Two Years After Hurricane Michael – Mexico Beach Real Estate Market Report

What a two years it’s been since Hurricane Michael ravaged our area and flipped the lives of so many people upside down.  Unbelievable amounts of cleanup, infrastructure repairs, and rebuilding have taken place since the storm.  The rebuilding process is far from complete and much work left to do.  Our market remains very strong with an influx of new buyers and money that want to be a part of the future in the area.  We’ve had many buyers that are only purchasing here after Michael put Mexico Beach and Gulf County on the map for them.  The flip side is that it’s clear the rebuild won’t be quick and many people that lived here prior to the storm have decided to sell and not wait for the time when things are more “normal”.  Lower priced homes and long term rentals have been nearly non-existent and there’s no doubt some good, hard working people that lost their homes have been priced out of the market.  There have been 400 homes and 349 lots sell since Michael from Mexico Beach to WindMark Beach.  A number of these lots once had homes on them that were destroyed in the storm.  I’ve helped numerous owners sell their property that felt selling and leaving was bittersweet, but the best option for them at their current stage of life. After two years, we still don’t have a gas station, traditional grocery store, motel, or a restaurant with inside dining open in Mexico Beach. We do have five restaurants operating out of food trucks at the beaches with some tasty options and you won’t starve to death if you decide to visit. (Mango Marley’s, La Chaparitta, Killer Seafood, Mr. G’s, and Krispy Krunchy Chicken) We didn’t have a bank until 2 weeks ago when Centennial Bank’s rebuilt branch opened.  It’s not as convenient as it once was, but you can get everything most people need 12 miles away in Port St. Joe.  Port St. Joe and Gulf County are thriving.  This has helped ease the inconvenience of not having as many commercial options and services available yet in Mexico Beach.  The Mexico Beach Marina is offering grocery items and there is a small grocery store operating next to the post office as well.  Still, no traditional grocery store, no gas stations, and a lack of restaurants are the biggest complaints I hear.  St. Joe Beach is located right next to Mexico Beach and between Mexico Beach and Port St. Joe.  It has a Dollar General, Lookout Lounge, and Shipwreck Raw Bar which have all been open for some time.     I’ve called a few different Mexico Beach commercial business owners that I know in the last week and asked if I could share an update on the status of their businesses.  The Express Lane, located behind where Toucan’s was located, has started construction and the same owners are hoping to start rebuilding their St. Joe Beach location in the next couple of months.  They plan for their Mexico Beach location to be open by early Spring.  Toucan’s is moving forward with design and permitting and those owners hope to start construction by next Summer.  Mango Marley’s is nearing completion and the owners are shooting for serving their famous wings and cold beer by the end of this month inside their renovated building.  The brand new Shell Shack is looking great and those owners are hoping to be open around January. I volunteered to sell the property for the city where the Civic Center was once located and that property sold last month to a group stating they intend to put in a pharmacy.  Al Cathey and his son Lee have been operating Ace Hardware out of a temporary location behind their old store and hope to be open in their brand new store by early next year.  According to updates on their Facebook page, the El Governor Campground hopes to be open later this year while the motel remodel is taking longer and they hope to be open sometime in 2021.  The Driftwood Inn has also posted updates that they hope to rebuild and they’ve shared a beautiful rendering of their new design on their Facebook page.  Mr. Ike with Gulf Foods said they are still battling through insurance, but hope to start rebuilding next year. Most of the other owners I talked to are on hold for a variety of different reasons.    

I asked my friend Al Cathey, who is the mayor of Mexico Beach, if I could ask him a few questions for this report.  I am going to paraphrase his answers to the questions I asked him on 10/12/20.  All main infrastructure is complete and has been for some time and is functioning well.  The pier is going to be one of the last projects completed as it’s a large project and also an amenity.  It is on the city’s “sooner than later” radar and bids for engineering services are currently being collected.  The city has recently voted to go back to using the 100-year floodplain instead of the 500-year floodplain that was adopted after Michael.  This will lower the cost of rebuilding by allowing future homebuilders and owners to build lower to the ground than required for the last 18 months; if they desire.  The mayor was proud that there have now been 150 people complete or pull permits for brand new construction of homes or commercial businesses since Michael.  The city’s finances remain complicated since Michael, but Mr. Al is proud of how well money has been managed and pointed out we are one of the few municipalities impacted by Michael that has not taken out private loans to pay expenses.  There are still many moving parts dealing with FEMA to rebuild and move forward, but they are very conscious of finances and the City is in a solvent financial position.  They will continue to work on the many grants and funding options available to communities like Mexico Beach that were so severely impacted by a natural disaster.  The St. Joe Company owns a large tract of land on the west side of Mexico Beach that they are starting to develop.  They are going to start with building 104 apartments for full time residents in a location near the boat ramp.  Now that this phase has been approved by Mexico Beach, they are in their permitting and environmental stages and hope to start construction in 2021.  St. Joe does plan to do a commercial and residential phase down the road and these plans have not been finalized.  The phases don’t sound like they’ll be anything we’ll see soon and St. Joe estimated this site would be developed over the next 20 years.

My crystal ball sure didn’t predict that Covid would lead to a boom in the real estate market.  It’s done that and led to higher sales prices in this area and throughout the country in vacation towns.  2020 started moderately slow with buyers being frustrated at the pace of progress in the area, cost of construction, and lack of housing choices.  In March when Covid was really taking over the news and the stock market was crashing, many believed 2nd home markets, like Mexico Beach, would fall as people didn’t have jobs and money for luxuries like a beach house.  That seemed like a realistic outcome of a pandemic and the market stalled as most buyers went on hold with contracts being cancelled or extended left and right.  I heard very educated investors worry that Covid would lead to coastal and vacation markets crashing.  The exact opposite has happened to this point.  After a few months, people started realizing they didn’t have to work from a busy city they didn’t really like living in and they could work from small resort area that they love visiting.  “Zoomtowns” became a term where people could now buy and work from home in areas where they formerly only could vacation and that’s a been a tremendous boost for our whole area.  An uncrowded, beautiful beach area became more appealing to some escaping Covid and large populations.  Our biggest influx of full time buyers are people leaving Atlanta.  A huge portion of our customers buying second homes previously owned in Destin and 30A and are tired of the large crowds.  These factors have led to a banner rental year for vacation rentals and certain schools being online only has kept vacation rentals occupied with families that could normally not be at the beach this time of year.  Our small family friendly beach atmosphere is at an all-time high in popularity with end user buyers wanting to be here.  The market is near levels it was in 2003 which was a great year, but not the insane market of 2004 and 2005.  Prices are much lower than seen in 2005.  The difference now is all of these buyers are buying to be here, not buying vacant or condo for the sole purpose of hoping to flip them.  This recent article about The St. Joe Company (NYSE:JOE) reminds me of 2003 as well.    

The market for existing homes is absolutely on fire right now and has been for about the last 5 months.   This isn’t unique for Mexico Beach and every broker I’ve talked to in other areas along the coast has reported the same.  Interest rates being at, or near, all-time lows are also a contributing factor.  The only reason we aren’t selling more homes is that we don’t have them to sell.  I don’t have one move in ready home listed.  If we’ve listed them in the last 6 months, we’ve sold them.  I have sold every lot that I listed in 2020 except for this one that I volunteered to list for the City of Mexico Beach.  98 Real Estate Group is on track for a record year and has closed over $50 million in sales for 2020.  We’ve ironically sold 98 homes at the time of this report in 2020. Market priced inventory on undamaged homes is at a 15 year low.  If a home is sitting on the market; much more than 60 days right now, it probably falls into one of three categories.  The property probably needs significant work, is a condo that has a lien, or is priced 10%, 20%, 30% or more over recent sold comps and where it would appraise.  The majority of our larger condo developments are still dealing with insurance claims and liens from contractors like Express and Serve Pro.  Some sellers reaching for higher price points have started to have success and price points are definitely moving up on all property types.  DR Horton is selling their homes in WindMark Beach as fast as they can build them.  Stewart Haire, with DR Horton, informed me that they sold 57 homes in 2019, 56 homes so far this year and are planning to build approximately 70 more homes between now and the end of next year.  WindMark has as much momentum as it’s ever had and The View on 98 opened last month in the upstairs restaurant space that sat vacant for years. I’ve had a great dining experience each time I’ve dined there and encourage you to give it a try.  Truland Homes has also moved into the Port St. Joe area and is looking for more properties as they’ve also had great success with spec homes.  Both of these builders have been offering homes primarily in the mid $300K to low $400’s price points.  These are the first large builders we’ve had in the area and they are only building homes on their lots at this time.  

Mexico Beach / Beacon Hill / St. Joe Beach / WindMark Beach

Best Values on the Market – Top 25 Homes and Top 15 Lots  

The inventory of move in ready homes is so low that custom home building is remaining a popular option.  Build prices are higher than they’ve historically been with my average customer building in the $200-$300 per square foot range.  The vacant lot selection has also been much larger than existing home choices and pretty much your only choice if you want to be close to the beach.  For example, we haven’t had one single family beachfront home in Mexico Beach come on the market in the last 2 years.  There are owners still fighting insurance or waiting to make repairs for a combination of reasons that are now getting pressured to move forward fixing them up by Gulf County and Mexico Beach.  I think you could see an increase in the number of damaged homes on the market in the next few months.  Our custom home builders remain very busy with some booked up for the next 2 years.  The larger builders prefer new construction and finding help for large remodels remains a challenge that needs to be considered if you’re looking at a potential big project.  

98 Real Estate Group was able to move back into our Mexico Beach office in the Summer of 2019;  thanks to a lot of favors from our friends at Big Fish Construction who helped with the fastest full commercial remodel in Mexico Beach.  We’ve been humming along this year and are on pace to finish as the top producing office in Mexico Beach for the 8th consecutive year.  We’ve outsold our closest competitor by over $60 million since 2013 in the Mexico Beach to WindMark Beach region and are proud to be the market leaders in an area we love so much.  I am very thankful for all of the support we continue to enjoy.  We have 17 agents and work the Port St. Joe and Cape San Blas markets as well.  Michael whacked our agent’s personal homes and 13 out of 17 agents working with us in 2018 had their homes either severely damaged or destroyed.  4 of these agents are still living in temporary housing as they navigate the slow rebuilding process.  We’ve learned first hand the challenges people face with destruction like Michael and pray for those areas that have been hit with storms recently.  I mentioned that Port St. Joe and Gulf County are thriving and those markets have had terrific years as well.  The hurricane did not hit quite as hard in these areas and a fair amount of buyers originally considering Mexico Beach decided to settle in these less damaged areas instead.

Port St. Joe

Cape San Blas / Indian Pass

Hurricane Michael also severely impacted Tyndall Air Force Base that borders Mexico Beach to the west.  While the base never stopped operating, it’s just getting going on the rebuild to make it a “base of the future”.  I read different articles saying the Air Force is going to spend in the $4 to $5 billion dollar range on this base.  There is a massive workforce that will be employed for the construction that will ensure many jobs at the base for the foreseeable future during the construction phase and beyond.  This impact will be extremely positive on real estate and create many high paying, somewhat “recession proof” jobs in the area. I think Tyndall’s impact will be felt more starting in 2021 and moving forward and should be mentioned.  I have a few customers and friends that work higher up the chain of command at Tyndall and they all feel the rebuild will happen 100% and is fully funded as articles like this support.  

My family is growing and in August, Michelle and I welcomed our 2nd son into the world.  Hudson is now 3 and wide open all the time.  We’ve got two happy and healthy boys and for that I could not be more thankful.  When it was recommended this Spring that we close our office to the public due to Covid, I took up golf and joined the St. Joe Bay Golf Club.  The course was taken over by Gulf County about a year ago and a large amount of money has been infused into the course and the new greens are awesome with more improvements in the works.  I can’t make the ball do what it’s supposed to do, but it’s been a lot of fun and there’s also a good restaurant operating from the club called The Shaggy Bay Supper Club.  The restaurant and course are open to the public.  As a sports fan and Georgia native, we’re on the right track with the Braves this week.  It sure would be nice if the Bulldogs could beat Alabama on Saturday.  I’m just glad we’re able to watch sports as crazy as 2020 has been and hope you’re all having as good of a 2020 as possible.  The fishing here remains great and there are some bonus red snapper days this fall if you’re looking for a fun day on the water.  I pride myself on understanding the real estate market and giving honest and sincere advice.  If you’re looking to buy or sell in this area, I’d love the opportunity to speak with you and see if we’re a good fit to work together.  

Cheers,

Zach Childs
Broker/Owner- 98 Real Estate Group
#1 Producing Real Estate Company Located in Mexico Beach- 2013, 2014, 2015, 2016, 2017, 2018, & 2019

850.819.0833
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