Homebuilders and affluent buyers are quickly scooping up vacant lots along the waterfront in Pinellas County, as the market continues to flourish with activity despite the limited supply of new homes.
“We are at a two-month supply of homes; a healthy market has a six-month supply. It’s still a seller’s market. If you have a property on the water, people will pay a premium,” said Alex Malagon, a fourth-generation St. Petersburg native who’s working with Remax Metro Florida.
Malagon works with a handful of homebuilders and general contractors, such as Bradenton-based general contractor Tide Homes.
Tide Homes was planning to develop a spec home (a home built for buyer consideration before it hits the market) at 809 Brightwaters Blvd. NE.
“I was removing the ‘for sale’ sign at the site when I got a call from a local saying he wanted to build a home there,” Malagon said. The buyer purchased the vacant lot for $3.2 million.
“He signed a construction contract at closing that was more than the purchase price for the land. The buyer plans to build a 7,200-square-foot luxury custom home,” Malagon said. “People are buying these empty lots just to have a piece of St. Petersburg real estate.”
The type of buyer and deals in St. Pete
“Miami and Fort Lauderdale have significantly higher transactions, making us an excellent candidate. When people come to Tampa and St. Pete, they recognize they can buy properties at a better value,” remarked Jennifer Zales, Coldwell Banker Realty’s top Florida agent who’s most active in the exclusive Shore Acres and Snell Isles communities.
“Within the first few weeks of 2023, my business started picking up to where it was last year and have a large influx of buyers coming from New York, Chicago and California,” said Zales, who is based in Tampa. “We are seeing a strong real estate market in the luxury space and are still getting multiple offers on properties – maybe not as many as before, but they are quality offers – it’s a much more balanced normal market today, versus when it was a crazed market during the pandemic.”
Dynasty Group associate broker Carol Fasick-Joyce and real estate consultant Alexis Logan said that while the housing market is leveling out on a national scale, they are still experiencing all-cash deals and multiple offers from out-of-town buyers.
“I sold a property in Belleair Beach in January to buyers from Colorado. They just knew they wanted to live on the water, and we went from looking in St. Pete to all over the beaches and found a property in Belleair. People seem to be really focused on making sure what they are buying will serve them in the long term and are being extra diligent,” Joyce said.
Last year, the duo sold a Snell Isle estate in a $13 million sale – a new record for single-family waterfront homes within that ZIP code.
They also recently closed a $5.5 million deal for a Venetian Isles estate built in 2021.
The desire to buy waterfront properties in St. Petersburg is still robust regardless of the catastrophic damage caused by Hurricane Ian and storm surges last year in coastal Fort Myers.
“People thought after the hurricane and rising interest rates it would greatly affect us, but we might be more insulated from that,” Fasick-Joyce said, stating she is still seeing 30-day closing windows.
However, Zales said buyers may be more inclined to buy spec homes due to FEMA (Federal Emergency Management Agency) setting new requirements for homes in its flood map. Some older homes constructed at lower elevations are meeting the wrecking ball as a result of the flood map.
“When a buyer calls me to look at homes in Tampa Bay, I educate them about the elevations and zones of the newer homes and reasonable flood insurance,” Zales said. “It’s hard to renovate homes sitting below the FEMA flood map. When the land exceeds the home value, it often makes sense to tear down the structure and construct a new home to meet the newest codes, and it is easier to insure.”
Can St. Pete’s inventory keep up with the demand?
The simple answer is no.
“Although the days a house is sitting on the market have increased, and we are not seeing the bidding wars driving prices up anymore, our area remains very strong with more demand than our inventory can keep up with,” said Brittany Ranew, a realtor with Premier Sotheby’s International Realty and host of the St. Pete Soul podcast. “With all the future developments planned for St. Pete over the next several years, I don’t think the demand is going anywhere.”
Others also shared Ranew’s market perspective, stating they are constantly seeking out off-market properties for buyers.
“There’s not enough supply. People will buy land quickly – there’s no question about that. As far as spec homes, we’d like to see them nearly finished or as least have the walls up,” Joyce said. “People still prefer for it to be turn-key ready, as many don’t want a project unless they are starting from scratch.”
“I represent a fair number of local builders and we have several homes under construction that will be coming online this spring. Agents often share lists of different properties that are not yet listed, but will be coming to the market because we don’t want to list certain properties until they reach a certain stage,” Zales added.
Zales is actively selling a Shores Acres spec home under construction at 3801 Bayshore Blvd. NE. The home, which is nearing completion, is listed at $7.5 million, breaking down to just over $1,000 per square foot.
She is also selling a condo in Ovation, a luxury residential complex on Beach Drive. The condo, listed for $4.35 million, quickly went under contract and is currently pending a sale.
Predictions for the local luxury market
“There’s a significant migration of investment. St. Pete is desirable, and compared to other markets, we remain extremely well-priced,” said Malagon.
Malagon resided in South Florida for two years before moving back to St. Petersburg in 2018.
“In West Palm Beach, I witnessed buyers purchasing $30 million estates and bulldozing them for new homes. A lot of people around the country are noticing they could have an easier lifestyle in Pinellas County and can get more value from their investment without needing to spend a ridiculous amount of money,” Malagon said.
Malagon is also working with St. Petersburg-based Backstreets Capital and Canopy Builders, which are building Canopy Oaks, a luxury townhome development at 1920 Dr. MLK Jr. St. N. on the eastern boundary of the Euclid St. Paul neighborhood.
The local real estate agents and brokers agree the market is on a steady trajectory.
“Luxury is strong and often leads us out of residential real estate downturns,” said Zales, who attended the International Luxury Alliance meeting in Chicago last week where Coldwell Banker Realty’s top 77 agents convened to discuss the market.
Zales said the realtors at the event expressed optimism for the future, and she predicts the interest rates will become better adjusted in time, meaning buyers may refinance later while all-cash deals for luxury properties are still trending.
As of this month, the current interest rates in Florida are 6.84% for a 30-year fixed mortgage and 6.15% for a 15-year fixed mortgage. However, if inflation continues to slow down, mortgage rates may stabilize below 6% this year, according to National Association of Realtors (NAR).
Ranew added that the rise of remote work becoming more prevalent among the recent numerous corporate relocations, largely due to Petersburg Economic Development Corporation’s business recruitment efforts, has bolstered the area’s appeal.
“Despite the ever-changing economic climate in the U.S., St. Pete and Tampa are poised to experience continued and sustainable growth for years to come,” Ranew said.