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Scarcity, demand push Coast waterfront property values up

If you were looking for somewhere to invest your money in the 1980s or early ‘90s, you couldn’t do much better than good waterfront properties on the Coast. Before casinos came in, sparking a major growth curve in the early 1990s, waterfront lots could be purchased for as little at $10,000 to $20,000. Today some of those same lots are selling in the range of $150,000 to $200,000.

“There is just so much waterfront,” said Martin Jones, president of the Gulf Coast Association of Realtors, and a real estate agent with Ray Crowell Real Estate, Gulfport. “As it gets developed or taken, what remains is costlier.”

Jones said in some cases waterfront property is more valuable than an older home or other structure located on it. Those waterfront lots in good locations close to shopping and entertainment are more in demand than the more isolated lots.

Je’nell Blocher, a real estate agent with Ellis Branch Realty, Ocean Springs, moved back to the Coast in 1990 after working in real estate in California.

“I never thought our waterfront prices would be like what they were in California,” Blocker said. “Our prices have gone up drastically in the past 10 years. It is amazing. It is nice to see we are finally being discovered, although some people don’t think it is so nice because we are getting too crowded.”

Blocker said she recently sold some land to a man from Scotland who is purchasing property across the world.

“He says he thinks Ocean Springs is the best kept secret in the world,” Blocker said. “They know what we have here and are surprised we haven’t been discovered. They know prices will be going up.”

Getting the property

Blocker and other real estate experts agree that waterfront goes up in value faster — and holds value better — than non-waterfront property. “People are buying lots with houses and tearing the houses down, just for the property,” Blocker said.

Waterfront values combined with the massive casino property investments have helped Harrison County surpass Hinds County as the county with the highest total assessed value in the state.

Robert Stinziano, real property supervisor for the Harrison County Tax Assessor’s office, said the county is becoming home to a lot of retirees leaving more congested areas in Louisiana and elsewhere.

“A lot of people reach retirement age and have a lot of money invested in their home in Louisiana and other places,” Stinziano. “They are buying up property, basically driving the market up. It is the economic principal of supply and demand. A lot of people coming in, particularly towards Pass Christian, are from Louisiana. Their families came here when they were kids, and now it is time for them to start looking for a place to retire. They are leaving cities like Kenner, Metairie, Bogalusa and New Orleans. They’re leaving the city behind, and coming over here where the family brought them when they were young. They are investing their money in a lot of waterfront properties.”

Stinziano said the appreciation in waterfront property values isn’t just a Harrison County or Mississippi Gulf Coast phenomenon, but is going on across the U.S. Raw waterfront land is increasingly scarce around the country. And waterfront on the Mississippi Gulf Coast is still a value compared to U.S. averages.

The downside?

There is a downside to appreciating waterfront values. It is great if you are an investor and sell at a big profit. But if you aren’t planning to sell, the increased property taxes can be a burden — especially for retirees on a fixed income. Some people call the Tax Assessor’s Office to complain that the assessed value might have doubled or even tripled.

“Lots of people get mad and say, ‘What are you doing to us?’ I don’t set market value,” Stinziano said. “We just watch the trends and look at the sales data. That is how we arrive at value. And state law requires that we properly access the value of properties. We can’t legally give people a break by assessing their property lower than its true value. It isn’t our luxury to do that.”

“We are nothing but administrators of the law, and the law says value things for what they sell for,” said Kevin Hindmarch, director of appraisal for the Jackson County Tax Assessor. “We had people complain after the reassessment in 2002 that they could no longer afford the taxes for waterfront. It is too early to say what will happen with the new appraisal in 2006 because the analysis isn’t done yet.”

But indications are there could be another doubling of value in some cases. Hindmarch said that in Old Ocean Springs, an area of town that is so popular it commands prices approaching waterfront, the non-waterfront land doubled in value based on sales observed in 2000 and 2001. Some waterfront properties in the county also doubled in value. For example, lots at Belle Fontaine beach south of Ocean Springs that sold from $100,000 in 1999 and 2000 are now selling for as much as $180,000.

“The really unique waterfront properties that have panoramic views have increased even more than other waterfront, although all of them are seeing significant increases,” Hindmarch said. “We do see significant increases in the value of waterfront, particularly the raw law. Vacant land is demanding a premium. People like vacant lots because they can build what they want. The scarcity of vacant waterfront lots is what is driving the price.”

People have often said that the Mississippi Gulf Coast is the last affordable area for waterfront. But Hindmarch said that is becoming less true.

“Since 1996, the increase in value for waterfront is unreal,” Hindmarch said. “When we revalued in 2002, waterfront probably on average tripled. Prices have gone up a lot even in rural, low-lying areas with lots of mosquitoes and no services such as city water and sewer.”

A good deal?

Hindmarch said a lot of retirees are relocating, and many come from areas like California or New York where their previous homes soared in value over the years. Coming to the Gulf Coast, prices that seem high to natives appear to be a bargain to the retirees.

“It seems like a good deal to them,” Hindmarch said. “Those people coming down who are willing to pay more are creating more demand and higher property values.”

Waterfront property values on the beach off U.S. 90 are going up in value especially fast. Sources said that three private jets were in Gulfport last week buying up all the beachfront property they could for condominium developments. In one case, a piece of property that sold for $1 million less than a year ago sold again recently for $2 million.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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