Just how strong the Virgin Islands real estate market is these two years since the hurricanes depends somewhat on who you ask and where they’re from.
But there is general agreement on several things:
– More homeowners decided to repair their storm-damaged homes than those who decided to sell.
– Relatively low inventory means it’s a seller’s market.
– Properties in the low-to middle price range are selling faster than those over the million-dollar mark.
– The influx of disaster-related workers is still inflating rental prices.
– More and more residential properties are converting to vacation rentals.
A look at the statistics – shared by April Newland of Newland Real Estate – shows more movement on St. Croix than on St. Thomas for the past year. And as has historically been the case, prices are generally lower on St. Croix than on St. Thomas. As of Friday, MLS (Multiple Listing Service) numbers of sales for the past 12 months were:
207 homes ranging in price from $275,000 to $2.9 million
136 condominiums ranging from $120,000 to $650,000
151 transactions involving plots of land, ranging from $30,000 to $750,000
127 homes, ranging in price from $216,000 to $7 million
128 condominiums, ranging from $140,000 to $685,000
57 parcels of land, ranging from $35,000 to $990,000
MLS also shows 11 timeshares sold on St. Thomas, all at the Ritz, but none on St. Croix.
Commercial property transactions are difficult to parse. MLS shows 16 on St. Croix for the past year compared with just nine on St. Thomas. But, Newland said, not all commercial sales are captured in MLS listings. The small number of sales and wide range of businesses involved also make price comparisons problematic.
Newland did not have numbers for St. John, which has a separate MLS.
Nick Van Assche, owner and broker with Sea Glass Properties, knows the St. John market well and said parts of it are strong and others are not.
“Cruz Bay has performed quite well,” Van Assche said. “Coral Bay is still in the recovery mode … It’s not a strong market.” However, overall, he’s optimistic. “We’re starting to see more activity.”
He noted several hurricane-related factors that are holding things back.
“The uncertainty about Caneel Bay has not been helpful,” he said, refering to the lease dispute that has kept one of St. John’s two major resorts from rebuilding.
“Not having a golf course hasn’t helped us” either, he said, in an apparent reference to the fact that the Mahogany Run course on nearby St. Thomas has not reopened.
Add to that the mini exodus of businesses whose deep-pocketed owners once comprised a ready market for high-end homes.
“We lost a lot of the EDC people,” he said, referring to companies that had operated businesses in the Virgin Islands to take advantage of tax benefits offered by the Economic Development Commission.
His partner and co-owner at Sea Glass, Kirsten McConnell, is acutely aware of that sting. With her office based on the East End of St. Thomas, where many EDC beneficiaries were housed before the storms, she said, “It’s dead here. Most of the EDC companies are gone.”
Another factor hurting sales is the increase in insurance rates that has followed the storms.
McConnell said buyers now must ask themselves: “Are you prepared for a $24,000 to $29,000 yearly insurance bill?”
Then there is the infrastructure. The V.I. Water and Power Authority’s frequent electrical outages are making buyers nervous, she said. Last week, people who had just closed on purchases were looking to sell them again.
“This WAPA problem is just another nail in the coffin,” McConnell said.
That is not to say McConnell has given up on the market. But she said it’s tough and requires creative thinking.
For instance, “The hurricane-damaged homes are cash. You can’t get a loan for that.” It takes negotiation between the buyer and seller to accommodate a cash reserve for making outstanding repairs.
Across the territory, as more and more homes are repaired, the market is stabilizing.
“The supply is catching up with the demand,” said Chris Hanley of Farchette and Hanley Real Estate, which is based on St. Croix.
Hanley said there has been some activity in the high price range in the last couple of weeks, but by and large most recent sales on the big island have been in the low to mid-range, somewhere under $750,000.
He estimated that 70 percent to 75 percent of buyers are from off-island. They are either looking for second homes or are planning retirement.
“The rental market continues to be good – if you’re a home owner,” Hanley said. It’s bad for those who have to rent.
The influx of construction workers and of federal disaster relief employees who have generous per diem allowances has temporarily skewed the rental market, he said. What would have rented for, say, $1,500 a month three years ago is now going for $2,500 or $3,000.
The effect seems to be stronger on St. Croix than on the other islands.
Besides an uncounted number of construction workers still busy on hurricane-related projects, Hanley said there are probably about 2,000 people brought in to work on preparing Limetree Bay Refinery for opening early next year. Many of those are living in the “Man Camp” set up by the company but others are renting places on their own.
Add to that FEMA employees who are working on temporary assignments in the territory. According to figures released by Eric Adams, FEMA communications officer in the Virgin Islands, there are 132 agency workers in St. Croix, 70 of whom are from outside the territory and therefore are receiving a housing allowance or per diem. On St. Thomas, there are 49 FEMA workers total, with 17 of them receiving per diem. Only one worker is assigned on St. John, and that person is a local hire. V.I. residents do not receive housing or per diem.
For those who do, the rates vary by island and by time of year. During the tourist season (from mid-December to mid-April) the rate is $399 for St. Thomas, $299 for St. Croix, and $230 for St. John. Out of season, the rates are $249 on St. Thomas, $247 on St. Croix and $170 on St. John.
Hanley speculated that by early 2020, many of the temporary workers – for the refinery, for FEMA and for general construction – will be gone. “Then the pressure on the rental market will ease.”
It should also help when more hotels reopen, particularly in the St. Thomas-St. John district where few large branded hotels operate.
While places like the Ritz Carlton (scheduled to open in December) and Frenchman’s Reef (projected to open in late 2020) have been closed, a lot of residential properties have taken to housing vacationers, Van Assche said.
Right now “Airbnb is driving the market,” she said. Some people are buying properties to turn them into short-term rentals.
While that may prove to be a temporary situation, Newland sees a related trend that may prove more long-term: a kind of remake of downtown Charlotte Amalie from a strictly retail area pitched to tourist trade, to a mix of business and residential. The residential side could appeal to visitors who are interested in the historic aspects of the island.
She said a deal was just completed for 11,000 square feet of downtown space slated for a complex of mixed use, some residential, and some retail space for smaller, boutique type shops. Other similar ventures are expected.
As traditional tourist shops strain from the competition with cruise ship outlets and some go out of business, prime properties are coming on the market “even on Main Street because you know there’s a lot of empty space on Main Street,” Newland said.
Meanwhile, she said, the long-awaited downtown revitalization project is progressing. In recent years, some of the amenities essential for a residential presence – such as banks and a grocery store – have set up downtown. The stage is set for a sea change and Newland thinks it has begun.
“I see the transition,” she said.