Ranch & Retreat: South Padre Island
9/14/2007 Source: MySA.com

It may be the Spring Break capital in March, but the rest of the year South Padre Island is considered a sleepy little town that's grown in terms of real estate and high appeal.
And investors have noticed.

Take Robert Vermeer of San Antonio, who purchased his second South Padre getaway in June at the Saida III condominiums. Vermeer bought his first condo in 1991 as part investment, part beach house retreat — before the island was "discovered" by many.

"It was after the savings and loan crash and after the peso was devalued, so it was a great time to buy," he says. "I was able to buy the condo I have now because of that investment."
The chief reason for South Padre's popularity? The price.

A getaway home or condo on the Texas Gulf Coast is still considered affordable, especially when compared with the rest of the country's beach hot spots.

For example, prices this year for Florida's popular Clearwater Beach near Tampa range from $269,000 for a tiny one-bedroom, one-bath condo to $6.7 million for a single-family waterfront luxury home. In North Carolina's Carolina Beach/Wrightsville area, the median price is nearly $300,000 for a condo.

But in South Padre Island, the median home price is $250,000 for 2007 as of August. That's up 9.17 percent from the 2006 median price of $229,000 and up 14.15 percent from the 2005 median of $219,000.

Such prices are what drove Bob Fiorey, whose primary residence is in Hartford, Conn., to the area. A Money magazine article on "Affordable Beach Places in the U.S." ranked South Padre Island near the top of the list.

"I was looking in Florida and the Carolinas, but prices had skyrocketed, especially for Florida," he says. "I started doing the research on South Padre, and the price was half that in Florida, and the insurance was less expensive."

Fiorey, who eventually plans to retire on South Padre, purchased a new two-bedroom, two-bath condo about 100 yards from the beach at Los Cabos IV in April 2006. He paid about $173,000, pre-construction.

Since the unit's completion in June 2007, Fiorey and his family have been to South Padre several times, and he says his investment is already paying off. Florida prices are down 20 percent to 30 percent, while similar units at Los Cabos IV are now going for the low $200s.

For Vermeer, the condo is primarily an investment, though he does visit several times a year. He recently signed up with HomeAway.com, a vacation rental listing Web site, and is using a property-management company to help with maintenance and rentals.

"Even if you rent it out as often as you can, there are still expenses involved," he says. "The way to make money is when it appreciates, hopefully 20 percent each year."

Vermeer isn't alone when it comes to investing in the beach. The National Association of Realtors annual Investment and Vacation Home Buyers Survey found that sales of vacation homes rose nearly 5 percent from 2005 to 2006 — even though primary residence sales fell 4.1 percent during the same period.

The NAR survey also found that second homes purchased as a vacation property or investment accounted for 36 percent of U.S. home sales in 2006.

Ron Binkley, an agent and broker with Re/Max-Austin/Skyline who owns a beach house in Galveston, has seen more interest in the Texas coast — in South Padre Island, Corpus Christi, Port Aransas and more. "It's very worth it," he says. "Even with all the construction and growth, the Texas coast is still a bargain."

Beachfront

For a beachfront condo, expect to pay from $325,000 to more than $1 million for a mid-1980s construction 1,200- to 1,500-square-foot, two-bedroom, two-bath home. Properties in this realm include Suntide III and Saida Towers.
If it's a single-family house you want, those prices jump considerably — up to $2 million at the high end and about $1.5 million for a townhouse, such as at The Shores master-planned community, which has gulf and bay views.

If you're willing to make do with less space, 500-square-foot efficiencies on the beach can still be had for about $150,000, such as at Bahia Mar or at the Florence condos.

Bayside

Perhaps surprisingly, housing on Laguna Madre Bay can cost about the same as oceanfront. The median price on the bay is around $300,000 to $350,000 and goes up to more than $1 million. But a 500-square-foot bayside efficiency can still be found for about $110,000.
Fans of bayside living love its calm waters and the fact that the sun sets on the bayside of the island.

Mid-island

It might not be right on the beach, but mid-island interior homes are also in demand. After all, the entire island of South Padre is about 35 miles long and about a quarter- to a half-mile wide from beach to bay, depending on where you are on the island.
Prices range from about $95,000 for a 781-square-foot one-bedroom, one-bath condo to $695,000 for a 2,400-square-foot three-story, three-bedroom, two-bath condo with an elevator.

Jeff Lamkin, principal of Sea Oats Group, the Atlanta-based developer of White Sands, says Padre's north end is full of possibilities.

"The nicest beaches are those that are their own little communities and more remote, and the north end is like that," he says.

In the end, South Padre Island is still very much in demand — and savvy buyers who want a place to call their own can still get one.

"There's a lot of demand for the Texas Gulf Coast," says Christine Karpinski, author of the recent "Profit from Your Vacation Home Dream: The Complete Guide to a Savvy Financial and Emotional Investment." "People from other states just want to come here."