Mixed property market in US Virgin Islands

Maria de Guzman | February 08, 2019

Home sales were generally lower in the US Virgin Islands during 2017. Yet housing markets in St. Croix and St. Thomas performed fairly well, while in contrast St. John´s suffered, both in terms of prices and sales.

In St. John, where most luxury residential properties can be found, the average home sales price plunged by 26.7% y-o-y in 2017, to approximately US$ 763,477, according to Islandia Real Estate.  This follows a 3.1% price decline in 2016, and a modest price rise of 3.4% in 2015. Part of the decline was attributed to the devastation brought by the Hurricanes Maria and Irma to properties in the area.

On the other hand, the average condominium sales price in St. John continued to skyrocket, rising by 53.7% y-o-y to US$ 875,000 in 2017, following the previous year´s price rise of 56.8%.

In St. Croix, the largest of the U.S. Virgin Islands, the average home sales price rose by 14.3% y-o-y to US$ 402,500 in 2017, after a 12.7% drop in 2016, and annual price rises of 21.2% in 2015, and 4.6% in 2014, according to Re/Max Team San Martin. In contrast, average condominium prices fell by 3% to US$ 183,400 in 2017. 

In St. Thomas, where the USVI’s capital Charlotte Amalie is located, the average home sales price rose by 10.7% in 2017 to US$ 627,000, according to Re/Max Team San Martin.

Construction. In Q2 2018, the total value of private residential construction permits in the US Virgin Islands rose by 28% y-o-y to US$ 41.2 million, based on the figures from the USVI Bureau of Economic Research. Behind this increase, there were variations:

  • In St. Thomas/St. John, private residential permits value sharply rose by 42.6% to US$ 29.8 million.
  • In St. Croix, the value of private residential permits rose by only 1% to US$ 11.4 million.

What attracts people to USVI? 

USVI annual property price change st john

St. John, the "Love City"  St. John is known for its well-preserved natural beauty and picturesque hills dotted with lavish villas. Unlike the overdeveloped St. Thomas, real estate developments in St. John are restricted. The island is the wealthiest and most expensive of the US Virgin Islands.

St John is home to the territory’s National Park, which protects more than half of St John’s land area. The National Park includes some of the best beaches and coral reefs in the world.

Some of the condominium developments on St. John offer full ownership while others operate as timeshares or run on fractional ownership. Most of these residential projects are located in Cruz Bay. Some existing condominium developments include:

  • Pastory Estates: located on the hillside just five minutes from Cruz Bay, it has four buildings with thirteen one and two bedroom condos. One-bedroom units are priced at least $350,000.
  • Pond Bay Club: located in Chocolate Hole just three miles from Cruz Bay, it is an exclusive 15-acre fractional time-share development consisting of 50 furnished three-bedroom cottages and villas and other recreational facilities.
  • Sunset Ridge: located in Cruz Bay, time-share and condo units are available starting from $575,000. Weekly time shares from $8,000 and up.

St. Thomas, the “Rock City”

USVI annual property price change st thomas

Mountainous St. Thomas is an ocean lover’s paradise. Hillside houses usually have magnificent views of the ocean. Snorkeling, scuba diving and windsurfing are popular tourist activities. St Thomas is home to USVI’s capital and largest city, Charlotte Amalie.

Some residential developments in St. Thomas include:

  • Jumeirah Botany Bay Resort: formerly known as The Preserve at Botany Bay, a 400-acre resort, which include an 84-room five-star boutique hotel, 30 fractional residences, 30 villas, and up to 20 grand estates.
  • Marriott Frenchman‘s Cove: Marriott Vacation Club International´s first timeshare resort overlooking Pacquereau Bay, which comprises of 220 two- and three-level vacation homes within seven buildings.
  • Yacht Haven Grande: located in Long Bay Harbor, this mixed-use luxury development features a marina, an extensive retail and office space, four restaurants, and 12 three-bedroom condominiums.
  • Dolphin Cove: a luxury community situated on St. Thomas’ "Gold Coast"; with around 20 acres of oceanfront property, the Dolphin Cove development includes at least 4 oceanfront bungalows, 64 villas, and 36 luxury flats offering views of Nazareth Bay and St Croix and the channel between St. Thomas and St. John.

St. Croix, the “Twin City”

USVI annual property price change st croix

St. Croix is the largest island in the US Virgin Islands, but is more laid back than the other two islands. Unlike St. Thomas and St. John’s mountainous landscape, one of St. Croix’s charms lies in its varied topography, which goes from uncrowded white-sand beaches to rolling hills to rain forests.

St Croix is nicknamed the Twin City because of its two main towns: Christiansted and Frederiksted. Out of the two, Christiansted is more developed featuring shops and superb restaurants with a modern setting. This town is also known for architectural and historic richness, present in its 18th-century Danish-style buildings constructed by African slaves. Meanwhile, Frederiksted, with its historic landmark Fort Frederik, has been the main port for cruise ships in St. Croix.

Some notable attractions in St. Croix include the Buck Island Reef National Monument, the renowned Cane Bay Wall, St. George Village Botanical Gardens and the Cruzan Rum Distillery. St. Croix is also the only island in the US Virgin Islands that has a casino, the Divi Carina Bay Casino.

Property sales dampened by hurricanes

USVI house prices

Property sales in all the major islands fell in 2017  - not surprisingly, given that there were two major hurricanes. 

In St. John, the number of homes sold fell by 58.5% y-o-y in 2017, according to Islandia Real Estate. Condominium sales were even more dismal, plunging by 80% y-o-y during the same period.

Residential property sales in St. Croix also shrunk, albeit at lower rates. In 2017, the total number of home sales declined by 7.7% y-o-y in 2017, while condo sales dropped by 14.5% y-o-y over the same period, according to Re/Max Team San Martin.

In St. Thomas, home sales fell by 7.4% y-o-y in 2017, according to Re/Max Team San Martin.

In terms of value:

  • In St. John, the value of home sales plunged by 69.6% y-o-y in 2017 to US$ 16.8 million.
  • In St. Croix, the value of home sales rose by 5.5% y-o-y in 2017 to US$ 62.8 million.
  • In St. Thomas, the value of home sales rose by 2.6% y-o-y in 2017 to US$ 55.2 million.

The rental market

St. John has the most expensive rental houses and villas. Monthly rents for one-bedroom apartments range from US$950 to US$1,800. Three to four-bedroom beach houses can cost from US$2,000 to US$7,000 per month. Recently, more condominiums have been built near hotels and resorts in St Thomas and St Croix.

Long-term rents in USVI are usually not advertised, except to locals. Most landlords only put a “for rent” signage in front of these rental apartments, which are often part of a larger house, with the landlord living next door.

Land price variations

USVI land prices

St. John continues to have the most expensive land in the territory, but land prices are now at their lowest point for 16 years, with land prices plunging by 53.2% y-o-y in 2017, to an average of US$ 148,079 per transaction, according to Islandia Real Estate.  In contrast from 2004 to 2008, St John land prices per transaction averaged US$551,000.

In contrast, land prices in St. Croix rose by 24.4% y-o-y in 2017 to an average of US$89,910 per transaction, according to RE/MAX Team San Martin, which is still below the average per-transaction price between 2003 and 2009 of US$110,000.

House price boom and bust

USVI annual change proeprty prices

The U.S. Virgin Islands saw a housing boom from 2000 to 2007, with nationwide home sales prices surging by 90.1%, according to the USVI Bureau of Economic Research. The condominium market experienced even bigger price rises, with an average price rise of 133.8% over the same period.

However in 2008, home prices dropped 11.8% while condominium prices fell by 2%. Home prices in St. John/St. Thomas saw the biggest decline, of 28.5%.

In 2013 and 2014, home prices began to recover, increasing by 22.1% and 5.6%, respectively. In contrast, condominium prices continued to fall (by 15.9% and 3%).

PROPERTY PRICE CHANGE (2000-2017)

HOME PRICE CHANGE (%) CONDO PRICE CHANGE (%)
2000-2007 2007-2012 2012-2014 2015 2016 2017 2000-2007 2007-2012 2012-2014 2015 2016 2017
St. John/St. Thomas 146.8 -39.1 62.1 -16.5 0.8 -0.6 161.7 -11.9 -2.4 -3.2 2.7 11.7
St. Croix 57.6 7.4 -17.7 14.6 -8.8 4.3 94.2 -37.3 -4.2 17.6 5.6 -12.5
US Virgin Islands 90.1 -16 28.9 -10.5 -1.6 -1.8 133.8 -11.4 -18.4 6.5 3.8 1.0
Source: USVI Bureau of Economic Research

USVI property sales

The situation was reversed in 2015, as home prices dropped by 10.5%, while condo prices increased by 6.5%. The trend of declining home prices and rising condo prices has continued for the next two years.

From 2008 to 2017, the average number of homes sold in the whole territory was 327 units per year, down from an average of 508 units from 2003 to 2007, according to the USVI Bureau of Economic Research. Over the same period, the average number of condo units sold also declined to 256 units from 470 units every year.

More residential construction activity in 2018

USVI private residential construction permits value

In Q2 2018, the total value of private residential construction permits in the US Virgin Islands rose by 28% y-o-y to US$ 41.2 million, based on the figures from the USVI Bureau of Economic Research. Behind this increase, there were variations:

  • In St. Thomas/St. John, private residential permits value sharply rose by 42.6% to US$ 29.8 million.
  • In St. Croix, the value of private residential permits rose by only 1% to US$ 11.4 million.

Hurricanes take a toll on the stabilizing economy

USVI tourist arrivals

Tourism is the US Virgin Islands’ main industry, generating 2 million visitors every year, and accounting for 80% of GDP. In 2017, the total number of stay-over visitor arrivals in the territory fell  by 24.5% y-o-y to 1.94 million people, according to USVI Bureau of Economic Research, as a result of a huge declines in cruise ship passengers by 26.6% and air passengers by 20.1%. Many of the territory´s resorts were hit by hurricanes Irma and Maria during the second half of the year.

GDP figures for 2017 are still unavailable. While the economy already seems to be picking up, it is still facing uncertainty, considering the impact of the hurricanes on tourism.  In 2016 USVI´s economy grew by 0.9%, after posting 0.3% growth in 2015, according to the U.S. Bureau of Economic Analysis.

The past decade has not been kind to the USVI. USVI’s GDP dipped 6.6% in 2009. After a short-lived recovery in 2010 (GDP up 0.9%), GDP plunged again by 8.2% in 2011, and then fell by a huge 15% in 2012, by 5.8% in 2013, and by 1% in 2014, mainly because of the closure of the HOVENSA refinery in 2012, which caused the layoff of around 1,200 employees.

In July 2018, the overall unemployment rate in the U.S. Virgin Islands stood at 9.2%, slightly down from 10% in the previous year, according to the USVI Bureau of Economic Research. In St. Croix, the jobless rate fell to 8.9% from 11.3% over the same period. In contrast, in St. Thomas/St. John, the jobless rate slightly rose to 9.4%, from 9.1%.

Affordable housing

The Virgin Islands Housing Authority is responsible for planning, financing, constructing, maintaining and managing public housing developments, mostly on St. Thomas and St. Croix, and manages around 15% of USVI’s total housing stock. VIHA provides rental assistance to low-income families, elderly and disabled persons, with rentals based on the highest of three methods:

  • Income-based: 30% of the monthly-adjusted income Total Tenant Payment (TTP)
  • Welfare rent, if applicable
  • Minimum rent of US$25

As of 2017, VIHA operate 24 public housing communities for a total of 3,014 units. An estimate of 1,471 apartment units are located in St. Thomas/St. John, while 1,543 units are in St. Croix.

One of VIHA’s newest developments (and also its largest redevelopment project) is the Louis E. Brown public housing development. The project´s first two phases consisted of 102 family units and 40 senior villas. The third phase of the project, which will consist of 90 family apartments, has started its construction during the second half of 2017.

SOURCES:
Property Values Plunge but Taxes on Sales Remain at Pre-Hurricane Levels
USVI Monthly Tourism Indicators (Dec. and Annual 2017)
Gross Domestic Product for U.S. Virgin Islands (USVI), 2016
Virgin Islands Housing Authority
Re/Max Team San Martin
Islandia Real Estate
USVI Bureau of Economic Research
 

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