Deals, discounts fuel resort market

Realtors say both sales and rentals at Gulf are brisk at bargain prices Sunday, August 16, 2009 By KATHY JUMPER Real Estate Editor

Realtor Steve Neitzel has already sold five condominium units in August and predicts his best months will be this fall.

"We've cut half of our inventory because of the great deals," said Neitzel of Brett Robinson Real Estate in Gulf Shores.

Prices in the current market can be summed up as "what someone is willing to pay," said Neitzel, who sold a large Gulf-front unit in Phoenix 9 in Orange Beach for $700,000, a half-million less than the original asking price.

Summer brought increased sales and rentals at the Gulf, but with sales prices 35 percent to 45 percent less than listing prices of two to three years ago. Most condos have sold from $260 per square foot up to $350 per square foot, Neitzel said.

The rentals were as good as last summer, and agencies said they are gearing up for what's expected to be a busy Labor Day weekend. But like the drop in condo prices, the rental agencies are offering discounts.

"There were more visitors this summer, but folks were taking shorter vacations, and the average daily rate was down," said Sarah Kuzma of Meyer Real Estate in Gulf Shores, which manages rentals for 1,600 condo units and 300 houses at the Gulf.

"It takes more effort," Kuzma said. "We know that once they come and visit, they are hooked."

She said Meyer is offering Labor Day specials - rent a condo unit and stay the third night free or a rent a beach house and get the fourth night free - and for the Shrimp Festival weekend in October will offer to provide a free week's stay for every week booked.

The national reports say folks are willing to travel, but they want a bargain, Kuzma said.

The discounting started last year and has escalated, with reduced rates offered even in the peak rental month of July, according to Bob Stuart, owner of Sugar Sands Realty & Management in Gulf Shores. In the spring, people called to cancel summer reservations, half because one or both spouses lost a job, he said.

Renters bring potential buyers, agents said. For example, many of the buyers that have stayed in the past at one of the 2,057 units managed by Brett Robinson are now buying units due to affordable pricing, according to Neitzel.

Most of the agents at the Gulf are selling properties under $400,000, and many are in the $200,000 range, according to C.B. Brierty of Realty Executives in Gulf Shores. "We've had some good sales this past year. We're not making money like we did in the heyday, but we're working with people who are buyers."

High insurance costs continue to hinder sales, Brierty said. And buyers today can't expect a cash flow from renting their units. "I was working with a couple who were going to pay 50 percent down, and there still was not a cash flow with all the fees."

Most of the sales at Sugar Sands Realty have been at $400,000 or above, according to Stuart.

"We've had a lot of activity from Louisiana," he said. "Where they have traditionally purchased in Destin and Panama City, we're seeing more and more of those folks buy here. Our pricing is better and the property taxes in Florida are a lot higher."

Not everyone is discounting. Developer Larry Wireman has finished his second gulf-front building at Turquoise Place on Alabama 182 in Orange Beach, and plans to start closing the units soon. More than 120 units presold at prices starting around $1.25 million in the 227-unit building.

All but 38 of the 173 units in the first Turquoise tower have sold, he said. The units average 2,300 square feet and start at $1 million and go up.

"We sold several units at full price, some for over $2 million after the first of this year," he added. "People try to compare us to units that are selling for $200 per square foot. We can't sell the units for that."

/cut/3/cBILL STARLING/ Staff PhotographerBeach lovers enjoy the summer sun and surf on the condominium-lined beach at Gulf Shores. Condo sales in Gulf Shores and Orange Beach were up in the summer, and rentals were as good if not better than last year, according to Realtors, who hope the upbeat market continues into the fall.