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Seabrook -- Diamond In A Rough Market

Published 8/16/2011
Angelo Bruscas
The Daily World

The planned beach community of Seabrook near Pacific Beach continues to spark a hot real estate market on the North Beach, driving average home prices in the area over the $500,000 mark for July, while Ocean Shores stays mired in an ongoing home sales slump.

That's the bottom line in mid-year Northwest Multiple Listing Service housing figures and charts released last week as part of a Grays Harbor Residential Real Estate report prepared by Windermere Realtor Tom Quigg that examines the second quarter of 2011.

While the real estate market in the rest of Grays Harbor County remains at about the same slow pace experienced the past three years, "the number of sales and average prices in Ocean Shores continues to drift downward," according to the report.

"This is likely because a large segment of the market is in discretionary purchase of second homes."

Seabrook is the real success story, Quigg said, with 11 new home sales written in July.

"Seabrook continues to appeal to buyers looking for a special community and lifestyle," he wrote in a prelude to the report for clients.

Casey Roloff, Seabrook president and developer, confirmed the recent sales and noted his company closed the sale of the oceanfront home built as Coastal Living Magazine's "Ultimate Beach House" edition last year. He said the sale price is expected to be $1.75 million [in addition to additional oceanfront lots sold at $650,000 and $1,500,000].

Roloff credits much of Seabrook's success to his business model, which has proved to be recession proof.

"We are not out here over-selling or twisting arms," Roloff said of his business philosophy. "People will be surprised at how low pressure our sales process is."

Seabrook now has 200 homes either built, under construction or sold.

New construction in Ocean Shores, on the other hand, is virtually non-existent and existing home sales continue to sputter.

Quigg noted all statistics in Ocean Shores have been trending downward the past few months, with only three closed sales recorded n June, compared to 17 from June 2010. For the year, there have been 82 closed sales in Ocean Shores through July, compared to 104 last year, according to the Northwest Multiple Listing Service.

"I don't know what to make of it," Quigg said. "Year-to-date it's down significantly."

WESTPORT IMPROVES

Westport, on the other hand, is showing some resurgence in its real estate market, with home sales 54 percent greater this June. For the year through July, there have been 21 homes sold in Westport, compared to 14 last year, with average sales prices dropping from $149,966 to $86,350.

"Westport is a different community," Quigg said. "For one thing, there is not nearly as much inventory."

There are currently more than 340 houses on the market in Ocean Shores, while Westport has only 83 listings. Few people are in the market for vacation homes in this economy, Quigg said.

"People are on this austerity program right now and that's one of the first things to get cut," he said, which leaves "incredible values" for those who have the money to buy in this climate.

Seabrook is a bit different in that nearly all the sales are for new homes, mostly used as vacation properties. The development south of Pacific Beach also has traditionally required a 10 percent cash deposit before new construction will begin on a lot.

"People are willing to pay money for something that is done right," Quigg said. He noted that even an interior lot at Seabrook can cost nearly $1 million, and "you can't even get within 10 or 15 percent of that in Ocean Shores."

SEABROOK SOARS

Because of Seabrook, the Pacific Beach area saw average home sale prices jump from $56,750 in June 2010 to $222,633 this June, with 13 sales this year compared to six in 2010. As of July 31, the average price of a listed home in Pacific Beach is now $500,683, compared to $210,638 in Ocean Shores, or $159,318 in Aberdeen.

"You have to remember that Seabrook is not selling homes," Quigg said. "Seabrook is selling a community and a lifestyle."

He likens it to beach communities that began springing up 100 years ago on the East Coast, such as Cape Cod.

"Cape Cod has never lost its value," Quigg said. "It's gone up through thick or thin, depressions and everything. It's probably the most valuable real estate in the United Sates, and it's the exact same model as Seabrook."

The key is the community lifestyle that comes with the home you purchase.

"It's a very close community, you walk to everywhere. You can walk to the beach, walk to the woods, walk all around town and just have that sense of community," Quigg said. "You can't do that in Ocean Shores."

Quigg does have some thoughts on how Ocean Shores might spur sales, such as relaxing a ban on using homes for nightly rentals except for certain zones, or building better pedestrian walkways to the beach, Duck Lake or canals. Better access to the beach, parks and shopping is critical.

"You could do that very same model inside of Ocean Shores, but you have to have really tight covenants on what you do," Quigg said.

ROLOFF'S MODEL

Roloff has been able to make Seabrook a success with his conservative approach and high downpayment requirement. And he has been able to ask high prices for new homes without a lot of amenities other than the natural ones that come with the North Beach coast. The development is only now building an indoor swimming pool, and still doesn't have a large meeting facility for groups and larger gatherings such as weddings. Discussions are now under way to build a new "grange hall."

The current Seabrook construction schedule calls for about 35 homes a year to be built, even though Roloff believes the company might be able to build more.

"That insures quality and it also allows prices to go up," Roloff said. "If we see an increase in demand, we're going to increase prices before we up the number of homes built."

Where a home or lot at Seabrook is located affects whether prices go up a little or a lot. The development this year is selling more oceanfront property even though Roloff says Seabrook is selling roughly the same number of houses as in the past two years.

"In 2009, we sold a lot of $200,000 to $300,000 cottages, and that's what sort of re-ignited our market," he said of one way Seabrook weathered the recession. "These were 400-square-foot cabins. ... Then last year, the average price moved more into the $350,000 to $400,000 range."

This year, he expects the average Seabrook sale to be in the $600,000-$700,000 range because of the additional oceanfront properties on the market.

Roloff noted that about 60% of all property owners put their houses into the rental market, where they can be used for nightly guests when not in use by the owners. The Seabrook vacation business has grown about 35% each year over the past three years, Roloff said.

"But every couple of weeks we sell to someone who likes it here, doesn't want to rent, but they are buying because it's so vibrant and alive that they just can't find that anywhere else right now," he said. "That's what will make our Main Street sustainable."

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