Post Michael – Mexico Beach Real Estate Market Report

The area has obviously changed a great deal since my mid-year market update.  I was working on a 3rd Quarter update when Hurricane Michael came through and devastated our special place.  This area had been fortunate to never have had a direct impact from a huge storm. The storm damage everyone always talked about around here was Opal, which was a category 3 when it made landfall in 1995.  It wiped out some beachfront and low lying houses and has always been the benchmark the locals referred to when talking about hurricanes.  That has changed now that we took a direct hit from a category 4 storm that will probably be reclassified as a category 5. Mexico Beach through St. Joe Beach took the most severe damage and these are the areas I’ll mostly focus on in this report.    This isn’t at all saying that there aren’t many destroyed homes and displaced families in Port St. Joe and Cape San Blas.  I’ll focus more on these areas in my next update.
The damage is significant, and I keep hearing from people seeing the area for the 1st time that it’s much worse than they thought from the news.  The truth is, they are seeing a far cleaner version now than existed a month ago as a massive amount of debris has been removed and the roads are vastly improved.  Those properties closest to the beach took the hardest hit with a combination of extreme winds and a massive storm surge.  There’s an official government marking attached to our office that says the surge was 19 feet at that location on 33rd Street.  The area has never seen anything like this and the wall of water washed away most beachside properties that weren’t already blown away by the 200 mph winds.  I evacuated with my family safely to Alabama and came back 2 days after the storm.  There’s barely a trace of many landmarks like Toucan’s, The Lookout Lounge, Killer Seafood, Sharon’s, and many other longstanding buildings.  I was trying to update owners on how their homes did and was going through neighborhoods I’ve been through thousands of times and was getting turned around.  Many of the homes I recognized were relocated a few streets over and about half the street signs were gone.
There is some good news, and everything wasn’t destroyed.  Utilities are almost fully restored and tons of clean up has taken place.  The roads are navigable and there’s an army of workers and volunteers working daily.  The homes further from the beach fared much better, but many were flooded and fallen pine trees also destroyed countless others. Building codes were significantly updated in the early 2000’s.  Newer homes withstood the storm on average much better than the older homes.  That’s not to say some newer homes weren’t destroyed, and some 1960’s mobile homes didn’t make it just fine, but in general, the newer homes are in much better shape.  Many homes located blocks further away than surges ever came near in previous storms survived the wind, but have flood damage.  The majority of these flooded homes aren’t ruined though, and owners are getting back in at various speeds with some already remediated and remodeled with owners planning to be back in within a few months.
The ten big condos in Mexico Beach like The Club, Paradise Shores, and West End Harbor which were all finished from 2005-2007 are all structurally sound with repairs underway.  The newer townhouse developments like Oceanside Village also fared moderately well, but will need new roofs and the interiors redone from the flooding.  In the subdivisions developed in the 2000’s, part of the reason those homes held up better is they weren’t surrounded by older homes that were blown into them.   Ocean Plantation, Casuna, Beacon by the Sea, Sunset Village, Sea Haven, Magnolia Bluff, and Barefoot Cottages all did well in regards to wind damage.  Ace Hardware relocated to one of their storage barns behind their building that wasn’t destroyed, and Mango Marley’s and Shipwreck weren’t destroyed and are working hard to get back open.  Caribbean Coffee also sustained very little damage and is back open.
Except for some slight flooding, the new Mexico Beach City Hall and the Public Works building are fine and have been fully operational since a day or two after the storm.  The MB City Council voted to allow existing restaurants to operate from food trucks, and a few of the owners plan to go this route until they’ve rebuilt.  RVs are also going to be allowed on a temporary basis in Mexico Beach and Gulf County changed their ordinances and allowed RVs a few months prior to the storm in Beacon Hill and St. Joe Beach.  It looks like we’ll have more occupied homes and businesses operating by spring than originally thought.    The commercial space and residences in WindMark Beach held up very well, and The St. Joe Company, which owns the commercial space, has a big opportunity to capitalize on the situation.  There are multiple unoccupied commercial spaces including a high end restaurant that’s been closed for years.  I hope the right people with the St. Joe Company get involved and work with businesses like Killer Seafood that are interested in locating in WindMark.  Hurricane Michael could be what finally jump starts the commercial area in WindMark. Killer is just one example, and they would ideally open in WindMark by the end of the year and then open a second location at their original location in Mexico Beach once rebuilt.
Understanding Mexico Beach’s plans for moving forward has been my top priority. I am attending the city council meetings in Mexico Beach and am usually the only Realtor in attendance.  The Mayor and City Clerk are good friends of mine, and I stop by and visit them regularly for updates.  I think he and the other 4 council members and 36 city employees have really been doing a great job.  The city desperately needs FEMA’s help, particularly financially, and there are lots of regulations they are having to follow closely.  Many rumors are flying around that aren’t near true.  For those of you worried about Mexico Beach changing a great deal, there is nothing on the table in regards to any big changes.  If your property isn’t damaged more than 50%, you can get permits to repair it like normal. The biggest controversy right now seems to be related to people who are getting damage ratings past 50%, yet they and their insurance companies don’t feel the homes are significantly damaged.  They want to repair vs rebuild and the city has vowed to work with these owners on a case by case basis.  There is a 90 day moratorium on permits for new construction and those properties damaged past 50%.  If you feel your home isn’t 50% damaged, you’re supposed to be able to appeal this decision and begin repairs immediately if your appeal is successful.  During this 90 day moratorium, building codes and flood zones are being evaluated for possible changes. This is a FEMA requirement if you want to be eligible for as much reimbursement as possible.  I think we will see Mexico Beach move to building codes similar to Gulf County with a slightly higher wind rating and the flood zones will probably change as well requiring future construction in some areas to be elevated where building on ground level was previously allowed.
I have never had more calls in my 14 years of experience from people with an interest in buying property in Mexico Beach than I’ve experienced since the storm. How serious and realistic these buyers are is another question.  I’ve carried around a notepad since the storm and write down people’s contact information after they call.  I’m at 130 buyers and counting that say they want to buy in Mexico Beach since the storm, and I’ve talked to 6 or 7 sellers that are probably going to sell.  None of these sellers are desperate, and all have said they are only selling if it makes sense financially.  The average call is from somebody that wants to invest in a “great deal” from a seller wanting to move on and sell their property for significantly less than it was worth on October 9th.  I don’t know if those buyers will ever get to purchase at these discounts.  There hasn’t been one of these sought after great deals yet.  There are also some very realistic buyers happy to pay pre-storm prices as well.  Some of these are buyers that lost their homes, they’ve gotten paid from insurance, and they are buying undamaged existing homes.  Others are those looking for a premium location.  There hasn’t been a beachfront lot on the market in Mexico Beach in well over a year and the same goes for a lot on the canal.  I have buyers willing to pay pre-hurricane prices for these properties, and we haven’t found anything yet at full price, so we are far from big discounts.  It is true that there are developers and investment groups looking in the area that would love to buy large tracts of Mexico Beach properties cheap, but they aren’t finding anything at this time.  The entire city council is in full support of the current land development regulations that limits density and keeps the height restrictions.  Some hopeful “developers” have realized this and that buying lots of cheap properties and changing the zoning is unrealistic in this tight knit community.  I think they saw Mexico Beach on the news and pictured turning it into Miami, but have found on the ground that it’s actually more like Mayberry.
I think the best post hurricane values may come in damaged homes that are repairable with a lot of work that sellers aren’t going to fix. Some are just going to take the insurance money, and others don’t have insurance.  Keep in mind that a huge percentage of people that live in the area have damaged homes that they are trying to repair.  Finding labor to do work is becoming borderline impossible to find and prices seem to be going up weekly.  I’m saying this to caution buying one of these damaged homes if you think you’re going to be easily able to find somebody to help you fix it up.  The same goes for new construction as demand was already very high before the storm, and it’s through the roof now.  This supports the theory that existing, undamaged homes could see an increase in value vs any decline.  If you have an undamaged home that you don’t want to sell, but would consider renting, there are literally hundreds of displaced residents looking for a home and countless numbers of construction related contractors trying to rent anything they can get their hands on.  This page on our website will show some of the reduced prices from damaged homes and other reductions that stand out including a home in PSJ reduced from $449K to $169K.  https://www.98realestategroup.com/properties/michael/  This is a new page on our website that will be updated as new listings come if you’re in the market for these types of properties.
If you want to come down and stay to look at properties in the near future in the Mexico Beach area, your closest options will probably be in Port St. Joe or Cape San Blas.  These are limited right now and some buyers are finding the closest available place to book a room is in Apalachicola or Panama City Beach.  If you want to plan your vacation for Spring or Summer in 2019 and usually come to Mexico Beach and want to support the area, my suggestion is to book in Port St. Joe or Cape San Blas.  The beach in Mexico Beach will be beautiful and the canal will be open.  The reason I’m suggesting booking in our neighboring communities in 2019 is that many of the typical vacation rental homes that are in good shape will be rented by full time residences that are displaced and rebuilding and finding a vacation rental will be difficult in Mexico Beach, but a big portion of the vacation rentals in PSJ and the Cape will be online as normal by Spring, with many already available.   Enjoy the neighboring communities and drive to Mexico Beach to enjoy the beach and support the businesses that are open.  There will be more businesses open than people think by the Spring.  Shops will be open and at least 3 restaurants will be back in their buildings with at least 3 others hoping to be open soon in food trucks.  You’ll find closer to 80% of your favorite businesses in PSJ and the Cape already back open.
Hurricane Michael has been and will be a humbling experience for most of us living through this situation.  The 98 Real Estate members personally suffered significant losses and are a good cross section of how people’s homes in the community fared.  Regina Gossett, Bonita Thompson, Steve Newman, Jeff Mayle, and Gene Cline all had their homes destroyed.  The huge storm surge flooded to varying degrees the homes of Kristy Lee, Kaci Rhodes, Grant Terry,  Raz Castaneda, Clay Williams, Bo Spring, and Henry Jordan, as well as my home.  The office flooded and had part of the roof ripped off, but is structurally sound and repairs are underway.  As we approach Thanksgiving, I think we will all be appreciative for what we do have with a new perspective on what’s important in life.  Things are certainly much different than they were on October 9th.  Our friends at Big Fish Construction allowed us to move in after the storm and we’re very thankful to be working from there as a temporary satellite office.   We have been the top producing real estate company in Mexico Beach for the last 5 years and are here on the ground working and happy to help however we can at this time.  The situation in Mexico Beach is improving and changing weekly, if not daily.  Feel free to call my cell 850-819-0833 if I can help with any updates or advice.
Happy Thanksgiving,
Zach Childs
Broker/Owner- 98 Real Estate Group

#1 Producing Real Estate Company Located in Mexico Beach-
2013, 2014, 2015, 2016, 2017 & 2018
850.819.0833