Episode Transcript
[00:00:00] Speaker A: Here we are on the Galveston Crystal Beach Show.
The Crystal Beach Real Estate Show.
And it's great to be here. It's been a while, so we're going to catch up on this market. And Kelsey, how you doing?
[00:00:12] Speaker B: Good. Great. How are you?
[00:00:14] Speaker A: Wonderful.
So we are recording this in the winter of 25, 26.
And what are we seeing out there?
You know, like our seller selling. Are buyers buying?
[00:00:30] Speaker B: It's longer days on market for sellers, but that's really created a fantastic buyer's market.
Sellers are more negotiable than they've ever been.
Prices are really back to where they were in late 2021, before we had a big, you know, run up to, you know, those deadlines for people to.
[00:00:52] Speaker C: Close before.
[00:00:54] Speaker B: Financing changed and interest rates went up in 2022.
So this is kind of a rare opportunity where you get to kind of travel back in time and get yesteryear's prices.
[00:01:09] Speaker A: Yes. And are you seeing a decent amount of COVID sellers, or is it mostly pre Covid sellers that do have equity or a little of both, or do.
[00:01:20] Speaker B: You even think so? Both. Yeah, it's a mix of the. It's a mix of the two. I mean, really, what you have is you have a market where there's. I mean, yeah, there's people who bought during COVID or in the years later, and maybe they've realized that they're not good at it or they don't like it or they wish they'd invested closer to home or whatever it might be. And those people sell.
There's also your typical second home buyer who has owned this house for however many years, and they now they want a lake house or now their kids in travel ball, and they don't get to see the house like they used to or any number of things that.
[00:02:02] Speaker C: Make it where they want to sell.
[00:02:03] Speaker B: Just your natural rhythms of the market. The problem is that there aren't enough buyers to eat up that inventory.
And so we've got.
At this rate, we have something like, I want to say it's 34 months of inventory and market. So it is hugely a buyer's market.
[00:02:26] Speaker A: Which is difficult to quantify really, because, you know, people don't need these houses right there. There's very few people living in these areas. In this area. Right. These are like extra. Almost all of them are going to be like an extra home.
[00:02:40] Speaker B: That's all of what I. All of it is optional.
So there's not a primary home, a strong primary home market that like pushes the market along at a decent pace. That's typically. That's more true in Galveston, which is a major city.
It's less true in Crystal beach, where you have more of a community. I mean, sure, there's people who live and work there, mostly related to tourism, but then you have some retirees and you have mostly second homes and investment properties.
[00:03:19] Speaker A: And what about rents? I know you own your own properties as well. Are we holding steady? Are things a little lower?
Where are we at on rents?
[00:03:28] Speaker B: Rents are a little lower on smaller properties from 2024.
But like on my six bed that I have, I think I'm finishing the year the same as I did in 2024. So I put it in service at the very end of 2023, of course for bonus depreciation reasons.
And we did 138k with that house and we're on to do the same this year.
[00:03:56] Speaker A: Okay, so rents are even.
[00:03:59] Speaker B: For bigger houses.
[00:04:01] Speaker A: That's great.
[00:04:02] Speaker B: So it is really true what they say about, you know, everything's bigger in Texas. Bigger is better in this market. And it's not because I want you to buy a more expensive house. I wish I could sell people houses that were, you know, 250 or something like that and that they 1 existed and 2 were cash flowing. But for the most part, that's a pretty difficult proposition.
Buying bigger is where Crystal beach and Galveston really shines because you have all these 12 million plus people who live in the Houston area who'd probably like to go vacation with family and friends and getting them to drive like an hour and a half, two hours from Houston or like four hours from Dallas, that's a pretty easy ask to go have a really fun weekend or a week long trip at the beach or family reunion at one of these bigger houses. It's a whole different thing to be like, let's all hop on planes and fly somewhere or let's hop on planes and fly out of the country. And everybody needs a passport.
So Crystal beach is a great low ask destination for people to gather with friends and family. So it really shines for bigger groups.
[00:05:16] Speaker A: Okay. And are, let's talk about maybe like your last couple of deals like, like walk me through what that looked like.
In other words, I'm a buyer, I found a house that I like, but there's like 10 of them that are probably going to be okay because there's so many of them to choose from. Is it, can I offer on house number one, see what the seller says and then move to house number two and then, and also are the sellers you Know, wiggling.
[00:05:49] Speaker B: They are wiggling. I mean everybody has a lower limit of how low they can go where it no longer makes sense to sell a house.
But yes, people definitely have.
Sellers are negotiating for the most part. Now some people, like, I have a listing, I'll share it with you.
I've had actually multiple offers on it. Somebody's financing fell through. Somebody decided they were at the end of their year too close to the end of the year to close on it.
Let's see.
So this is 1317 Emerald. These are, this is my listing. It's priced at 749. It's a five bedroom, three bath house. It really should be doing well, upwards of 100k. I could definitely do somewhere between.
I could probably do 140, 150 with the house. But I think your typical person should be able to do somewhere between 120 and 140.
This is the goal.
And you have views of the Gulf from all of the common area in front.
This is a buyout lot, meaning it can't be developed.
This lot could be potentially developed, but not the way it is now. You'd have to like move a dune and that kind of deal. And then this is a beach access street. And the really unique thing about Crystal beach is that you just drive right onto the beach and you can walk on, you can drive on with a golf cart. You can go on your, you know, just a regular vehicle.
It's not, you know, super powdery where you get stuck. Although people do get stuck occasionally.
So this one is a pretty cool house. This is the one that I would say makes the most sense out of everything that's on the market.
Because when we talk about how much can you wiggle, I mean, if somebody's already taken it down to and they're like the cheapest five bedroom on the market. That's the size that they are. There's only so low they're willing to go. And basically buyers and sellers are playing like a game of limbo.
And that's pretty much what it comes down to is they're trying to figure out how low will sellers go.
[00:08:10] Speaker A: So this is a perfect option option for somebody who lives say in Houston and wants a vacation home.
But it's also, you know, got pretty good rentability.
[00:08:21] Speaker B: Yeah, this is a house that I think you would have enough room that if you just wanted to not pay a mortgage, I think you could probably farm this out to a property manager who's very well performing and you'd be even with their Fee, you might be able to, you know, vacation and set. That would increase in value, take advantage of bonus depreciation. And even with the property management in there, I think you'd have room.
[00:08:56] Speaker C: So I think this one is really a perfect listing where they've really already discounted it from the get go. So originally they wanted 870 for the house. So they've already come down 120k. They're serious about selling.
So I've received some offers on it. They're waiting for the right one.
It's a five. Three. I think there's enough room that if you wanted to buy a house and vacation there, rent it out, even maybe farm it out to a property manager, I think you could get enough income from it that you could, you know, own this house without having to pay mortgage, let other people pay for it.
[00:09:36] Speaker A: Let's assume this thing's this. Let's assume this thing's already long gone by the time I'm watching this video.
[00:09:42] Speaker C: Yeah.
[00:09:43] Speaker A: What were the offers? What offers did they turn down?
[00:09:46] Speaker C: So they had an offer for. So I personally brought them two offers and we were at terms. It was close to the 749. It was. I think we were in agreement at about 740.
That person could not get financing because of their HELOC.
The other person agreed to the same about 740.
The problem was that they decided they were too close to the end of the year and decided that they were trying to make this happen without having done very much. Looking at the market, they were just kind of quickly closing and they decided they were being, I guess, rash or something.
They just decided they were too close to the end of the year and hadn't done their homework.
[00:10:43] Speaker A: I see. So it wasn't the seller either time.
[00:10:47] Speaker C: No, no, it wasn't the seller.
We got an offer Saturday for 700. That's just too low for. For them. I mean, they've already come down 120k. There's only so much that they're going to come down.
[00:11:04] Speaker A: And I'm not going to ask you because it's technically at the time of this recording, still active, what they paid for it. But let's. Do you have anything else that's on the market that we could look at, good or bad?
[00:11:17] Speaker B: Yeah.
[00:11:21] Speaker C: I pulled up Airbnb listings. Let me pull up.
[00:11:28] Speaker A: Yeah, let's pull up just like a random house in your area and talk about whether you know what's good about it and what's not good about it.
[00:11:36] Speaker C: Yeah. So this is an interesting One that just came on the market today. It's another really big house. It's a six bed, four and a half bath, 3,900 square feet. It's on a large lot.
I've toured this one before, so it's been for sale multiple times. I think they've come down from like 1.4, 1.3, something like that. They've now relisted at 1.2.
It is right across from.
Can't remember if this is a biolot or this is.
But there should be permanent use from the house. So location is fantastic.
The size of the house is fantastic.
It really needs six whole bedrooms worth of new furniture.
This is an extra game space that's on the ground floor.
They have a great bunk room.
[00:12:29] Speaker A: Is that common? Do you, do you normally have a finished out first floor or is it usually piers?
[00:12:35] Speaker C: Oh, I say first floor because we call this the ground floor.
So this is the ground floor. This is the first floor. This is the second.
[00:12:43] Speaker A: Sorry if that was technically the second floor.
[00:12:47] Speaker C: And to answer your question, yeah, this is.
Yeah, you're going upstairs to get to here. This is the first living space. It is not common to have a finished out ground floor. You're really not supposed to. You can, you know, finish out a garage of some variety and make the game room. You're kind of self insuring because insurance is not going to pay you back for the damage that's done beyond, you know, a garage.
[00:13:14] Speaker A: And do you have, does your area find itself in those situations? In other words, do you have hurricanes that come in and flood first floors and things or is that not common?
[00:13:23] Speaker C: I mean, we're building 14ft above base flood elevation.
So I mean, not typically in houses. And I mean, I've worked for the short term shop for four plus years now and we've had one hurricane in the area that knocked out power for a week and damaged some properties, mostly on the front row. And it was like cracked windows or it lifted up some shingles, caused some water damage.
But I mean it's been the last like really destructive hurricane that came through was like in 2008.
So it's been a long time. Like we are not the, you know, it's not a Florida situation where it's like every summer we're getting five hurricanes. It just, it hasn't played out that way historically.
[00:14:17] Speaker A: Got it. Okay, sorry.
[00:14:18] Speaker C: We get them. Yes. But it's not like.
It's kind of like fires in the Smokies versus fires in California.
[00:14:26] Speaker A: Got it.
[00:14:27] Speaker C: They happen. It's just not like a all the time kind of thing.
So I mean, this is just really outdated furniture.
This is definitely not enough seating, but you have the game room area to address that.
There's a lot of deferred maintenance on the outside of the house. But it's got this really cool tiki bar.
I think the deck could be re engineered to have a hot tub. So you'd add supports to put the hot tub up there.
There's one room that has a bunk. We've got carpet upstairs.
Really bad furniture. Kind of outdated finishes a little bit.
The kind of. It's the kind of thing where the door knobs are loose and the towel racks are falling off the wall.
It needs a little help. But we've got a really cool bunk room.
It sleeps a lot of people. I don't remember how many. I want to say it was like 22 plus.
[00:15:27] Speaker A: I'm having a little trouble with this one versus the first one you showed me because I don't really see why. This one is two times as much money.
[00:15:35] Speaker C: There you go. And that's why I've gotten like five offers. Now granted, we haven't closed on anything yet, but that's why I've gotten five offers on the other house.
[00:15:43] Speaker A: So this one is really not that much different than that other one.
[00:15:48] Speaker C: You tell me. The other one's a lot more turnkey inside. Now one thing that is really cool about the house, it is smaller. Yeah. There's no second living space.
There's no like tiki bar.
I think this one. I think this one has a garage. This one has a garage. And my listing does not.
Another cool thing about the house is if you go past that, let's see, in the game room, if you go out this door, there's a second little patio.
And there's a. The back side of the lot. It's. It's a deep lot.
[00:16:21] Speaker B: And you.
[00:16:23] Speaker C: I'm pretty sure that you could put an above ground pool with a deck surrounding it.
You are not allowed to put a pool, like a freestanding INR pool outside of the foundation of the home within like a thousand feet of median high tide.
So your options for pools are limited. But that's what I would do if I owned this house.
[00:16:48] Speaker A: Do you have anything, you know, like off the top of your head that you had recently, whether it was a seller or a buyer where you can remember the purchase price and the back and forth of the offers?
[00:16:58] Speaker C: Yeah. Let me show you one of my recent deals.
This is one we closed on recently with a client of mine.
And actually he's going to close on the lot next to this one on Friday.
So this property is actually in Galveston. I Probably close about 20 in Crystal beach for every one that I close in Galveston.
Not because one area is better than the other, but purchase prices tend to be about 20 to 25% higher in Galveston.
[00:17:30] Speaker B: So.
[00:17:31] Speaker C: So just be paying for the location.
So this house sold for 8:30. It was on the market, listed at 8:45.
I believe we had some seller paid closing costs to the tune of about 10k in there as well.
And this is a really cool area.
Let me show you on the map where it's located.
So it's on this cool street called Road Less Traveled.
[00:17:58] Speaker B: I forget the neighborhood name.
[00:18:00] Speaker C: Road Less Traveled. And this entire area is like a nature preserve.
And these are all like million dollar houses through here.
And you're actually really close to all the in town things.
So you can see like here's Schlitterbahn, Moody Gardens is here. The Pleasure Pier is here.
The Strand is over here.
So you're probably 15 minutes from all of that and you're at a true beach house.
And you're on this very. It's a private street with a gate and there's a thing called artist boat launch right over here.
And they have a kayak launch here. So you can take eco kayak tours through here.
And you have a fantastic.
You just drive there.
It's like a. I think an eight minute drive. Yeah, yeah. There's public access.
[00:19:03] Speaker A: So much different than where I live. No, nobody would rent this house where. Where I'm at.
[00:19:09] Speaker C: So they do to the tune of about 150k.
[00:19:15] Speaker A: Okay.
[00:19:16] Speaker C: Yeah. So this is one where they were.
[00:19:20] Speaker A: Because of the house. I say that because of the location. There's no beach parking at all where I'm. I'm in 38 Destin. And there's no. You have to. You're either walking to the beach or you're not getting to the beach where I'm at.
[00:19:32] Speaker C: No, there's drive on beach access here.
[00:19:35] Speaker A: So literally take your car onto the beach that you're tailgating is what we're.
[00:19:39] Speaker C: Doing in Crystal Beach. Yes, in Galveston. It's a mishmash of that. So it is not. So in Crystal beach, it's 28 miles of drivable coastline.
You can just literally take your car as far as you're willing to drive your car. You can do it in Galveston, it's more controlled access because it's a nature city and they actually have like rules. I Often joke that Crystal beach is kind of like Outback Steakhouse. No rules, just right. And people love it that way.
It's true.
So in Galveston, you'll find a variety of access options. One of them is that there will be a beach parking lot, like at the street where the highway is.
Other options is that you drive onto the beach and they have, like, pilings in the ground, and it's like a beachfront parking. And then you walk your stuff over to where you want to put it, and then there's some access where it's like. They'll do that, but it'll be like one mile wide. And so you can drive and park your stuff within that area. Of course, you could walk it beyond that area, but those. That's predominantly how you get to the beach.
[00:20:50] Speaker A: Can you scroll down and show me the price history on this?
[00:20:53] Speaker C: Yeah.
See, So they had listed.
They were listed for a while. So they bought for 725 back in 2020 for the market went up.
They thought, oh, wow, we're gonna.
[00:21:13] Speaker A: Let's cash in.
[00:21:15] Speaker C: But they. They. They went too late.
That was too late.
They're like, oh, that's not realistic.
They got closer to reality in February of 2024, and it stayed at 8. 45.
[00:21:33] Speaker A: Still expired.
[00:21:34] Speaker C: Off and on. Yeah, off and on. Over and over.
[00:21:37] Speaker A: Expired twice. Yep.
[00:21:40] Speaker C: Yeah. And my client was going to buy a completely different house, but based on the rental history of this house.
[00:21:49] Speaker B: Oh, you actually sold this with a property manager?
[00:21:52] Speaker C: Yeah, I sold this. It's not my listing, but I sold it. Yeah.
[00:21:55] Speaker A: Got it.
Yeah. So this thing was for sale for three years plus.
[00:22:06] Speaker C: Yeah. If you don't have the right price in this market, there are a lot of other houses to go look at.
[00:22:14] Speaker A: What's with that exposed. The exposed joists there in the ceiling, they just are missing a piece of.
[00:22:20] Speaker C: Plywood that is the upper deck. So there's a private deck above it. So the water goes through if there's rain or something.
[00:22:29] Speaker A: I see. They leave that open because of rain.
Yes, I see.
[00:22:34] Speaker C: Because your only other option is to do this weird thing where you put, like, concrete. It's like a. Almost like. Feels like pool decking.
And I don't know. I'm not a big fan of that. I feel like it's gonna be like a stucco situation where you end up with wood rot below it. So I'm happy they did it this way, even though maybe that picture isn't lovely, but you have, like, really nice day views.
[00:22:58] Speaker A: Again, we have a lot of stucco where I Live and it's not frowned upon. But in your area it sounds like it's not a good idea.
[00:23:04] Speaker C: Stucco is not common along the coast here.
[00:23:08] Speaker A: Mostly hardy board.
[00:23:10] Speaker C: Yes, predominantly hardy board. On the older houses in Galveston you'll have some vinyl plank or not vinyl plank, vinyl siding.
But mostly it's hardy board. Anything built after 2002 or before that, really.
[00:23:27] Speaker A: Have you had any situations recently where let's say it was a million dollar house. I'm making numbers up here, but let's say it was a million bucks and they offered, you know, like 850.
In other words, any low balls recently?
[00:23:43] Speaker C: Yeah, that same house that I told you is my listing. They keep.
I'm after this call. Supposed to go write a low ball offer for a buyer of mine, but it's.
[00:23:56] Speaker A: I mean, how low is it?
[00:24:02] Speaker C: 75.
[00:24:03] Speaker A: Oh, I wouldn't say that's.
I would, I'd be okay with that. So if it's.
[00:24:08] Speaker C: I mean, I mean, I'm going to write it. I don't have a problem with writing it. Yeah, but if it's the lowest five bedroom on the market, you're really lowballing somebody who's already taken a discount.
[00:24:22] Speaker A: Yeah, that's true, that's true.
[00:24:25] Speaker C: I mean it would be one thing to offer somebody.
So I always think of it like, you know, if they're priced at 870 and you want to offer them 100 candor ass because you think they're wrong priced, go for it. Yeah. And, and you can offer whatever you want. I'm happy to offer whatever people want to offer on a house.
I don't really tell people no in regard to that, but it is. As somebody who represents sellers, it's like sometimes it's like, come on man, it's like they came down 120k. Like how low do you think they'll go?
[00:25:01] Speaker A: Yeah. So forget about this house because we don't know what's going to happen yet. I mean we kind of know what's going to happen. But what about anything else recently have had any buyers offer 100 grand under asking? And how did it go?
Not that low.
[00:25:15] Speaker C: I don't remember somebody recently offering 100k under asking.
[00:25:23] Speaker A: I'm looking at a house right now that's a million bucks and I want to offer 900.
So I'm curious if you've been.
[00:25:30] Speaker C: It's not wild at that price point, but the price points here are not $1 million. Typically the price points are 500 to 750.
And that's on The, I would say the upper end of the market because I'm talking about big houses.
So percentage wise you're talking about 10%. If you were talking about one of these houses, you might be talking about 15 or 20%, depending on what it is.
[00:25:56] Speaker A: I got you.
[00:25:57] Speaker C: So it's more common that it's a $550,000 house and they're trying to get it for 50k under ask. And that is pretty common. Usually about the most you can get off of a house if it's a right priced house already and you just want them to come down in the price because otherwise you're not going to buy it.
Probably 30 and the propensity to meet in the middle is amazing to me.
If you want them to take 30 off, you pretty much have to offer like 60 or 70 off in hopes to get back to that point. Right. And I don't know if that's the case everywhere. I think that it probably is.
[00:26:43] Speaker A: Yeah, I think so. I think that everybody wants to win, you know, but, but in the market we're in, it sounds like to me what you're telling me is, is that I could just move down the street to another house.
[00:26:53] Speaker C: Yeah, if. If it has all of the right things. So the thing about Crystal beach and Galveston is that less so Galveston, but also that it was developed like one house or one street at a time.
So it's not like a cookie cutter neighborhood where if I just move down the street it's going to even be built by the same builder, similar size.
It's not a cookie cutter situation. Every house is very different.
Could be 20 years different in age.
[00:27:31] Speaker A: Got it. All right. Anything else we need to know?
[00:27:37] Speaker C: See?
[00:27:42] Speaker A: Well, you can tell us how we can find you.
[00:27:45] Speaker C: That would be a good idea, wouldn't it?
Yeah. So I can show you my listing if you want. That does really well.
[00:27:54] Speaker A: Oh yeah, yeah, absolutely. That you own.
[00:27:57] Speaker C: So like that house on Emerald, what I tell people is, and I actually gave somebody what I call a show and tell tour. There wasn't anybody at my property. And so I was like, I told you what you should do to the underside of the house. But it's more powerful if I show you.
So like this house had just apartment style quality and furniture everywhere.
And we took out all the furniture and we added a lot of entertainment. So when I tell people, you know, and I don't have a view, I'm six, seven rows back, I, I have a nice peaceful neighborhood view, but not a view of the water. And people book my property for the amenities and because it's in the center of Crystal beach and easy access, it's very golf cartable.
That's one thing.
[00:28:47] Speaker A: So here's golf carts, or you have a golf cart.
[00:28:50] Speaker C: No, they rent them. There's tons of suppliers on the peninsula for renting a golf cart, and they will do as much as you rent it ahead of time. They drop it off, like during the turn.
It's there when you show up, and then they pick it up at the end.
So it's. It's like a completely turnkey situation. They're dropping it off filled up with gas.
[00:29:14] Speaker A: All right, well, let's take a look what a successful house looks like.
[00:29:19] Speaker C: Okay, let me find a share button.
Okay, so this is my listing in Crystal beach that has six beds.
It did 138k last year and is on track to do the same this year. We furnished all of it.
We didn't do any repairs to the house. Like, we didn't paint or do anything else. But we put in new furniture and added a lot of entertainment and a lot of local art to make it unique. These are all built in beds, which I highly recommend to people in general.
But really in this market, it's very amenity driven, so you can make a pretty place to sleep. But people are spending 90% of their time at the house and at the beach. And the beach is like an extension of the house, especially if you're providing chairs and a beach wagon and that kind of thing.
So we've got a hot tub, swinging chairs, fire pit, playground. We've got a Connect 4, which photographs. I always think those photograph really well.
Wipeable couches because sandy bottoms, local art. I had to break up the brown somehow. There's a tv.
We provide all sorts of games outside.
This is my view. So there's this open area. It's a drainage area, but so all of this is open. And it's also a really big amenity to have the yard fence, which makes it really nice for dogs and kids.
And you can actually come down here. And this is open to the yard. So if you have a dog up on the deck, they can come down to the yard, essentially let themselves out kind of. And you don't just have kids wandering into the driveway as well.
We have shuffleboard, we've got an arcade game.
We have air hockey table.
And probably one of the biggest things, I think something that people don't do well sometimes in this market is they.
[00:31:46] Speaker B: Want to put a bunch of people.
[00:31:49] Speaker C: In a room where it's like an adult bed and then like a bunk bed next to it.
And I absolutely hate that.
So in this room in this house we have four private king suites or king bedrooms. And then upstairs is just kid city and there's the four queen bunks and then a bedroom that has two full beds. So it kind of divides up as boys and girls and all the couples sleep downstairs.
[00:32:15] Speaker A: It's very cool. I love it. The vintage swimsuits and the, the flamingo chair was my favorite.
[00:32:23] Speaker C: Thanks.
[00:32:24] Speaker A: Very cool. Very cool.
[00:32:26] Speaker C: While I was shopping for my vintage Barbie, they realized that I needed a Where is he? They watch Ken.
[00:32:34] Speaker A: Nice.
[00:32:36] Speaker C: But yeah. So this one does well. And if you're interested in this market, not afraid to put in some amenities, give me a call. You can reach me at 409-405-4601 or Kelsey at theshortermshop.
[00:32:51] Speaker B: Com.
[00:32:52] Speaker A: Wonderful. Thank you so much. We'll catch up soon.
