usvi-on-line
St. John Economy on Downhill Slide
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designbyroe
- Posts: 1348
- Joined: Tue Feb 27, 2007 1:27 pm
- Location: Chilaxin on White Bay at least in my mind
St. John Economy on Downhill Slide
by Lynda Lohr
June 24, 2008 -- Building-permit figures from the Department of Planning and Natural Resources tell the tale of St. John's building boom gone bust, a sign of a declining economy both on St. John and the mainland.
So far this year, the department issued 37 building permits. A look at those permits shows only four are for single-family houses, with most appearing to be for local residents instead of the statesiders that fueled the building boom of the last few years. The rest are additions, alterations and things like pool decks.
This compares to 89 permits for all of 2007, when 46 of the permits were for single- or two-family homes. In the years 2005 and 2006, Planning issued 155 permits each year. In 2006, 66 were for single- or two-family homes. Of the 155 issued in 2005, 79 were for one- or two-family houses.
While construction continues across St. John, work is mainly on houses permitted in previous years.
The construction industry is definitely slowing down, said St. John architect Rob Crane.
"I'm getting contractors calling me looking for work," he said.
Laborers laid off from their construction jobs are also contacting him to see if he knows of anyone with any work for them.
Crane said he's doing okay this year, but he's a one-person operation who can only handle three houses a year. However, the work he now has is for properties that were in the family for decades, or for renovations.
Last year was terrible, Crane said, with the phone not ringing at all during the winter season, when people who want to build vacation homes typically call.
Real-estate sales figures also tell the tale of a declining economy. The number of houses on the St. John market sits at more than 120, an extraordinarily high number compared to several years ago, when homes sold quickly and at a good price.
Business is bad, with very few properties selling. According to Multiple Listing Service information, 11 houses sold so far this year. In 2007, a total of 29 sold. The year 2006 saw 33 houses sell, with 54 selling in 2005. In 2004, 43 sold, and in 2003, 61 sold.
So far this year, 13 parcels of land, sold compared to 24 all of last year. In 2006, 49 parcels sold, with 69 selling in 2005. In 2004, the number of parcels sold totaled 106. In 2003, 167 parcels of land sold.
Stateside buyers want fire-sale prices, but St. John sellers aren't lowering their prices much unless they were too "aggressively" priced to start, said Re/Max Island Paradise Realty Realtor Diana Beam.
"Most sellers are holding firm," she said.
The island's economic troubles are showing up across St. John. Some local businesses have closed their doors, with more expected to follow as the economy worsens.
"People who are marginal are not going to be able to hold themselves up," said Lonnie Willis, who owns several St. John businesses.
She ticked off a list of about 10 businesses that have closed in the last year. While many closed for economic reasons, others are shuttered, like Willis' Stone Terrace Restaurant, because the owners ran out of steam.
Willis said she and her husband, Albert, have been in the restaurant business a long time.
"My husband decided he didn't want to do it anymore," Willis said.
The business is for sale. The 2008 winter tourism season was the second bad one in a row when it came to the number of visitors and the amount they spent, Willis said. However, people who do visit continue to rent cars, but they aren't eating out and spending in shops, she said.
"They're cooking in the villas," Willis said.
The 4-percent gross-receipts tax and the escalating V.I. Water and Power bills add to the problem. It's a Catch 22 for business owners. If they raise their prices, they then must pay more gross-receipts tax.
The retail business all over St. John is down because visitors are spending less, said Radha Speer, who owns Caravan Gallery gift shop in Mongoose Junction.
"They're looking for good value and inexpensive gifts," she said.
And her staff has to work a lot harder than they used to when making sales, Speer said.
Willis, who moved to St. John in 1975, said that she went into business at a time when newcomers could buy homes and the buildings where they opened shop, but entrepreneurs who moved here in recent years were stuck paying high rents for their homes and for business space. This puts them at even greater risk for going out of business.
The high cost of housing also impacts businesses' ability to keep employees. Willis said she must rely on transient workers who only stay for a season because they can't find suitable permanent housing.
June 24, 2008 -- Building-permit figures from the Department of Planning and Natural Resources tell the tale of St. John's building boom gone bust, a sign of a declining economy both on St. John and the mainland.
So far this year, the department issued 37 building permits. A look at those permits shows only four are for single-family houses, with most appearing to be for local residents instead of the statesiders that fueled the building boom of the last few years. The rest are additions, alterations and things like pool decks.
This compares to 89 permits for all of 2007, when 46 of the permits were for single- or two-family homes. In the years 2005 and 2006, Planning issued 155 permits each year. In 2006, 66 were for single- or two-family homes. Of the 155 issued in 2005, 79 were for one- or two-family houses.
While construction continues across St. John, work is mainly on houses permitted in previous years.
The construction industry is definitely slowing down, said St. John architect Rob Crane.
"I'm getting contractors calling me looking for work," he said.
Laborers laid off from their construction jobs are also contacting him to see if he knows of anyone with any work for them.
Crane said he's doing okay this year, but he's a one-person operation who can only handle three houses a year. However, the work he now has is for properties that were in the family for decades, or for renovations.
Last year was terrible, Crane said, with the phone not ringing at all during the winter season, when people who want to build vacation homes typically call.
Real-estate sales figures also tell the tale of a declining economy. The number of houses on the St. John market sits at more than 120, an extraordinarily high number compared to several years ago, when homes sold quickly and at a good price.
Business is bad, with very few properties selling. According to Multiple Listing Service information, 11 houses sold so far this year. In 2007, a total of 29 sold. The year 2006 saw 33 houses sell, with 54 selling in 2005. In 2004, 43 sold, and in 2003, 61 sold.
So far this year, 13 parcels of land, sold compared to 24 all of last year. In 2006, 49 parcels sold, with 69 selling in 2005. In 2004, the number of parcels sold totaled 106. In 2003, 167 parcels of land sold.
Stateside buyers want fire-sale prices, but St. John sellers aren't lowering their prices much unless they were too "aggressively" priced to start, said Re/Max Island Paradise Realty Realtor Diana Beam.
"Most sellers are holding firm," she said.
The island's economic troubles are showing up across St. John. Some local businesses have closed their doors, with more expected to follow as the economy worsens.
"People who are marginal are not going to be able to hold themselves up," said Lonnie Willis, who owns several St. John businesses.
She ticked off a list of about 10 businesses that have closed in the last year. While many closed for economic reasons, others are shuttered, like Willis' Stone Terrace Restaurant, because the owners ran out of steam.
Willis said she and her husband, Albert, have been in the restaurant business a long time.
"My husband decided he didn't want to do it anymore," Willis said.
The business is for sale. The 2008 winter tourism season was the second bad one in a row when it came to the number of visitors and the amount they spent, Willis said. However, people who do visit continue to rent cars, but they aren't eating out and spending in shops, she said.
"They're cooking in the villas," Willis said.
The 4-percent gross-receipts tax and the escalating V.I. Water and Power bills add to the problem. It's a Catch 22 for business owners. If they raise their prices, they then must pay more gross-receipts tax.
The retail business all over St. John is down because visitors are spending less, said Radha Speer, who owns Caravan Gallery gift shop in Mongoose Junction.
"They're looking for good value and inexpensive gifts," she said.
And her staff has to work a lot harder than they used to when making sales, Speer said.
Willis, who moved to St. John in 1975, said that she went into business at a time when newcomers could buy homes and the buildings where they opened shop, but entrepreneurs who moved here in recent years were stuck paying high rents for their homes and for business space. This puts them at even greater risk for going out of business.
The high cost of housing also impacts businesses' ability to keep employees. Willis said she must rely on transient workers who only stay for a season because they can't find suitable permanent housing.
There's no $ sign on a peace of mind, this I've come to know
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sailorgirl
- Posts: 1644
- Joined: Mon Oct 30, 2006 3:03 pm
You could buy reasonable houses and property in STJ in the 70's because the Desalination water plant wasn't built yet - once it came online years later, different development evolved- people started building houses that required buying water to sustain themselves - few locals ever went this route - but rental homes with many bathrooms and showers, swimming pools and fountains were built to enter the villa market - homes that have central AC became the accepted norm requiring expensive electricity- house and land prices skyrocketed as a whole new segment of buyers and speculators entered the market - so now as the general US economy has hit a downturn it should be no surprise that STJ with its very specialized real estate market is affected.
Cooking in a gourmet kitchen in a million dollar villa with a drop dead view is not really a bad option versus finding parking, paying high prices in many restaurants and having very few other affordable food choices available. Drinking and driving the unfamiliar roads in STJ afterwards has also become a factor as the consequences in recent times have escalated.
The availability of suitable affordable housing for transient workers is certainly not unique to STJ - Key West, Martha's Vineyard, Mackinac Is., etc. have all been struggling with this problem for years as the lower cost homes are bought and renovated and taken off the summer help rental market.
I doubt that paying more gross receipts tax is much of a deterrent since having higher gross sales is a problem many stores would like to have. Selling better value items and not $75 T shirts and luxury goods in general might be a better place to focus insight on as a retail business plan when you notice the visitors to the island have less disposable spending money.
Few business are 'stuck' paying high rents - they signed leases at that price and felt it was workable as an expense -they ran the numbers and felt they could make money, no one forced them into starting the business. That is the entrepreneurial model and has risk.
Businesses that offer needed and good valued services and products will survive even if they do have to work a little harder and the transformation that occurs in these stressful economic times may well make STJ into a more realistic real estate and retail market down the road and for the better overall.
Cooking in a gourmet kitchen in a million dollar villa with a drop dead view is not really a bad option versus finding parking, paying high prices in many restaurants and having very few other affordable food choices available. Drinking and driving the unfamiliar roads in STJ afterwards has also become a factor as the consequences in recent times have escalated.
The availability of suitable affordable housing for transient workers is certainly not unique to STJ - Key West, Martha's Vineyard, Mackinac Is., etc. have all been struggling with this problem for years as the lower cost homes are bought and renovated and taken off the summer help rental market.
I doubt that paying more gross receipts tax is much of a deterrent since having higher gross sales is a problem many stores would like to have. Selling better value items and not $75 T shirts and luxury goods in general might be a better place to focus insight on as a retail business plan when you notice the visitors to the island have less disposable spending money.
Few business are 'stuck' paying high rents - they signed leases at that price and felt it was workable as an expense -they ran the numbers and felt they could make money, no one forced them into starting the business. That is the entrepreneurial model and has risk.
Businesses that offer needed and good valued services and products will survive even if they do have to work a little harder and the transformation that occurs in these stressful economic times may well make STJ into a more realistic real estate and retail market down the road and for the better overall.
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TropicAtHeart
- Posts: 180
- Joined: Mon Jul 30, 2007 11:37 am
- Location: Ohio
There are still those potential home buyers with the money to invest, but I suspect it is the property taxes and insurance rates that are giving them great pause. This is also happening on the mainland in many areas where property taxes are becoming too high and not tolerable or reasonable. There comes a time when governments must realize that their property rates have hit an unsustainable level and in the long run will come back to bite them. The only alternative is to make cuts in what a government puts out. It's a bullet that must be bit for the overall good of the residents. There must be a balance in what the residents can afford to have and to pay.
I think real estate taxes on St. John are quite low in relation to the value of the real estate.
For example, the house we rented in Feb is for sale for $6,000,000 (I know, asking price doesn't always equal value) and the real estate taxes are $12,000.
The house was purchased (I found this bit of information on the VI assessment website) for $2,500,000 several years back.
In my area, a $2,500,000 house would have a tax bill in the $30,000s. A $6,000,000 house would exceed $75,000.
For example, the house we rented in Feb is for sale for $6,000,000 (I know, asking price doesn't always equal value) and the real estate taxes are $12,000.
The house was purchased (I found this bit of information on the VI assessment website) for $2,500,000 several years back.
In my area, a $2,500,000 house would have a tax bill in the $30,000s. A $6,000,000 house would exceed $75,000.
http://www.vipropertyrevaluation.com/
Caution, it can be a HUGE time waster. I spent one afternoon looking up all sorts of houses!
Caution, it can be a HUGE time waster. I spent one afternoon looking up all sorts of houses!
This article is yet another reason I try to spend all of my tourist $$ on STJ. I want these guys to still be in business when I come back year after year. I am a loyal customer who spends $$ and tips well. I have rented cars from Lonnie and STJ Car rental since 1998 and paid the higher price rather than renting on STT and taking the car ferry over.
I feel that I have a relationship with Lonnie and her business and am happy to pay a higher price to maintain that. I am fortunate to have the disposable income to be able to do it.
In some way businesses having to be more customer service oriented is a good thing for visitors.
Even though times are tight I have already booked 2 trips to STJ over the next 12 months and will be bringing new folks to the island for first visits.
Sure I have less disposable income than I did a year ago, but I'm happy to financially support the place I love the most.
I feel that I have a relationship with Lonnie and her business and am happy to pay a higher price to maintain that. I am fortunate to have the disposable income to be able to do it.
In some way businesses having to be more customer service oriented is a good thing for visitors.
Even though times are tight I have already booked 2 trips to STJ over the next 12 months and will be bringing new folks to the island for first visits.
Sure I have less disposable income than I did a year ago, but I'm happy to financially support the place I love the most.
Last edited by Gromit on Thu Jun 26, 2008 1:54 pm, edited 1 time in total.
*Another fine scatterbrained production
The cost of vacationing on STJ is only going to continue to escalate. Airfare is skyrocketing and airlines continue to announce schedule cuts as they try to cope with the price of fuel. Villa rates increase as owners are forced to pass along higher utility and insurance rates.
Many Americans have far less disposable income than in years past. Higher costs and reduced accessibility will likely mean fewer tourists further affecting STJ's economy.
Many Americans have far less disposable income than in years past. Higher costs and reduced accessibility will likely mean fewer tourists further affecting STJ's economy.
Insurance rates are super high which is curious considering just about the whole house is concrete so....but they can so they do! They are trying to raise the taxes as they saw the prices and saw a cash cow but they have met some resistance. I got the letter but they never explained how they valued the property!! It was so out of whack I almost laughed/cried- on top of that the house was not even close to being finished then!!
Maybe this downturn will weed out some of the people who take advantage of tourist/property owners and have overcharged/padded etc.. It should also send a wake up to the police and officials to go after the infrequent burglaries etc. more aggressively. They/we can't afford any nonsense and it's just not hard to catch these folks on a small island. Can't bite the hand that feeds. There's my rant-sorry for the book!!!
Maybe this downturn will weed out some of the people who take advantage of tourist/property owners and have overcharged/padded etc.. It should also send a wake up to the police and officials to go after the infrequent burglaries etc. more aggressively. They/we can't afford any nonsense and it's just not hard to catch these folks on a small island. Can't bite the hand that feeds. There's my rant-sorry for the book!!!
PS they also should be advertising that along with no passport- you don't have to exchange your US dollars for euros or (insert currency here) and get hammered in the process!! Even more so, advertise to the Canadians- "it's much cheaper than it was blah, blah, blah!!"- Just a thought.- Ok,now I am really finished-anyone have a Heineken Light???
There's a lot of bad news there...
...but, and excuse me if this makes me an awful person, I have a hard time getting all teary-eyed about the construction boom slowing down. That strikes me as good news.
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bayer40601
- Posts: 612
- Joined: Sun Oct 14, 2007 1:06 pm
- Location: Kentucky
I'm threadjacking this a little bit, but how do you find the parcel information and stuff so you can look up a property? I don't know the addresses of the rental properties we've stayed at. I know them as "Make a left at the chicken and go up the hill"PA Girl wrote:http://www.vipropertyrevaluation.com/
Caution, it can be a HUGE time waster. I spent one afternoon looking up all sorts of houses!