A regular Source feature, Undercurrents explores issues, ideas and events as they develop beneath the surface in the Virgin Islands community.
It’s a little early for fireworks but a few balloons would not be out of order to celebrate a recent upswing in the territory’s housing market.
Until the last year, things have been especially bleak on St. Croix. Realtor Julie San Martin shared an analysis she recently published that traces land, condominium and home sales on the island over the 10-year period from July 2004 to now. Sales in all categories dipped so far the first nine years of the period, that even with the upward swing between 2013 and 2014, the market is still well below what it was in 2004.
According to her report, there were 187 St. Croix homes sold in the 12 months between July 2004 and 2005; in the same timeframe between July 2013 and June 30, 2014, there were 147 homes sold, or 22 percent fewer. Condominium sales were off 54 percent – from 175 to 80 – in the same period, and lot sales dropped 76 percent, from 268 to 63.
As might be expected, San Martin’s report shows the low point in the 10-year span came between 2011 and 2012 as the island’s major employer, the Hovensa oil refinery, closed in January 2012.
Between localized problems and the general economic downturn across the country, by late 2012, sales were so far down on both St. Croix and St. Thomas that some real estate professionals warned we might soon hit rock bottom.
Now they are heralding an increase in activity.
“We’re starting to see the change in the market,” San Martin said. “The inventory (of houses for sale) is becoming smaller” as the number of sales is increasing.
“It definitely has improved a lot,” said Chris Hanley, St. Croix realtor.
Suzanne Mabe, a real estate broker/owner on St. Thomas, said the sales volume is up.
Hanley concentrated on the more recent numbers. He compared the first six months of 2014 with the same period in 2013 and found a 22 percent increase in the number of sales on St. Croix for properties across the board, that is, land, houses, condominiums, etc. There were 128 real estate transactions on the island from January through June last year, compared with 163 transactions for the first six months of this year. The total dollar amount also went up, from $27.6 million to $39.9 million – although he said “prices are still very low.”
St. Thomas figures reflect the same trend. Mabe said there were only 61 houses sold in the 12-month period from July 2012 to July 2013. But in the last 12 months, the figure was 89, an increase of more than 30 percent.
The high end of the market on St. Thomas is “a great deal stronger” than it was a couple of years ago, Mabe said. In the last 12 months, there have been 16 homes sold for more than $1 million each. In contrast, it took three and a half years, January 2010 to July 2013, to sell 17 homes in that bracket.
The low end of the condominium market is also very strong on St. Thomas, she said. Of 100 condominium units sold in the past 12 months, 44 of them went for less than $150,000.
“The less expensive studio or one bedroom (near the beach) pied de terre get-away- spot- in- the- sun sold really well,” she said. Buyers were generally people from the U.S. mainland.
What isn’t changing much are sales of residences in the middle range and long-term residential condominiums that are not beachside. She described those as “flat.”
Mabe attributes the upswing in the overall market in part to individuals who recently moved to the Virgin Islands to take advantage of Economic Development Commission tax benefits and who are buying property here. But she said the biggest difference is because of an upsurge in the number of second home buyers – residents from the mainland U.S. who are buying vacation or retirement homes in the territory.
All three professionals concurred that as the U.S. economy has improved and stabilized, the local market has benefitted.
“If we don’t have those off-island buyers in the market, our market is dead,” said San Martin. The community is simply too small, and much of it too poor, to sustain a large real estate industry.
Hanley said 75 percent of the real estate transactions on St. Croix are by new people coming to the island.
And now that mainland prospects have the means to purchase, they are learning what the islands have to offer. Hanley said the media exposure the territory has received in the past few months, particularly St. Croix, has played a big part in increasing sales.
The Tourism Department’s VI Nice campaign has brought some attention to all three islands and St. Croix was featured on “The Bachelor,” but the biggest boost seems to be coming from the home improvement channel’s real estate shows, Hanley said.
HGTV is airing two such shows that have featured the island, Beachfront Bargain Hunt and Caribbean Life. Hanley appears as the St. Croix real estate agent on the Caribbean Life series; he was in two episodes this year and said the show has already been renewed for next year when it will feature St. Croix in three different episodes.
Both Hanley and San Martin said each time one of the St. Croix shows airs, there’s a notable increase in interest.
“We’ve gotten thousands of inquiries from it,” Hanley said. And lots of people fly into St. Croix to check it out for themselves.
Another factor in play, San Martin believes, is that “the sellers are relaxing their expectations” as far as pricing is concerned.
That may be a natural response to a slow market.
“Our sellers many times do not have to sell,” she said, adding that they tend to overprice their properties. She said that’s a mistake, however, because “at the end of the day, the buyers drive the market.”
Right now, the drive is upward.
“We expect this trend to continue,” Hanley said. “And if the refinery reopens …”
