port Aransas are slightly more than 60% of the rates paid by property owners on North Padre. “Higher City and County taxes combined with higher insurance rates are getting to be a real problem.” Davis said. “Those are things we can control and need to pay attention to.” But overall Island realtors we spoke too are optimistic about the market over the next several years, in spite of projected downturns in production (and revenue) from the Eagle Ford Shale play in the next year. “Eagle Ford is just part of what is driving the market,” Davis said. “Our buyers come primarily from the Dallas, Austin, San Antonio corridor and each one of those areas is growing. If the Eagle Ford drops off we will feel it, but it won’t be a huge impact.” The other thing they all agree on is that prices for vacant lots on The Island will continue to rise. “As more houses are being built,” Cox said, “the inventory of vacant lots drops and prices on the remaining lots is going up. And we are running out of waterfront property.” They also agree that 2015 promises to be very active and in many ways, unprecedented year for real estate on The Island.
Posted on: Sun, 04 Jan 2015 13:15:04 +0000
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