3rd Quarter Update

By Joe Savage, Real Estate Broker

The weather is beautiful along the Alabama Gulf Coast this time of the year. Shrimp Festival on the second weekend in October, Monarch butterflies are migrating through their flyway, temperatures are giving us a breather, but the gulf is still warm enough to take a refreshing swim. This is a time to come visit your property at the beach. Once November gets here, its all about the holidays, so take advantage of it now.

September closed out the third quarter, and as of September 30, there had been 34 sales for the year across the Gulf Shores Plantation. Of those, 12 were in the third quarter. That makes all three quarters consistent so far this year: 11 in the first quarter and 11 in the second quarter. There is currently one unit under contract in the MLS, and is projected to close near the end of the month. Prices have trended upward throughout the year, but we expect to see some deals hit the books in the fourth quarter. Someone purchasing a unit as we enter the lowest-use, lowest-rent period of the year typically expects some discounting as the quid pro quo for assuming the expenses from the seller for those months. Hopefully that discounting will not be too drastic.

Currently, there are 42 properties for sale across the complex: nine in Plantation East (two-1BR; seven-2BR); seven in Plantation Dunes (six-Sunsuites; one-2BR); 18 in Plantation West (four-Sunsuites; 14-2BR); seven in Plantation Palms (three-1BR; four-2BR); and one duplex for sale in the PUD. This is still a lower inventory than is common, with a balanced market being somewhere in the 10% of inventory for sale, or around 60-70 units. There is some concern for the percentage of units for sale in West (there are 107 units in west). This excess inventory could have an adverse impact on pricing in West, and beyond. That is, West and East are both wood-frame structures sharing the same setting and beach, and are of comparable age. With these similarities, sales in each are often used as comparable sales in the other when a mortgage appraisal is conducted. Thus, falling prices arising from a glut of offerings in West would very likely have a detrimental impact on prices in East, and even in Dunes to some extent, due to the similarity in ages of the three. GSP Development, by both its form and function, is necessarily intertwined and interdependent it is not likely that something can happen in one complex, and not have an effect on the other four.

This diminishing inventory can also be seen at neighboring Beach Club, as well as in Gulf Shores and Orange Beach. Conversations with other agents, property managers, and owners suggest that there is likely a shadow market of sellers out there, waiting for the price to get right before they take their property to market. Lets hope they all don't decide to do it at the same time!