Conditions are making Florida ripe for another Land Rush.
Demand for waterfront property at or near the beach is changing rapidly. Prior to the increase in flood insurance premiums, buyers were looking for smaller, relatively inexpensive "beach cottages" or "shacks" on the water that they could gradually fix up, eventually harvesting the equity of those improvements. As the market recovered, prices for those so-called shacks averaged above $500,000 on the Intracoastal and above $300,000 not on the water, but within walking distance to the beach. Those days are over. The new non-subsidized rates for flood insurance are so high that they throw off income/expense ratios for buyers getting mortgages in those price ranges. When the flood insurance controversy began to rage in Pinellas county, the market seemed to hold its breath. Buyers vote with their feet and as the average number of days on the market for this type of property climbed, it was clear that buyers were voting against paying very high prices for smaller, out-of-date waterfront houses while also paying very high prices for flood insurance.
Today, buyers of waterfront homes near the beach are willing to pay more for a property if it means they will pay less for flood insurance. They also want what all buyers want:
- Great rooms -- open floor plans where everyone can do their own thing but still be together
- Master suites with a spa-like feeling & huge walk-in showers
- Space for outdoor living
- Energy efficiency
- Storage for household goods and "toys"
- Plenty of parking for extended family and guests
- No wasted space (hallways, formal living rooms)
- Granite countertops, stainless steel appliances, hip-height bathroom vanities
We all follow the path of least resistance when we go shopping. What follows are the three paths we believe that buyers will choose when purchasing a waterfront home in the future.
1. Buy An Existing FEMA-Compliant Property
For the mid-Tampa Bay Beaches, this means newer houses with no living space on the ground floor . Any single family home built in a flood zone after 1974 should match that description, but even houses built as recently as 1999 will be considered outdated by today's buyer. Buyers will pay more for single family waterfront homes built in the past 10 years because they are both FEMA-compliant and more likely to have all the features listed above. As of November 2013, there are only nine single family homes matching that description for sale in zip code 33708, about 15% of the total at or near the beach. With this low number, chances of a buyer finding exactly what he wants in move-in ready condition are slim.
2. Buy Vacant Land On The Water
Buy a vacant waterfront lot and build a FEMA-compliant house with everything on the above wish list. A good rule of thumb is that a parcel of land will generally support the value of a new build so long as the structure's value is at least two times the value of the land. There are currently eight such waterfront lots available for sale in zip code 33708, or 10% of the total at or near the beach. Again, not a huge inventory &construction takes time, but worth it in the long run to get what you want.
3. Buy a Tear-Down
Find a waterfront property with at least a 9,000 square foot lot that has a small, slab-on-grade house on it. (You're looking for a bad house on good water.) Then tear the house down and build what you want. There are currently seven such waterfront properties available for sale in zip code 33708, about 5% of the total at or near the beach. Because of the cost to remove the existing structure plus the construction time, this is the least likely path buyers will choose.
We have described the three paths that we believe buyers of waterfront property with low flood insurance rates will take and listed them in the order in which we believe buyers will consider them. These are limited commodities, which means their prices will rise. By the time everyone else figures this out, the best properties may be financially out of reach for most buyers. These conditions are making Florida ripe for another big land rush. So even if you don't build now or even want to move in now...Buy Now!!
- Bill and Jennie Blackburn
- Blackburn Investors Realty
- Redington Shores, Florida