It would appear that sanity has returned to the Gulf Coast condo market. New projects opening up are selling well, but fewer condo sales are to investors looking to make a quick buck by immediately selling the property to other investors, a practice known as flipping.
The $43.4 million Lighthouse condominium development is ready to open for occupancy. The 18 stories tall, 251 two and three bedroom unit development sold out within hours of going on the market in 2003.
Now it's time for Lighthouse condo owners to close on their properties, and real estate professionals are watching for indications the market might once again become frothy. So far, if closings on the Lighthouse condo development are a good indicator, there are few signs of this exuberance. Owners are closing on their properties for occupancy and not the quick sale.
Gulf Shores condo prices appear to be stabilizing and appreciating at a healthy pace.
Realtors optimistic about beach market prospects
The buyers of the 251 condominium units at The Lighthouse in Gulf Shores started closing on their units two weeks ago, and everybody's watching.
In today's sluggish condo market, how many will buy and how many will bail?
The project presold within 24 hours in August 2003 at prices from $215,000 to $485,000. Some units flipped, or were sold several times at ever-increasing prices, with totals reaching the high $600,000s and into $700,000s, according to agents.
So far, 50 units have closed, according to Rick Phillips, one of the developers of The Lighthouse.
"We're overwhelmed with our buyers trying to come to close," he said, noting that scheduling the 251 closings is difficult since so many owners want to use their units this summer.
"We have not had a single person say they are not going to close," Phillips said. "We've had a couple of buyers say they would not like to close, but they plan to close unless they find a buyer."
Phillips said he gets calls from investors looking for a good deal on a unit, and puts them on a list. So far, he added, he hasn't had to use it.
Watching the Lighthouse and other preconstruction projects close "gives me a whole lot of optimism that everything will close," said Paul Wesch of The Mitchell Company. "Most of the people are buying the unit, will furnish it and not flip it."
"The flippers have gone away," said Frank Malone of ERA Class.com in Gulf Shores. "It was a fun game, though. But we have to remember that flipping is not real estate, that's securities. We're in the real estate business."