We found what we were looking for when we first visited the Fort Morgan Peninsula, just west of Gulf Shores, in 1987. From that first trip onward, we came back again and again, and soon began paying attention to property values in the area. Thus, our knowledge of the area begins 20 years ago. We spent two years scouring every sandy lane of the Fort Morgan area looking for "our spot" before buying a lot in 1991. We built the High Dunes House on that lot in 1994, and we opened the B&B there in 1995.
Based on that context, here is what we know from first-hand experience...
A History of Bargains
Until fairly recently, beachfront property in Alabama was significantly less expensive that comparable beachfront property elsewhere... including property just a few miles away, across the Alabama/Florida state line.
Much of this difference existed for a very simple reason: When people think "beach", few think of Alabama. This is because Alabama does not have very much coastline. The Florida Panhandle extends westward far enough that much of the state of Alabama is north of the Florida coast, not the Alabama coast.
Only about 30 miles of the beautiful Gulf Coast is in Alabama, and most people were not aware of it. As a result, the Alabama beaches were largely a secret spot for locals. Most property owners we met in the late 1980s were from Mobile, New Orleans, and other places nearby.
The World Begins to Notice
In the mid-1990's, the rest of the world began to notice Alabama's gorgeous coastline. Traditionally, the cars of most visitors carried license plates from Alabama, Georgia, Mississippi, Lousianna, and Tennessee. By the late-1990's, the scope had expanded greatly. At our B&B, our guests began to routinely include couples from Michigan, Illinois, Indiana, Missouri, Ohio, and various parts of Canada. When we asked our guests about this, many told us the same story. For them, Florida had become too crowded, the Alabama coast was more beautiful than other spots they'd visited, and the Gulf Shores area was significantly closer to their home.
The fact that Alabama's beaches are the beaches nearest to much of the nation explained some of this, but not all of it. It became routine for us to see visitors from areas of the country that have beaches nearby. We began to have B&B guests flying in (to nearby Pensacola) from New York, Boston, Washington D.C., and other spots where the Atlantic coast is only a short drive away. We also began to have many guests who travel by car from Texas. Various guests from Houston opt to come here rather than to Galveston or Corpus Christi. Various guests explained that they found the Alabama coast to be so much prettier and less crowded than the other choices available to them. For them, the tradeoff between coastal beauty and travel led them to choose the Alabama coast over places closer to their home.
The increased awareness of the Alabama Gulf Coast is not confined to Americans. Guests have come to visit from England, Ireland, Germany, the Netherlands, as well as from Australia and New Zealand. Many foreign visitors want their trip to America to include some quiet "beach time", and more and more of them are choosing to visit us.
Not only are we seeing more and more people from more and more places, but they are also visiting during a much longer part of the year. A dozen years ago, our B&B was busy during the Summer with sporadic weekend business during the Spring and Fall. Now, our season extends across most of the year. For example, last year March and October were nearly as busy as the traditional mid-Summer months.
Over the last several years, the secret has gotten out. The Alabama Coast is drawing more people from more places, and for a much larger part of the year.
The "Price Gap" Narrows
As the rest of the world has discovered the Alabama Coast, the "price gap" between our area and other beachfront areas began to shrink. For most of the last decade, the gap narrowed in a gradual fashion. By 2005, standard undeveloped beachfront residential building lots in the Fort Morgan area were selling at prices between $1,600,000 and $1,700,000. Even at these prices, it was still significantly less than the price of similar lots in other areas on the Atlantic Coast and along Florida's Gulf Coast.
During the Summer of 2005, we first began to ask ourselves if we should relocate to be closer to our adult children and our grandchildren. We asked respected realtors in the area for opinions of the value of our 3-parcel beach compound. Because of our setting, the unique design of our houses, and the reputation of our B&B, realtors were already quite aware of our property but none had had reason to visit. After touring the property, and after having appraisers tour it, we were advised that the property's location, combined with the quality of the two custom homes, meant that we should expect a sale price in the mid-to-high $5,000,000 range, perhaps as much as $6,000,000. These figures were for the real estate alonne, and did not include the income-producing nature of the established B&B business.
The Real Estate Market Pauses
As we all know, across the nation the real estate market has cooled in the last year. We have sought updated opinions about the market value of our compound, but we have been unable to obtain any substantive answers. The dilemma that agents and appraisers describe to us is that there is not sufficient data on which to base any kind of well-informed judgment. The professionals tell us that meaningful opinions are based on two kinds of data:
Both kinds of data are lacking because the local market has been frozen in place for more than a year. The only data points available are a small number of "panic sales" in which a couple properties were sold at steep discounts. No one thinks those prices were representative or meaningful. Yet with an absence of market activity, no one has any solid basis for pinpointing what updated values might be.
The only thing we have been able to determine is that there is no general consensus. Across this range of opinion, the only shared expectation is that market will return in time.
We don't know when activty will return to the real estate market. Your guess is as good as ours.
We do know that the general level of non-real estate activity in the Gulf Shores area is up significantly this year. This increase is reflected in our B&B business.
What we don't know (and evidently no one knows) is exactly when this will translate into the return of the local real estate market. Forecasts about the timing of its return range from "any minute" to "a year or more from now".
In the absence of any hard information, here is what we believe is true:
The future bodes well for the Alabama Coast for reasons that go well beyond its natural beauty. Chief among these is its proximity to areas in which ongoing population growth is forecast. Across much of the South and the Midwest, the Alabama Coast is "the beach nearby". It is both the northern- and western-most of any of the beautiful beaches on the Gulf of Mexico. It is only a 3-hour drive from New Orleans and 5:30 from Atlanta, and is within a day's drive from much of the Eastern half of the United States.
Whatever the strength of market on the Alabama Coast in general, we expect the Fort Morgan area to be as strong or stronger. Because of the ongoing trend to fill the coastline with high-density condominium towers, areas such as Fort Morgan that emphasize single family residences are becoming more and more rare.
Within that favorable context, we expect that value of our compound will be even stronger. The central truism of real estate is that what matters is "location, location, and location". This tells us that our beach compound will become only "more special" because of its position by a National Wildlife Refuge, forever protected from development. On a regular seasonal basis, we're surrounded with beautiful Monarch butterflies and wake to the song of migratory birds. These wonders of nature are attracted to the natural open spaces of the Refuge, not to concrete towers and parking lots. Because intensive coastline development will make these unspoiled spots much rarer and harder to find, we expect the value of special settings such as this will increase more rapidly than most.
We have no way to predict the short-term behavior of the real estate market, but we do expect the factors that affect supply-and-demand for unspoiled and protected beachfront propety will increase the value of property such as ours for years to come. Not only are "they not making more beach", they're certainly not making more of it that's next to permanently protected beach and dunes.
Our Own Market Timing
A reasonable person might ask, "If the outlook for your property's value is so rosy, why are you offering it for sale now, when the real estate market is down?"
Good question. Here's the short answer: Time.
Here's the more complete answer:
If we were ten years younger, our decision would likely be different.
We do not wish to exchange a few years to get "maximal dollars". Whoever decides to acquire it will enjoy both the magical setting and its future value. It's been wonderful for us, and it will be hard to say goodbye. We expect it will be wonderful for the new owners too.
If you want to stop by and view the property, you are welcome to visit...
Please understand that we cannot accommodate unplanned drop-in visits.
Introduction to The Beach Compound