Sunday, December 14, 2008

We're Too Darned High

The subject for this post is real estate and the the theme is whether SPI really is cheaper than other places in the US. This conversation came up during our "Alternatini" gathering because we weren't invited to Martini Night, and how a real good business simply couldn't find anything on the island that was remotely workable.

So I hit the books and did a little research. I can't compare condos yet, as they have zero land, but I was able to compare land lot prices in terms of dollars per acre.
  • Block Island, RI: $0.7M per acre
  • Martha's Vineyard: $0.8M per acre
  • South Padre Island: $1.4M per acre
I know I have avoided the California issue but places like Block Island, Martha's Vineyard, Long island NY, and Nantucket are the cream of the crop, the highest land prices on the Eastern Seaboard. The fact is, our prices are double theirs.

This came as quite a surprise because the prevailing logic that SPI is cheaper than most other places. I can do some more research, although it involves putting numbers into a spreadsheet, but I don't think the answers would change much. The prevailing logic was wrong. Face it, we're trying to screw the market and the potential home buyer knows it. Here are the chief reasons:
  • The average home lot is only 0.14 acres in SPI, a small postage stamp
  • Other places offer land at in terms of 1 to 2 acres, with small lots being 0.25 acres, lots of space that people really value
  • The Town of SPI isn't nearly that great or pretty to offset the very high cost of land
What is truly baffling is that many people bought land down here when it was only $200K to $400K per acre or even cheaper if you'd been here since the early 70's. How did we end up adding a million to those kinds of numbers and get away with it?

Until recently we did. That all stopped about two years ago when the housing market dried up. The only moving down here are condos and townhomes and they aren't doing too great either. It is simple math: we're too damn high.

To tell the truth, I moved here for quality of life and knew about the costs and did my research. But I wouldn't expect "zoomers and boomers" to fall from the sky because we're totally upside down on our land prices. I can tell you why islanders move to Port Isabel or Bayview though: you can get an entire acre or more for the price, including a $250,000 house on it.


island princess said...

Damn good post and points made. LOL on the alterniti night. Way to go.

Sam said...

You are too kind, Island Princess.

I did get one person rather upset, I suppose for cherry picking my information and not providing a solution to the problem. I guess that person has a point ... I just don't know what to do about it.

The truth is, I bought a house that less than 8 years ago, was worth half as much. That's an incredible increase! But I did it because I wanted to, and I suppose perpetuated my own premis that land here is priced pretty darn high compared to other non-luxury coastal resorts.

As I explained it, the market will do any fixing, and certainly not poor ole Sammie here. As long as I make the payments I'm good to go. Matter of fact, we've been paying more than the mortgage because we want to own the house quicker than 30 years!

Perhaps I should dwell on the funny, the humorous, and the nice things and not undertake such lofty conundrums. If anything, people are just WAY too serious these days, what with the depression happening, or whatever you want to call it. But sometimes I find trying to make everyone laugh and be happy can be an equally depressing task.