Sunday, February 15, 2009 By KATHY JUMPER Real Estate Editor
Beachfront units under $200 per square foot at San Carlos had everyone at last weekend's auction raising a hand to bid, said Chuck Norwood of REMAX of Gulf Shores. "Everything sells at a price," he said, "and when it's a deal, they fight over it."
The auction took 62 units off the market and netted more than $20 million for the Los Angeles-based owners, Canyon Capital.
The two- and three-bedroom units sold for an average $195 to $225 per square foot, which included a 10 percent buyer's premium, according to Norwood. The prices averaged $240,000 to the high $400s for the penthouses.
What a difference a few months makes in price. Last May, 44 new units at Crystal Tower, across the street from the beach in Gulf Shores, sold for $13 million at auction - an average $250 per square foot. Prices ranged from $275,000 to $350,000 on units in a complex that presold in 2004 in the high $400,000s to high $600,000s.
Financially strapped developers of the 20-story San Carlos sold 87 units in June 2007 to out-of-state investors for $40 million, or about $320 per square foot, according to financial brokers.
Does the recent San Carlos sale indicate prices have bottomed at the Gulf? Ask your crystal ball, said local Realtors, who wouldn't venture a yes or no answer.
"Folks are talking like that and acting like we're at the bottom," said appraiser Claude Clark in Magnolia Springs. "You can't build them" for $200 per square foot, he said.
The auction helped reduce inventory, and the auction crowd packed restaurants and stores in what is typically a quiet time of year at the beach, agents said.
There were 1,971 condo units on the market for sale at the end of January, according to the Baldwin County Association of Realtors.
It would take about 23 months to sell the residential and condo unit inventory in Baldwin County just prior to Dec. 25, 2008, according to a study by the Center for Real Estate Studies at the University of South Alabama. Take away the condos and it would take about 14 months, said Don Epley, director of the real estate center.
"A healthy market needs to be down around five to seven months," he said.
The number of bargain hunters at the San Carlos auction - about 1,400 at the event - shows that people still want to buy on the Alabama coast and are looking for deals, according to Norwood.
The units sold at less than market value, he said. San Carlos owners had turned down offers to buy units at $270 per square foot, but on deals for one or two units, not 60-plus, Norwood said.
"When you see that much interest and actual purchases, that's usually a sign things are turning," said Bruce Pfeiffer of Pickett Real Estate, which has offices on Dauphin Island and Fowl River.
Don Bekurs of Prudential Cooper & Co. in Gulf Shores agreed that the latest auction prices should help establish some kind of a baseline for Realtors and appraisers. Bekurs had clients at the auction, but they didn't buy in hopes the prices will drop even more, he said.
"You don't know that it's hit bottom until it starts going up," he said.
A credit crunch and the slumping economy slowed the market to a trickle in late September, but agents say traffic - at least people looking at units - has picked up in the last few weeks.
"It's not all doom and gloom," said Tinsley Myrick of REMAX of Orange Beach. She and her husband, Scott Myrick, had 32 sales at the Gulf last year at an average of $376,000 per transaction, including some foreclosures, she said. Buyers were end-users from all over the country, she said.
A Tuscaloosa buyer searched for a year before buying a unit for $212,000 that fit his five-year plan, Tinsley Myrick said. The unit was built in 2003 and sold for $480,000 in the peak market in 2005. "He figures in five years he can get $400,000," she said.
Buyers at the Gulf today are not looking to re-sell units for a fast dollar, Norwood said.
"People are buying to enjoy it and use it, and that's what our market was built on. A couple of years ago it got sort of crazy."
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