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South Padre Sales Up 27 Percent
1334 Views :: 14 Comments :: :: South Padre Island, Economy
The rest of the country is talking about the double dip for real estate sales, while south padre sales are up 27%.
With real estate it's Location Location Location.

Take a look at the MLS sales chart just published by the Texas Real Estate center:


 Sales Change from
Last Year		 Median
Price		 Change from
Last Year		 Months'
Inventory
Amarillo 226 down 23% $126,200 up 3% 7.1
Austin 1,851 down 17% $193,100 up 4% 6.9
Corpus
Christi		 285 down 19% $133,600 down 3% not available
Dallas 3,809 down 20% $161,100 up 1% 7.2
El Paso 423 down 19% $133,300 up 1% 7.1
Fort Worth 763 down 16% $101,300 down 13% 7.3
Houston 5,099 down 14% $148,600 down 2% 8
Lubbock 233 down 27% $106,400 down 7% 8.1
Odessa 113 down 1% $136,300 up 16% 6.1
San Angelo 90 down 26% $115,400 down 3% 7.1
San Antonio 1,481 down 23% $147,900 up 4% 8.5
South Padre
Island		 33 up 27% $182,000 down 19% 39.7
Temple-
Belton		 132 down 31% $115,500 no change 9.3
Tyler 253 down 20% $135,100 up 1% 14.5
Wichita
Falls		 111 down 34% $113,600 up 7% 8.7
Texas 18,027 down 18% $145,700 down 1% 7.8

We are seeing a lot of interest now from investors and people are buying who have cash or can get financing. The prices are lower and we have deals. We would have even more buyers if it were easier to get financing.

See this article and video about the double dip overall for the country, but how locations like Texas are already in recovery.

What do you all think?
Rating
Comments
Real Estate Center @ Friday, June 03, 2011 3:48 PM
What some people consider a double-dip recession, others view simply as the continuation of the recession that has gripped the nation for the past couple of years.

Take Real Estate Center Chief Economist Dr. Mark Dotzour, for example.

"We shouldn’t view this renewed softness in the economy as another downturn but just a continuation of the recession that was interrupted by a trillion dollars in federal stimulus that temporarily interrupted the cycle," Dotzour said Wednesday at the U.S. Real Estate Opportunity and Private Investing Forum in New York.

He said this is the necessary and final stage of the recession where government at federal, state and local levels is finally rightsizing by reducing spending and employment to more sustainable levels.

"Households and businesses have already done this," Dotzour said. "Once this adjustment to sustainable levels of government spending and employment is reached, then we will begin the slow process of real economic recovery."
C. Cargill @ Saturday, June 04, 2011 6:52 AM
It's hard to make the case for buying a SPI condo right now when prices are falling like a rock, and it's going to take you 3 or 4 years to sell if you change your mind after you buy it.

The #1 problem here is the violence in Mexico. The proof is everywhere. Just drive by a major hotel and look at where the cars are from. Very few Mexican license plates anymore. Just three years ago it was 50% Mexican. The truth is Mexican money built half this island, and now those tourists are locked in their homes afraid to make the trip to the island.

The #2 problem is the economy. Look at the Corpus Christi real estate market, which never depended as much on pesos. The situation there is also deteriorating, but not as bad as on South Padre.

More evidence of the soft economy can be found in the island's rental market. It's a little better than last year, but still far from healthy. However most people seem to agree we had a healthy spring break, so it looks like parents are more willing to spend on their kids than they are to spend on themselves!

I think another problem is the poor beach maintenance. If the city is so poor they can only afford to clean up the seaweed for the weekend visitors, then it alienates the weekday visitors. They're going to remember that when they're planning their vacation for next year, and tourism is what feeds the real estate market.

I think there is a real danger that island real estate prices will over correct to the downside. If average sales prices have fallen 19% in the past year, then maybe we'll see prices fall 10% next year, 5% in 2013, followed by stability for a year or two before prices start heading north. That's just my guess though, nobody can predict the future with any accuracy. Any resolution to the problems in Mexico will have a major positive impact for the island, and that could start happening with the next Mexican presidential election. (next year)

On the bright side, it's great to be in Texas! Yes, we're going into a double dip like the rest of the nation, but overall prices are only down 1% from a year ago, FAR better than many other states. Even though we don't see many Mexican license plates anymore, Texas visitors are still feeding the local economy.
Chip Eater @ Saturday, June 04, 2011 8:43 AM
Ya, confirmed. Less than 5% of the license plates I see today are from Mexico. There are many more out-of-state US plates than from Mexico. It changes the whole character of the island. Unless you're talking to the maintenance guys, it's as if everybody speaks English now.

One thing that may be contributing to the downward price action is the ratio of condos to private homes is WAY out of proportion with what you'll find along the rest of the Texas Gulf Coast. Look at Port Aransas, for example. How many big high-rise condos do you see there? Not many. We saw a few high rises go up on Galveston during the latest boom, but many of those are now being auctioned off.

I think the reason condos are so popular on SPI is because Mexicans living in Monterrey can effectively leave much of the maintenance to somebody else. Just pay the monthly HOA fee, and all the outdoor work is taken for you. Unfortunately, in a down economy, condo ownership is not the most economical way to visit the island. Right now you can rent any of a few hundred condos on the island for a significant discount to what many condo owners are actually paying for the mortgage and maintenance. So what is the incentive to buy instead of rent? When you're ready to go home you just turn in your keys to the rental office and let the maid clean up behind you. Cheap and easy.

Really, owning on this island can be a real problem sometimes. The door locks are constantly corroding. The outside AC compressors have a very limited life, maybe 3 or 4 years if you use them all the time, and the installers can't guarantee them. Then if you live in a highrise the HOA will make you replace your water heater every six years so it won't break and flood your neighbors downstairs. Lot's of stuff like that costs extra money. This may be the most wonderful place in Texas, but the price of coastal life is very high.

Right now I'm thinking the best investment deals on the island are empty lots. With the current glut of condos it will be years before you see any significant new construction on this island again. If you look around, good land can be found for a fraction of previous prices. You'll go broke paying bills waiting for a condo to rise in value, but if you own land, and can afford to hold it for a few years, your annual expenses are mostly limited to property taxes. Just imagine ten years from now, when you sell your empty lot for 10X what you paid for it today. You can brag to everybody: "Hey, I bought it back during the great depression, when there were no Mexicans on the island".
Math Wizz @ Monday, June 06, 2011 11:28 AM
I was looking at this about a week ago. My math says that average sales price of a 2 bedroom condo on the island has gone down 18% from a year ago, from $236K down to the current $201K.

I don't have any good numbers on condo rental occupancy, but checking around it looks to be well below 50% for the month of June. That makes sense, when you consider that very few Mexicans are risking the trip here, and that's usually half the island's business. The other day the lighted sign in front of the Motel 6 was advertising a weekday rate of something like $50, an amazing thing to see during peak season. I'm sure high gas prices are also impacting business.

It's not all bad though. Parking is quite a bit more plentiful, and restaurant service is better. As sad as I am about the current dismal state of the real estate market, I do enjoy the lighter crowds.

So what will happen this fall, after the tourists leave? A lot of owners are going to be looking at their rental income for the past season, and they're not going to be happy. Some will simply give up, and sell for whatever they can get, driving overall prices down even further. The whole negative downward cycle may feed upon itself.

I don't know how much the problems with the beach are impacting business. The other morning I was walking through the PILES of seaweed along the shore, and noticed the beach also looked like the remnants of a roofing job that hadn't been cleaned up. Flat tar balls everywhere, but not a single one of them stuck to my shoes. This is old stuff, maybe left over from last year's big oil spill incident??? The whole mess doesn't look pretty, not the kind of place you want your kids to go swimming. But, the next day, they raked/plowed it all up, thank goodness.

Yesterday I also noticed a crowd standing around a washed-up portuguese man of war. You used to see these things all of the time, but now they seem to be mostly gone. I also haven't seen a single sandpiper lately, so I'm wondering if that gulf spill has caused some kind of change to the ecology of the beach that tourists are not happy with??? Just wild speculation on my part. How's the fishing been lately, any fishermen out there? I'm sure some people also find that relatively new offshore oil platform also offensive. Little stuff by itself probably doesn't mean much, but when you add it all up these little annoyances could be impacting business. (The problem of high gas prices is probably a bigger problem than all of the beach problems put together.)

I'm also concerned about that high rental tax that was increased a couple years ago. I think it's up to something like 14.5% now? That's got to be hurting tourism. Some of that tax was supposed to be earmarked for beach maintenance, yet the beach has never looked worse. My own personal opinion is that it would be better to levy a small tax on property owners, that would be guaranteed by law to maintain the beach, instead of finding it's way into the general fund. Few people want to vote for higher taxes, as was evidenced during last year's bond election, but like the new fire station, the beach is an essential service that must be maintained. Without a fantastic beach, there will be few tourists.
Beach Walker @ Tuesday, June 07, 2011 8:02 AM
Some of that excessive beach tar could be coming from that new offshore drilling platform, but who really knows. Last year we learned from the big oil gulf spill that tar blobs can be analyzed for their specific origin, and south padre officials should be demanding that the stuff washing up on our own beaches be traced back to its origin. Wouldn't that be great if all oil companies were held truly accountable for every tar blob they produce? Some of that stuff could be coming from Mexico though, and dealing with PEMEX wouldn't be so easy. Some of those tar blobs also occurs naturally from leaks on the sea floor.
Stuck_in_traffic @ Tuesday, June 07, 2011 10:15 AM
When the economy gets back to normal this island is going to bust at the seams. Another water main broke yesterday. That old water system is no longer reliable, and needs to be replaced BEFORE the economy rebounds. The story I heard is that it's damp down in the ground where the pipes are buried, which speeds up the corrosion process. After a few decades in the ground, those pipes are just not reliable anymore.

We also could use a new bridge! For Spring Break and Memorial Day they had to discontinue the maintenance work because the traffic was so bad. You keep hearing rumors about a toll bridge bypassing Port Isabel and landing somewhere on the north end of the island, but like many new development rumors, nothing ever seems to happen.

Seriously, I hate to imagine the strain on the island's infrastructure when business eventually returns to normal. It is sad that the real estate business is currently stuck in the mud, but at this point I question how much more business the island's crumbling infrastructure can handle. We need to get on top of this NOW, before it seriously impacts the eventual economic recovery. The last thing we want to see is people needing to put cisterns on top of their roofs like they do in Mexico.
M.J. @ Wednesday, June 08, 2011 9:09 PM
I heard from one large restaurant manager that revenue is down about 25% this year, including spring break. Either we have fewer people eating out, fewer visitors, or some combination of both.
tax payer @ Friday, June 10, 2011 6:34 PM
Why don't you start a new topic like 1031's ? I bet most people never even heard of it. If more people knew about it, that might generate a little extra revenue for you agents.
Michael Stuart @ Saturday, June 11, 2011 2:48 AM
We will add a topic on 1031 soon
Idea man @ Wednesday, June 15, 2011 1:56 PM
Do you agents want to sell more real estate? I bet the average buyer/looker has NO idea that they can buy South Padre Real Estate with their IRA money.

With prices down, and a huge inventory of properties to pick from, buying SPI could make a great way for your clients to diversify their retirement portfolios. Plus, they get the added advantage of actually being able to SEE their retirement investment, instead of just getting a paper statement in the mail from some mutual fund company.

Here is just one example of a company that assists with the necessary paperwork, but you can pick any firm you want:

https://americanpension.com/pages/faq

This is not a scam; the IRS rules clearly allow real estate within a self directed IRA. There is nothing to stop you from using your IRA money to buy a South Padre beachfront condo and renting it out for as long as you want. (There are a few important catches though, you can't use the condo for personal use while it is still inside your IRA, and you can't maintain the condo with funds from outside your IRA.)

From the real estate agent's perspective it's just another real estate transaction, but with a little extra paperwork. But, if it helps you sell more property, then the extra paperwork is worth it.

Good luck to all!


Newspaper Reader @ Thursday, June 23, 2011 5:33 PM
Finally, Mexicans from Monterrey will have a SAFE way to get to the island:

http://www.themonitor.com/articles/brownsville-52048-monterrey-service.html

Only two flights a week, and $136 (each way) isn't much to brag about, but in this economy every extra tourist helps!
looker @ Sunday, June 26, 2011 11:54 PM
Got a suggestion. Why don't you add anonymous comment fields next to your listings, instead of just a simple "Rate this property" at the bottom of the web page? Then you can see what lookers REALLY think about the properties you have listed. It would also help provide the seller with unbiased feedback, and prove that your marketing methods are getting reasonable amounts of exposure to potential buyers. Since you spent all the time and effort getting this WONDERFUL website up and running, it would be a shame not to solicit feedback on individual listings from potential buyers, before they get away. You might even want to take it a step further and automatically email sellers with feedback, as soon as it is received. You could even run it through an automatic translator for Mexican sellers. Don't know if you would want to post all comments, but it might even start an interesting discussion that would help you market the property better. For example, I know of one condo listed that is directly above a dumpster, within easy smelling distance. I'm sure other potential buyers might be interested in that, and if more than a couple potential buyers seem disturbed by it, then in exchange you might get a price reduction from the seller to help sell it faster.

Well, if you've got something better to do, then feel free to ignore my suggestion. But right now since business is slow, I thought it might be a good use of your time to upgrade the web site a bit.

Good luck to all buyers, sellers, and agents!



Mike @ Monday, June 27, 2011 8:55 AM
We have a new version of the website coming this fall that has that feature and many more.

We've been working on it for several years, it will be available this fall.

It will allow much better property search and analysis, with comments/ratings.

Also we will be providing a user community for all things about the region.

You can see some of the early work on the user community part at http://www.TexasBeachHomes.com
Beach Buddy @ Tuesday, June 28, 2011 1:48 PM
I wish you the most luck on your new venture! It's wonderful that your web site has evolved to the point where you can now start to gather outside sponsors, and explore new frontiers in journalism without having to worry about how it will impact your own real estate sales. (i.e., shed the rose colored glasses!) It's sad to see all of those wonderful agents gone, but it definitely looks like you're doing your best to adjust to current realities.

Before you get any deeper into this web business, I do have one strong suggestion for you: Get a new dang ISP! I run into problems trying to access this site about once a month, sometimes more. Sometimes I get a nice error message from the ISP, sometimes I don't. The ISP you are currently using is probably fine for a real estate agent, but completely inadequate for a news site.

Just out of curiosity, have you noticed any Gulf Coast businesses that are actually prospering in this environment? That would be interesting to read about! (Perhaps make it a regular monthly feature/report, to keep readers coming back?) The Gulf Coast will always be seductive, so it should never be hard to find interesting things to keep readers coming back.

Again, the best of luck to you!
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