Island home buyers face dearth of choices as season nears
STORY BY STEVEN M. THOMAS (Week of November 7, 2024)
With the busy winter selling season approaching, finding a house or condo to buy on the island is proving a challenge – again.
Most island real estate brokers believe more inventory will go on the market in the final two months of the year, but in the meantime, listings are scarce by historical standards.
“Before covid, we typically had about 300 houses for sale on the island,” said Douglas Elliman broker associate Sally Daley, who follows the island market as closely as anyone. “We have 140 today.”
Condo inventory is similar with about 150 units for sale in 32963, compared to an average of more than 300 before COVID-19 turned the world upside down and transformed the island real estate market.
The number of houses for sale on the island rose during the first few scary months of the pandemic, peaking around 380 in May 2020, before sledding steeply downhill to a low of about 50 homes in April 2022 as the pandemic real estate boom peaked.
Over the next year and half, inventory inched up to about 125 homes. Then, a year ago, the increase accelerated and by May, the average number of houses listed for sale in 32963 was above 200, back to about two-thirds of the historic norm.
But then, for a mix of reasons – some good and some not so good – inventory began to contract again, shrinking to less than half the pre-pandemic average.
The shortage extends from Central Beach to top club communities like Orchid Island Golf and Beach Club and John’s Island.
“We currently have one active listing,” said Orchid Island Realty broker Anne Torline.
That listing, a 4-bedroom, 5.5-bath, 5,289-square-foot residence offered for $4,650,000, is the only house for sale in the 375-home county club community. There are no condos listed.
“Inventory here has stayed tight since covid,” Torline added.
It’s almost as skinny in John’s Island.
“We have three or four active listings for single-family homes, five condos, one townhouse and no golf cottages,” John’s Island Real Estate broker Bob Gibb told Vero Beach 32963 last week.
Listings change day by day, and on Saturday the company website showed a total of 13 properties for sale not already under contract, including one lot.
That is about one percent of the 1,380 residences in the nationally renowned club community and considerably less than Gibb’s normal inventory.
“We usually exist happily with 2 ½ to 3 percent inventory,” he said. “The current numbers show we are definitely in a sellers market in John’s Island.”
The mass influx of pandemic buyers bought up the available houses and condos in John’s Island and Gibb said “we never regained the same level of supply after covid.”
Torline makes the same point about Orchid Island, where a $20 million set of upgrades has included major golf course and clubhouse renovations, new pickleball courts, bocce ball and croquet courts, and other improvements.
“Residents love the lifestyle here and aren’t inclined to move,” said Torline. “Natural attrition will always occur, but members tend to stay because they like the club, the management, the other members, and all the new amenities.”
The gravitational pull of the island’s residential clubs for a select but substantial group of buyers has gotten stronger because other non-residential island clubs developed long waitlists during and after the pandemic.
So, a buyer who might have purchased a home in Riomar or another upscale neighborhood and then looked for a club to join now may favor a club community such as John’s Island because club membership is available.
Membership is not automatic at John’s Island. There is an approval process. But memberships are available for approved property owners.
“The availability of club membership continues to be a strength of our market,” says Gibb.
A broader desirability factor that encompasses the clubs and includes the rest of the barrier island is another force pushing down on inventory.
Even though the great pandemic migration to Florida has ebbed, Vero Beach has attained a cache that continues to attract buyers.
“In many parts of Florida, inventory is above pre-covid levels,” said Daley, an observation backed up Redfin data that shows 20 percent more homes for sale statewide now than in December 2019, up from about 104,000 to 124,000.
Gibb said he thinks the success and continued expansion of Breeze Airways routes between Vero and the Northeast also plays a role in the continuing influx of buyers.
“There were people who passed on Vero because it would be hard for their kids or grandkids to get here, having to fly into West Palm or Orlando, but Breeze has solved that problem for many of them.”
A negative factor suppressing inventory on the island has to do with the home insurance crisis and continuing disconnect between sellers’ aspirations and the reality of the post-pandemic market.
Insurance companies won’t write policies on homes with roofs older than 10 years in some cases and have other extreme coverage requirements, along with increasingly astronomical rates for houses they do insure, often based on age and condition.
Sellers who aren’t fully aware of this may list their aging homes for more than buyers are willing to pay, considering the uncertain availability and high cost of insurance.
They may see a nearby house the same size and age as theirs sell for $3 million and list for $3.1 million, still under the spell of the pandemic boom when prices rose higher by the week, not taking into account a changed market or realizing that the sold house was fully renovated while theirs lacks key updates.
Then, when they get no offers, rather than reduce their asking price, which they believe is justified, some sellers take their homes off the market, depressing inventory.
“It is a material factor,” said Daley. “Houses can come off the market and reduce inventory because they sell or because they are withdrawn, and I see that happening quite a bit.
“The question that has yet to be answered is whether they will adjust their price and put the house back on in January or decide to stay put.”
And it isn’t just the insurance dilemma causing withdrawals. Contemporary buyers generally want homes that are up-to-date and move in ready and many of the middle-market, $1 million to $3 million houses on the island were built in the 1980s and 1990s and are dated in a variety of ways, even if they are insurable.
“Homes that are well renovated sell quickly,” Daley said. “When I meet with a potential seller, I tell them what I think their home is worth as is and what it would be worth with a set of renovations that would increase its appeal.”
“Having a home that is move-in ready is much more important now than in the past,” Gibb said.
“Even if the seller offers a credit for a new roof or other renovation, buyers aren’t interested,” Daley said. “They don’t want to inherit a messy project and the uncertainty of what is underneath or how the job might expand. They want the new roof or the new kitchen in place.”
Mainland inventory in Indian River County didn’t dip in recent months the way island listings did. It came up to about two-thirds of pre-pandemic levels in May and has stayed at that level, with a strong supply of new homes bolstering the numbers.
Mainland single-family inventory peaked in April 2020 around 1,400 houses, dropped to a low of about 200 in May 2022, and has since climbed back to about 900, as of Nov. 1, according to data provided by Douglas Elliman.