Mass Exodus Accelerates at Failing Beach Town

Seabrook home prices continue to take a beating as demand has sunk to a new record low.

Part of the selling pitch to potential Seabrook homeowners is that they can rent out their overpriced home to vacationers who will overpay to stay at Seabrook. But summer bookings in 2020 are at historic lows in "Washington's Beach Town," resulting in less revenue for the people who own and rent their homes out.

"We're being crushed," said one owner who owns a popular oceanfront home. "Not only is demand really low, but the costs of owning a second home at Seabrook is astronomical. From the 37% of nightly revenue we have to share with Seabrook to the increasing maintenance costs, we won't recoup this summer's lost revenue for three or more years."

For people who enter their home into Seabrook's rental pool, they have to share revenue with the beach town operator. Seabrook takes 37% of the nightly revenue and the homeowner has to pay the mortgage, taxes, insurance, and maintenance fees with the remaining revenue.

According to Hotel News Now, occupancy at resorts across the country is at 47.5%, which is down 40% from this time last year. In other words, Seabrook homeowners who enter their house into the vacation rental pool are getting decimated.

Listing Glut

Seabrook's website reports a total of 33 homes listed for sale, which is about 15% off the stock of 200 homes. Of the 33 homes for sale, 20 of them are new construction and 13 of them are resale homes. The executive team at Seabrook limits the number of resale homes it will participate in remarketing for sale to protect the value of the new home sales. Saltwater Properties has an additional 12 listed for sale that are not marketed on Seabrook's website. Add in the additional properties in Seabrook that are listed on the NWMLS, and the real number of homes for sale is roughly 50, which is a quarter of the homes in Seabrook that are listed for sale.

But it's not just the homeowners who are getting crushed. The small businesses within Seabrook are feeling the pain just as much if not worse.

The small merchants in Seabrook depend on the summer crowds to shop and spend money with them. The winters in Seabrook are not pleasant and do not bring in many crowds, so the businesses need successful summers to carry them through the year. With occupancy so low at Seabrook the merchants don't have the foot traffic to keep afloat.

Seabrook was struggling before COVID hit, especially in the new home sales department. But now that the vacation rental side of the business is being severely impacted by COVID, there is a mass exodus of homeowners trying to get out while they can retain some value.

Seabrook housing market crashing

It was only a matter of time before the Seabrook housing market collapsed. Long before the pandemic, real estate sales at Seabrook fell off a cliff. The developers had to take investor money to keep the project afloat. And now, it looks like their runway is coming to an end.

Add that on top of the pandemic, and it's no surprise real estate sales at Seabrook have come to a grinding halt.

One-half of owners have trouble paying mortgage

It's no shock people are having a tough time paying their mortgage payment. And that's on their primary residence. At Seabrook, the majority of homes are vacation homes, which is why over half of Seabrook homeowners are missing their mortgage payments. 

In good times, these homeowners rent their houses out to vacationers. But much of that business has been shut down by the governor, and the missed mortgage payments began mounting up.

So homeowners are rushing to list their homes for sale. Currently, there are 32 homes for sale, which is 20% off the Seabrook stock. Of the 32 homes for sale, 18 of them are resales. And this is just the beginning. As the summer selling season begins, more homeowners will list their Seabrook house for sale, if Seabrook lets them (generally, Seabrook does not allow too many resales on the market as they do not want resales competing with their new home sales).

New home construction has collapsed

Investors infused money into Seabrook in late-2018 to help the land development company finish building long-awaited commercial buildings and new home construction. That money was supposed to be replenished by sales. It has not. And it's drying up quick. Which is why new construction is coming to halt.

Seabrook is leveraged up to its eyeballs. You should see the forums with their homeowners. The panic is so real you can feel it come through your screen. This is not good for the housing values that were already super inflated at Seabrook. 

Sales Sink on the Washington Coast

Seabrook, Washington's Beach Town, has had it's worst year of real estate sales since 'The Great Recession'.

Sales are low.

Extremely low.

The Seabrook housing market is in a state of desperation.

Inventory is up dramatically. And, the average number of days on the market for listed homes is more than 200-days.

For anyone looking to buy, the market has fallen dramatically.

There is no urgency amongst potential buyers as they see the flood of homes coming on to the market and staying on the market.

Currently, Seabrook has 20 new homes (or property) listed for sale with an average price of $1.2M.

From October to November, Seabrook did not sell a single new home.

Seabrook currently has nine (9) resale homes listed for sale listed by their sales staff; and another five (6) homes for sale listed by outside agents.

In total, Seabrook currently has 35 homes for sale, which represents nearly 20% of all the homes built there.

Looking at things as they stand, such as demand and pricing, why would you expect sales to pick up? The only thing we are seeing is that inventory is sharply rising but prices are not coming down.

However, having inventory rise every month is definitely going to add more supply to the market which means buyers will have more options.

But the reality is, Seabrook's inventory has been elevated for some time now. What is really happening here is there is no demand for Seabrook housing at the current prices.

The majority of homes in Seabrook are second-homes and vacation-homes. The Seabrook real estate market reacts quickly to changes in the overall economy faster than other areas because it's a barometer on people's non-essential spending.

Sales volume in Seabrook has dried up. Sales have sunk. They are currently non-existent. And this is happening while inventory is up.

It will be interesting to see what happens this winter as winter is usually a seasonally slower period. The large rise in inventory and lack of buyer demand is a very telling and signals a slowdown at Seabrook is upon us.

The only question that remains is if this rise in inventory will translate into price corrections.