MADEIRA BEACH – The days of small family homes and quaint cottages along the beach are coming to an end. More and more large multimillion-dollar homes are replacing the older ones and it is a trend real estate sellers and developers see continuing.
Developer Peter Donnantuoni operates Sea Glass Coastal Properties in Madeira Beach and said coming out of the recession expensive homes are hitting the market all over.
“There are multiple reasons for that,” he said. “The market for the last 10 years has been dormant; there hasn’t really been any new construction along the beach since 2006 when the market tanked.”
So he said it was time to begin to build again. Building new homes trumped buying existing homes because of age.
“The product, the homes along the beach, is 15, 20, and 30 years old,” he said, “That means designs and finishes are older and not something people want.”
Those people are now feeling more comfortable spending big dollars on a new home and Donnantuoni said they are filling a void in the market.
“They are the baby boomers who are saying they are tired of waiting,” he said. “They are saying they have worked hard all their lives and now it is time to enjoy it.”
“We came to that conclusion a year and a half ago when we built some spec houses and they are moving,” he said. “This isn’t sudden. People had invested in the market and then it corrected itself, now they are investing in real estate where they can enjoy it.”
Despite the cost of high-end homes along the Gulf beaches – from $3 million to 5 million – Donnantuoni said they are a bargain compared to homes south of the Skyway Bridge, in Sarasota and Naples.
“A home that would cost $3.5 million here would easily cost $5 million or more in Sarasota,” he said. “As a result of that people want to come here to live. It used to be called God’s waiting room – well not anymore. Now everybody wants to live here; it is a dramatic turn. Pinellas County is going through a renaissance.”
That fact was confirmed by Dennis Fagan, chairman of the board of the Treasure Island/Madeira Beach Chamber of Commerce.
Fagan, a real estate agent himself, said there is a desire by many people to invest in beachfront property, what he called some of the most valuable land in the county.
“The market is absolutely there,” he said. “People are looking for new construction on the Gulf. We live on a peninsula that is mostly built out, so any time there is new construction there is a market.”
In fact, said Fagan, the value of the land is what is driving the price of those high-end homes.
“It wouldn’t make a whole lot of sense to spend a million dollars for land and put a $250,000 house on it. That’s why prices are the way they are,” he said.
But doesn’t the trend toward higher end homes mean that only the very rich can afford to live on the beach?
“I would ask what’s the alternative, an empty lot with nothing on it?” said Fagan. “It is better for the community to have a home on that property generating property tax that contributes to the community.”
Real estate agent Dania Perry with Century 21 Jim White & Associates deals almost exclusively with high-end properties. She said the trend will continue.
“Drive along Gulf Boulevard and you will see where people are putting their money,” she said. “I think our area is undervalued. Look at the quality of our beaches, the proximity to the airports, professional sports teams and the downtowns of our cities. It combines for a package that you can’t touch anywhere else in Florida.”
Like Fagan, Perry said the cost of the land is what is keeping the value up.
“It is so hard to find lots,” she said. “The last lot in Redington Beach sold for $1.7 million dollars. That was a 60-foot lot. There is a custom home going on that and it will cost $4 million or more by the time it is finished.”
Developer Donnantuoni said people building on the beach go one of two ways. They either have a custom home built by a builder, or buy a house already built by a developer. That’s where he fits in.
“When you build your own house or get a custom one built, it usually takes about two years to complete,” he said. “A developer takes the time lag out of it so the house is ready when you are.”
Getting to that stage, whichever way the buyers decide to go, is a process that begins with finding the land.
“What is happening is that more modest homes along the beach are getting sold and then knocked down,” said Donnantuoni. “The lot is the appreciating asset while the house depreciates as it ages. It becomes obsolete. The lots on the other hand have doubled in the last three years.”
Donnantuoni and the others are steadfast in their belief that more and more high-end homes will be built along the beach as the smaller, more modest homes are cleared away to make room.
Even though they say it is still cheaper to buy on the Pinellas beaches than it is to buy south of here, Perry said it won’t last forever.
“We were the best-kept secret and I think that is over and our values will continue to increase and so will the demand,” she said.