Property prices rising strongly again in US Virgin Islands
Lalaine C. Delmendo | February 18, 2020
After taking a temporary setback from the 2017 hurricanes, US Virgin Islands’ housing market is now growing strongly again. “We are as busy as we were the day before the storm hit,” said Chris Hanley of Chris Hanley Real Estate on St. Croix.
“The market has been very, very, very strong,” confirmed April Newland, a St. Thomas-based realtor. “A lot of people have been buying.”
In St. John, where most luxury residential properties can be found, the average home sales price rose by 11.5% y-o-y in 2019, to approximately US$1,169,878, according to Cruz Bay Realty, Inc. This follows a 17.7% price surge in 2018, and a 14.4% decline in 2017 mainly due to the devastation brought by the Hurricanes Maria and Irma to properties in the area during the year.
Likewise, the average condominium sales price in St. John climbed 26.8% y-o-y to US$760,750 in 2019, following the previous year’s price decline of 13.1%.
In St. Croix, the largest of the U.S. Virgin Islands, the average home sales price rose strongly by 22.8% y-o-y to US$ 405,926 in 2019, after an 18.6% drop in 2018 and an annual rise of 15.2% in 2017, according to Re/Max Team San Martin. On the other hand, average condominium prices rose by a modest 2% y-o-y to US$207,834 in the first eight months of 2019.
In St. Thomas, where the USVI’s capital Charlotte Amalie is located, the average home sales price surged by 27% y-o-y in the first eight months of 2019 to US$ 666,577, based on figures from Re/Max Team San Martin. In contrast, condo prices fell slightly by 1% to US$ 250,208 over the same period.
Residential construction activity is rising strongly. During the first ten months of 2019, the total value of private residential construction permits in the US Virgin Islands soared 45.5% y-o-y to US$ 147.27 million, according to the USVI Bureau of Economic Research. In St. Thomas/St. John, private residential permits value rose sharply by 50.4%, and in St. Croix, the value of permits increased 34.1%.
There are no restrictions on foreign property ownership. Owning a property in the US Virgin Islands is "fee simple".
What attracts people to USVI?
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 currently priced at around US$360,000 while two-bedroom units are offered for about US$425,000.
- 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.
- The Lumberyard: located just above the Cruz Bay ferry landing, this unique mixed-use development on the west coast of St. John offers four 2-3 storey buildings.
- Sunset Ridge: located in Cruz Bay, time-share and condo units are available starting from US$575,000. Weekly time shares from US$8,000 and up.
St. Thomas, the “Rock City”
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”
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.
Homes sales down, condo sales up
Home sales in all the major islands were weak in 2019. In St. John, the number of homes sold plunged by 25% y-o-y in 2019, following a 58% increase in the prior year, according to Cruz Bay Realty, Inc. In terms of value, total home sales in St. John fell by 16% y-o-y in 2019 to US$52.64 million.
Home sales in St. Croix also shrunk, albeit at lower rates – falling by 5% y-o-y in 2019, based on figures released by Re/Max Team San Martin. In St. Thomas, home sales were almost steady in the first eight months of 2019.
In contrast, condominium sales have risen strongly. In St. John, the number of condos sold doubled in 2019 from a year earlier. Likewise in the first eight months of 2019, condo sales in both St. Croix and St. Thomas soared by 36% and 32%, respectively.
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$7,000 per month. Recently, more condominiums have been built near hotels and resorts in St Thomas and St Croix.
Long-term rents in USVI are usually not advertised, except to locals. Most landlords only put a “for rent” signage in front of these rental apartments, which are often part of a larger house, with the landlord living next door.
Land price variations
St. John continues to have the most expensive land in the territory, but land prices have declined by 11.3% y-o-y in 2019, to an average of US$ 248,815 per transaction, according to Cruz Bay Realty, Inc. This was far below the average land price per transaction of US$551,000 from 2004 to 2008.
Similarly, land prices in St. Croix fell by 20.8% y-o-y in the first eight months of 2019 to an average of US$ 53,597 per transaction, the lowest since 2013, according to RE/MAX Team San Martin. This is in sharp contrast to the average per-transaction price between 2003 and 2009 of US$110,000.
In contrast in St. Thomas, the average land price rose by a whopping 55% y-o-y to US$172,270 per transaction in the first eight months of 2019.
House price boom and bust
The U.S. Virgin Islands saw a housing boom from 2000 to 2007, with nationwide home sales prices surging by 90.1%, according to the USVI Bureau of Economic Research. The condominium market experienced even bigger price rises, with an average price rise of 133.8% over the same period.
However in 2008, home prices dropped 11.8% while condominium prices fell by 2%. Home prices in St. John/St. Thomas saw the biggest decline, of 28.5%.
In 2013 and 2014, home prices began to recover, increasing by 22.1% and 5.6%, respectively. In contrast, condominium prices continued to fall (by 15.9% and 3%).
The situation was reversed in 2015, as home prices dropped by 10.5%, while condo prices increased by 6.5%. The trend of declining home prices and rising condo prices has continued for the next two years. But in 2018, both home and condo prices fell by 7.4% and 9.7%, respectively.
PROPERTY PRICE CHANGE (2000-2018)
|Home Price Change (%)||Condo Price Change (%)|
|St. John/St. Thomas||146.8||-39.1||62.1||-23.8||161.7||-11.9||-2.4||-6.6|
|US Virgin Islands||90.1||-16.0||28.9||-19.9||133.8||-11.4||-18.4||0.8|
|Sources: USVI Bureau of Economic Research, Global Property Guide|
From 2008 to 2018, the average number of homes sold in the whole territory was 346 units per year, down from an average of 508 units from 2003 to 2007, according to the USVI Bureau of Economic Research. Over the same period, the average number of condo units sold also declined to 267 units from 470 units every year.
Residential construction activity surging
During the first ten months of 2019, the total value of private residential construction permits in the US Virgin Islands soared 45.5% y-o-y to US$ 147.27 million, based on the figures from the USVI Bureau of Economic Research.
All USVI’s major islands saw strong construction activity:
- In St. Thomas/St. John, private residential permits value rose sharply by 50.4% y-o-y to US$ 106.13 million from Jan to Oct 2019.
- In St. Croix, the value of private residential permits increased 34.1% y-o-y to US$ 41.14 million.
Tourism remains weak
Tourism is the US Virgin Islands’ main industry, generating 2 million visitors every year, and accounting for 80% of GDP. In 2018, the total number of visitor arrivals in the territory fell by 1.5% y-o-y to about 1.94 million people, following declines of 23.6% in 2017, 2.6% in 2016 and 6.1% in 2015, according to USVI Bureau of Economic Research.
Tourism remains weak last year, with visitor arrivals totaling less than 1.8 million people in the first eleven months of 2019. About 68% were cruise passengers while the remaining 32% were air arrivals. This signals that the industry is yet to fully recover from the adverse impact of hurricanes Irma and Maria that hit the island in September 2017.
In January 2020, the government launched a new marketing campaign for St Croix with the tagline “St. Croix: a vibe like no other”, in an effort to revive the industry. The strategy’s focus is on digital and social media, such as Spotify, Pandora, Facebook, Instagram and Twitter. St. Thomas and St. John will continue to be promoted under the overarching USVI banner.
GDP figures for 2019 are still unavailable. While the economy already seems to be picking up, it is still facing uncertainty mainly due to ongoing trade tensions, global economic slowdown and the outbreak of the 2019-nCoV. In 2018, USVI’s economy grew by 1.5%, after contracting by 0.6% in 2017 and posting miniscule growth of 0.9% in 2016 and 0.3% in 2015, according to the U.S. Bureau of Economic Analysis. The growth was mainly driven by post-disaster recovery activities.
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 October 2019, the overall unemployment rate in the U.S. Virgin Islands stood at 5.7%, down from 7.2% in the previous year, according to the USVI Bureau of Economic Research. In St. Thomas/St. John, the jobless rate fell to 6.1%, from 7.9% over the same period. Likewise in St. Croix, the jobless rate fell to 5.3%, from 6.4%.
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$50
As of 2019, VIHA operate 27 low-income public housing communities for a total of about 3,000 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 developments, which are privately managed. The project’s first two phases consisted of 102 family units and 40 senior villas. The other public housing communities are directly operated by VIHA.
- St. John MLS Sales History (Cruz Bay Realty, Inc.): https://www.cruzbayrealty.com/st-john-sales-history/
- 8 Year St Croix Home Sales Price Trends (Team San Martin): http://www.american-virgin-islands.com/Team_Times_Market_Report.htm
- Rosy Real Estate Market Rises in V.I. Recovery (The St. John Source): https://stjohnsource.com/2019/01/10/rosy-real-estate-market-rises-in-v-i-recovery/
- Total Construction Permit Value – U.S. Virgin Islands (USVI Bureau of Economic Research): http://usviber.org/wp-content/uploads/2016/11/Construction-October-19.pdf
- U.S. Virgin Islands Annual Tourism Indicators (USVI Bureau of Economic Research): http://usviber.org/wp-content/uploads/2016/11/TOUR18-1.pdf
- US Virgin Islands Economic Review & Outlook Fiscal Year-to-Date September 2018 & Fiscal Year-to-Date November 2019 (USVI Bureau of Economic Research): http://usviber.org/wp-content/uploads/2016/11/Economic-Review-2017-2018-Rev-Final-feb-2019.pdf
- Gross Domestic Product for the U.S. Virgin Islands (USVI), 2018 (U.S. Bureau of Economic Analysis): https://www.bea.gov/news/2019/gross-domestic-product-us-virgin-islands-usvi-2018
- The Caribbean is open for business as tourist boards prepare for 2020 (Loop): http://www.looptt.com/content/caribbean-open-business-tourist-boards-prepare-2020
- Unemployment Rates - U.S. Virgin Islands (USVI Bureau of Economic Research): http://usviber.org/wp-content/uploads/2016/11/UN19-oct.pdf
- Budget Presentation Fiscal Year 2019 (Virgin Islands Housing Authority): http://legvi.org/committeemeetings/Finance/Budget%20FY2020/08-20-19%20VIHFA,%20VIHA,%20OCB/VIHA/VIHA%20Budget%20Testimony%20FY20%20-%2008-14-19.pdf
- Pond Bay (Legacy Development): https://www.legacydevelopment.com/property/pond-bay/
- Buying costs are moderate in the US Virgin Islands (Global Property Guide): https://www.globalpropertyguide.com/Caribbean/US-Virgin-Is/Buying-Guide
- US Virgin Islands' property market improving - March 16, 2015
- US Virgin Islands' property market on road to recovery - January 02, 2013