The St Aug Blog

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

Last November we opined here that the end of the buyer’s market was near for single family homes.  We were right.

Now we’re saying that it’s the begining of the end for the buyer’s market in St. Augustine condos.

I’m saying that because the below market “deals” that have been there since the beginning of the year are gone.  About the lowest I can find for a two-bedroom/two-bath in an ocean side community is $160,000 for a short sale at St. Augustine Ocean & Racquet.  Whereas last month we helped an investor get a Colony Reef Club condo for $124,900. 

Those deals that we were so used to seeing in the $120,000s and $130,000s are gone.  And the “deal of the century” units at Seaside Villas of Anastasia (about half a block west of FA), nearly all of which were bank owned or short sales selling for $60,000-$90,000 are now sold out.

The upshot is that the price floor has essentially moved up from “below market” to “market.”  And thus the recovery has begun. 

If there are still deals available its in the higher end condos, where there has never been a huge buyer pool.  And the range between $250,000 and $300,000 still has a lot of inventory.  It’s my guess that those units in the $250,000s to $300,00s will be the ones to go next because an investor can still cherry pick.

The reason this is happening: down payments are now between 20% and 30% for a condo as a 2nd home (you have to have the assets to back it up, however).  This is way better than the 50% we saw for most of 2009.  So more people can get in than could even just six months ago. 

Also, investors are pretty sure the market has bottomed and are moving in…I think that’s pretty obvious with the disappearance of the below $150,000 condo near the beach.

There are still fence sitters.  The logic is “I don’t see any reduction in inventory,” and, “I don’t want to put down more than 10%-15%-20%.”

I would counter that by saying it’s not the overall inventory that is important right now, but instead, it’s which inventory is selling that’s important.  That the “deals” are gone is a harbinger of things to come.  The serious rank-and-file buyers who were watching but haven’t jumped in will see the properties they bookmarked are gone, which means they’ll jump in next to get the second best properties available.

As for not wanting to put down over 20%, what, are you nuts?  In the last month investors were willing either to put 20% down or pay cash for properties that were selling at 65-85% of value.  Put down 20% and gain 15%+ equity right back?  Sounds like a deal to me.  But now you’ll have to put that same 20% down to get something for full market value.  So I don’t get the waiting to pay more, if you can get in right now.

But that’s just me.

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