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Real estate mystery: More homes coming on market, but island prices so far remain strong

STORY BY STEVEN M. THOMAS (Week of November 17, 2022)

There is a bit of a real estate mystery on the barrier island.

Inventory has increased dramatically since its March low, up 250 percent to about 180 properties, and sales of single-family homes and condos so far in 2022 are only about half what they were at this point in 2021.

Yet, prices in 32963 are stable or still climbing.

Looking just at single-family homes, the supply on the island has more than tripled since March, up from a low of about 30 to more than 110 last week, but home values remain strong.

“Prices in John’s Island were up 10 to 20 percent in the first half of 2022 [on top of huge gains in 2021], and we have maintained it,” said John’s Island Real Estate broker Bob Gibb. “The market hasn’t given up anything on prices and I don’t expect it to.”

“If you have a blue-chip property, a beautiful home in JI or The Moorings or something move-in-ready on the ocean or the river anywhere on the island, you can ask more for it today than you could a year ago,” said high-end expert Cindy O’Dare, broker-associate at ONE Sotheby’s International Realty.

So, what happened to the “law” of supply and demand?

Turns out it’s still operating behind a sometimes confusing flurry of statistics.

“Yes, inventory is up quite a bit from earlier this year, but it is still very low by historical standards,” says O’Dare. “Oceanfront inventory is the lowest I have seen it in my career and riverfront is the lowest it has been in many years.”

In fact, in a typical pre-pandemic year, island inventory hovered around 400 single-family homes for sale, plus condos and co-ops.

“Even with the increase, supply is not high enough to have an adverse effect on prices,” said O’Dare’s partner Richard Boga.

“We usually have about 20-25 properties listed for sale [in John’s Island],” added Gibb. “Right now, we have seven.”

With houses and condos still scarce by historical standards – and in relation to the level of demand among people who want to live in Vero – sellers still have leverage and don’t need to sell at a discount.

One reason inventory has gone up is because the number of sales has gone down, from 881 at this point in 2021 to 456 as of last week, according to figures provided by ONE Sotheby’s broker-associate Hank Wolff – but sales stats can be deceptive too.

For instance, only 23 sales closed in 32963 in October. Divide that low number into the available inventory of 180 houses, condos and townhouses, and it looks like there’s an 8-month supply of properties for sale – which would mean that a buyer’s market has taken hold and price declines are likely.

But island brokers say October was just an unusually slow month and is not predictive. According to Boga, the number of sales that went pending in the first 10 days of November was up 187 percent compared to the number that went pending in the first 10 days of October.

“Looking at one slow month doesn’t tell the whole story,” said Wolff. “There have been 456 closings on the island year-to-date. That’s about 45 per month. At that rate, we have about a four-month supply, which is still a slight seller’s market.”

Gibb sees it that way, too. “It is still a slight seller’s market trying to lean toward a balanced market,” he told Vero Beach 32963 last week.

O’Dare and Boga think the market has edged over into balanced territory and become “a great market for both buyers and sellers.”

In a report she compiles weekly, Sally Daley at Douglas Elliman said single-family buyers actually have a slight advantage, island wide, while it is still a slight seller’s market for condos.

Boga notes that the distinction between seller’s and buyer’s markers is murky and not definitive, because so much depends on specific neighborhoods and properties. While it may be a seller’s market for a beautiful, move-in-ready waterfront home, with multiple offers and a quick close, the owners of older house in a so-so location that needs work could find themselves in a buyer’s market, forced to negotiate on price and terms.

“There is a lot of gray area,” said Boga, adding that the increase in inventory, instead of depressing prices, will actually boost sales.

“There were a number of people who chose to stay on the bench when inventory was super-low,” Boga said. “They said, ‘There isn’t enough for us to consider. We aren’t going to fly down to look at just one house.’ Now, with more inventory, with three or four houses that interest them, they will come down.”

Gibb sees strong demand, too, from John’s Island residents who want to move within the community, downsizing or going bigger for friends and family who are traveling again, and from outside, from JI’s traditional northern feeder markets.

He said much of the pent-up internal demand comes from club members who haven’t been able to find what they want so far or who put off making a move during the pandemic. Much of the external demand comes from the latest wave of business owners and executives who have decided they can do their jobs remotely, and who want to make a move to Florida now, instead of 10 years from now.

“Instead of waiting until they are 60 or 65 as they planned, they are coming now in their 50s,” Gibb said.

“Every year, Vero Beach continues to be discovered by more and more people in the Hamptons and Nantucket and other places,” said O’Dare. “We have really good inquiries from people in New York, Chicago, California, South Florida – Miami, Fort Lauderdale, Boca, Palm Beach – and even abroad, from England and Sweden.”

“Business is good,” said Gibb, who expects to sell around 90 homes this year, in total, down only slightly from the 110 or so he and his agents sell in a typical year.”

The national press has painted a scary picture of the real estate market, with recent headlines like, “Housing markets face a brutal squeeze,” in the Economist, and “Housing Market Hits Brakes as US Prices Fall Most Since 2009,” in Bloomberg. And prices have dipped in some places as sales slowed due to interest rate hikes. But island brokers mostly agree Vero Beach has and will continue to defy national trends.

“Florida is the last place to feel the effect of a national housing decline, and Vero is the probably the last place to in Florida, and John’s Island is the last place in Vero,” said Gibb.

“I don’t think Bob is wrong,” said Boga.

“Prices are not going to plummet here,” said O’Dare. “It just isn’t going to happen. We have settled at a new benchmark and you will never see pre-pandemic prices again. If you bought a blue-chip property here anytime in the past few years, you are a winner. You will make money when you sell.”

So far, the stats back up brokers’ optimism, with prices up substantially year over year and year to date in 32963.

Baby Boomer demographics, an ongoing migration to the sunbelt, remote work, low taxes and the general allure of palm trees and white-capped blue water all support home prices in Florida. Add in Vero’s special virtues that earned it the nickname “Hamptons of Florida,” and it isn’t surprising the island housing market is holding its own despite national real estate gloom.

“People can’t believe that a place like this still exists,” said O’Dare.

“We are expecting a strong season,” said Boga.