August 2010 Issue INSIGHT Banks get serious about selling beach property by Patrick Anderson, Publisher
among lenders trying to unload foreclosed property (see links at the end of this article). But they're not just relying on auctions to move inventory. Most lenders are now taking a more aggressive approach to the traditional listing than they have in the past, pricing property at or below market to create a quick sale. That's because bank owned inventory is growing at such an alarming rate. It is now dominating the marketplace. Over the past 14 months, 729 foreclosure deeds have been filed in Glynn County. But banks have filed only 360 warranty deeds (with dollar amounts) during the same period. Warranty deeds are filed when a sale occurs. Foreclosure filings have outpaced bank owned property sales by two to one! (see chart at right) Lenders have no choice but to price aggressively in order to move inventory, even if it means dropping below the foreclosed loan value. StSimonsLetter.com analyzed five beach area neighborhoods/condos in order to get a more focused view of sales in the critical South St. Simons market. These statistics were compiled from local MLS data and do not include lot sales, nor any sales made without realtor assistance. EAST BEACH This popular beach community has been responsible for over $12.1 million in residential sales during the past 12 months, a huge increase over the previous year's $5.4 million. Note from the spreadsheet below that 8 of the 12 sales were bank owned versus the previous year when there were none. This illustrates a dramatic shift in lender's resolve to move foreclosed inventory. In the process, the average price dropped from $1,073,000 to $1,015,048. This particular statistic should not be heavily relied on as a single large sale or two can significanly skew the results. Nevertheless, it's clear that bank sales are forcing prices lower. COAST COTTAGES This luxury resort neighborhood led the surge during the "bubble" years of 1998 through 2005. It was also an early indicater of market woes when sales ground to a virtual standstill in 2006. There were no Coast Cottage sales during the 12 months ending July 31, 2009. Since then, three owners have lost their cottages to foreclosure. All three units sold this year once the banks got serious about pricing. One cottage that sold new for $1.5 million in 2005 was unloaded for $650,000 this past March. The agressive pricing drew multiple offers and the final selling price was a few thousand dollars over the list price. Now that the three foreclosures have new owners, pricing in the Coast Cottages neighborhood is stabilizing and even showing signs of recovery ... perhaps a precursor of things to come elsewhere. BEACH CLUB CONDOS This well established beach front condo had no sales in the 12 months leading up to July 31, 2009. There have been 3 sales since then. A bank owned unit was priced agressively at $396,000 drawing four competing offers. The winning bid was $526,000. This illustrates a fascinating phenomenon in real estate marketing ... if the price is perceived as an obvious bargain, buyer's will often bring it back up to market value. OCEAN BREEZE NEIGHBORHOOD This older neighborhood includes residential homes along Ocean Boulevard, Beachview Drive, College Street and others. Here we see sales growing from $985,000 to $1.86 million with two bank owned sales in the past 12 months versus none in the previous 12 months. Average selling price is down from $492,500 to $372,100. OCEAN WALK CONDOS Ocean Walk is one of the most established condominiums on St. Simons Island and a popular entry level investment community within walking distance of The Village. It's shown remarkable stability over the past two years with only one bank owned sale. Average selling price is down less than 6% from one year to the next, due in large part to the low number of bank owned sales. OVERALL unit sales in these five examples grew from 12 during the period ending July 31, 2009 (with no bank owned sales) to 28 during the most recent 12-month period (with 15 bank owned sales). Without the 15 bank owned sales, unit sales would have been virtually the same from one period to the next ... a dismal performance at best. The statistics clearly illustrate how bank owned sales are dominating the beach area real estate market.
Ten St. Simons condos auctioned online from November 2009 Issue Bidders keep St. Simons auction prices low from June 2010 Issue |
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