Purchasing real estate on St. John is becoming an option for many who could not afford to do so in the recent years.
The skyrocketing real estate prices that St. John has experienced over the last several years seem to have finally leveled out thanks to an increase in inventory and a price correction, according to many island real estate agents.
Last year’s average sale price of homes, land and condos of $1,050,283 is down this year to $887,313, according to the St. John Multiple Listing Service.
“We’ve had some price corrections,” said John McCann, owner/broker of John McCann and Associates. “What essentially happened is St. John had a very, very active market for a number of years with high rates of appreciation. This type of increase can’t continue on a permanent basis, because it prices people out of the market.”
The decrease in real estate sales is occurring stateside as well.
Correction in Market
“I think that the slow down in the market is nationwide, not just here on St. John,” said Gretchen Labrenz of Cruz Bay Realty. “We have a different market, because it’s a second home market — people aren’t relocating here. We are going through an adjustment in the market, and I think we started to see a slow down in early 2006.”
“The prices inflated too quickly for the market, so we’re just going through an adjustment right now — a correction in the market,” Labrenz added.
Off-season is traditionally slow for real estate on St. John.
“September and October are traditionally slow months for everybody, and this year was consistent with tradition,” said Hilarie Oliver of American Paradise Real Estate. “I think there is a lot more inventory on the market with regards to both land and houses, and with more competition you have to make sure you are priced competitively. It’s very important to price correctly.”
Owners who are highly motivated to sell are fueling the market’s current price correction period.
“I think it’s a little correction, because the prices were going so high so quickly, and it can’t go that way forever,” said Merry Nash of Islandia Real Estate. “We really haven’t seen any across-the-board price drops, other than from sellers who are really highly motivated. Most people are hanging in there, waiting for the market to improve in the states, because when that happens, the market improves here too.”
The real estate market on St. John is very different than it was this time last year, according to Reggie Walters of Reggie’s Real Estate Group.
“If we were looking at it as if it were a heartbeat, I think it would be almost at a flatline compared to what we’ve been at for the last four years,” said Walters. “I think the volume is there, but the number of transactions are way down.”
Some sellers are starting to get creative to steer buyers toward their properties.
“We just have to buckle down and get more creative,” said Walters. “We’ve certainly seen some creative listings, where it might include a car with the sale of the home. I think it’s time to get creative with the market and to put the spotlight on a certain property to move it right now.”
The increase in inventory coupled with the price correction gives buyers more choices.
“Customers have more of a choice to select from and are being more choosy,” said McCann. “Where in the past, people have only had one or two properties in their price range to choose from and needed to act quickly, now they have maybe five or six choices, and they are taking their time.”
Buyers are reacting to the market slow down in a more fluid manner than in the past, according to John Ford of Town and Country Real Estate.
“In the past, when the market’s gotten slow, the sellers have just said, ‘I’ll sit back and wait until someone meets my price,’” said Ford. “Now, it seems to be more fluid. Prices were being adjusted soon after sales started slowing down.”
Price Reduction Opens Market
“We’re seeing a market that is adjusting to the conditions,” Ford added.
The recent price correction opens up the market to those who could not afford to buy property on St. John in the past.
“This might be a good opportunity for someone who has been looking at property to purchase,” said Labrenz. “The price correction gives more opportunities for the buyers out there to make offers.”
It will be interesting to see where St. John’s real estate market goes from here, according to Miles Stair of Holiday Homes.
“There are more than 110 homes on the market for sale, so there’s no longer a supply and demand scarcity,” said Stair. “St. John is still a very desirable location, and I think sales will continue to occur. Whether sellers are motivated and cut prices, or if they hold their prices, it’s going to be an interesting market to watch.”
Cold Winters Good for Business
Many real estate agents are hoping for a cold winter stateside, which tends to drive sales on St. John.
“Things are picking up now that it’s started snowing in Buffalo,” said Nash. “When it starts snowing in Buffalo, phones start ringing. If they have a long, hard winter up there, we’ll have a very strong season.”
As tourist season begins to pick up, so does interest in real estate on St. John.
“I’ve gotten a lot of people e-mailing us in anticipation of their trip down here around the holidays,” said Oliver. “I’m also very excited about our new office. I think the freestanding location on the main drag will be great exposure for us.”
Despite this year’s sluggish real estate sales, island real estate agents are optimistic about the upcoming season.
“Typically, spring is a huge real estate time for us, when we have more contracts and more serious buyers,” said Walters. “I think the truth will be told by spring of next year, where this market is really going to go. I am just hoping that the floodgates will open.”
St. John’s period of readjustment will help increase turnover, according to Ford.
“We are poised for a good turnaround coming this season,” said Ford. “We haven’t had any major storms, which has been a good thing. I think our turnaround time will be shorter, so I’m looking forward to a good season.”