Recession deflates Island real estate; creates buyer's market

For years this island resort on the Gulf of Mexico has had some of the most valuable real estate prices in the Rio Grande Valley.

Consequently, finding a bargain on South Padre Island for either a primary residence or a second home has not been not easy in the past.

Now that the national recession has adversely impacted the Island's real estate market on a bigger scale than other Valley communities, prices are dropping, but still few people are buying, according to some folks in the real estate business.

Island real estate prices have fallen by as much as one third in some cases, while sales of vacant lots and idle land have virtually ground to a halt.

"Land is not selling at all," said Mary Phillip, a broker-owner with SPI Coastal Properties. "And we are at about half of what we were last year as far as closing is concerned with condominiums and townhouses."

In addition to the overall state of the economy, she attributed the poor property sales to several factors, chief among them being the high cost of maintaining a coastal property and high property taxes.

Although some construction can be seen around town, particularly at the north end of the Island, Phillip said few builders are constructing these days.

Because of the lack of real estate activity, the prices of some condos and townhouses have dropped anywhere from $70,000 to $80,000, brokers said, and fewer offers have been coming in despite the price reductions.

For example, the prices for some fully furnished beachfront condos valued at $250,000 not long ago, are now on the market for less than $200,000.

"We also have a few condos in the neighborhood of $100,000 for a one-bathroom, onebedroom condo," Phillip said. "Some of these properties have been completely remodeled."

The number of properties listed for sale, and the number of days they are on the market, are at all time highs for the Laguna Madre area, according to the multiple listing, a document available to participating real estate companies that lists the properties available and how long they have been for sale.

Forty-three percent of the 1,337 properties listed for the Laguna Madre area are located on the Island, according to the multiple listing, with the remainder spread around Port Isabel, Laguna Heights, Laguna Vista and Bayview.

The other indicator, the number of days on the market, shows that properties are sitting unsold for an average of 273 days, or about eight months.

In today's market, brokers said property is going for about $254 a square foot, meaning the asking prices for a 1,000-square-foot condominium would be in the range of $254,000.

"The economy had a double impact on South Padre Island," said Bill Bussard, an agent with Troy Giles Realty. "We had a recession and many people own vacation homes. You get hit twice."

Bussard said some condominium prices have dropped by 10-12 percent, and some houses as much as 20 percent, compared to just a couple of years ago.

He said he is aware of some instances where a buyer can purchase a two-bedroom, two bath condo in today's market for less than $200,000, when that same property would have sold for more than $240,000 two years ago.

However, some area brokers said they believe there is a light at the end of the recession tunnel.

Phillip noted that the lower prices make this a strong buyers' market.

"It seems (the market) to be level and I don't see it going any lower," she said. "Now that people went back home, we can show buyers the properties we couldn't show during the summer because many of them were rented."

Bussard echoed a similar remark and expressed optimism for the future.

"We are seeing a slight increase in activity," he said. "The market is down because of the many vacation homes we have here. We went down quicker than other places in the Valley, but we hope to rebound quicker."