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Must be something in the saltwater

Beach real estate has gone bonkers, as evidenced by cottages for not-so-quaint prices, a stream of million-dollar condos and the sought-after teardown.

MAUREEN BYRNE AHERN
Published February 15, 2004

In 1956, Dave Hankey moved with his family from Akron, Ohio, to Madeira Beach. A year later, his parents paid a builder $28,000 for a house on a canal in Treasure Island, one of a handful of homes at the time on the Isle of Capri.

His parents divorced, but Hankey's father, H.E. Hankey, lived at 440 Capri Blvd. until he moved to a nursing home last year.

A Buy Owner sign now stands in the front yard of the faded green house. With its terrazzo floors and Formica counters, it looks pretty much as it did 50 years ago. On the placard is a list of the property's features: two-car garage, block stucco, three bedrooms, two baths, central heat and air, dock, and 1,700 square feet of living space.

Asking price: $549,000.

Not a bad return on a $28,000 investment.

"I don't think any of us who lived on the beach would ever think the property values would increase like they have," said Hankey, 60, who taught shop for 30 years at Dixie Hollins High School near Kenneth City before retiring to Gatlinburg, Tenn. "It looks like there is no end in sight."

Great weather, no state income tax and a 3 percent cap on homesteaded property taxes are some of the reasons people yearn to buy a piece of paradise. And with low interest rates and rising property values, opportunities are there for both buyers and sellers.

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Use the interactive maps located on the pages linked below show the rates at which prices have risen in neighborhoods throughout the 5-county Tampa Bay area:
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So, what does a median price house look like? It depends on the neighborhood. To view representative homes from south Pinellas County, see our photo gallery.

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"It's a win-win situation," said Pat Plumlee, who has been selling real estate on the beaches for 30 years and owns Century 21 Plumlee Realty in Indian Rocks Beach.

There is another reason for the profitable turnover. With few empty lots available on the beach, people are often replacing what's already here. They're tearing down older, one-story homes and building multilevel, expensive houses. They're knocking down mom-and-pop motels and beach cottages and putting luxury condos in their place.

Developers can squeeze 12 upscale condos on a lot and charge $1-million-plus per unit. Since 1998, condo sales have outpaced those of single-family homes on the beaches. Median prices for single-family homes and condos from St. Pete Beach to Belleair Beach saw double- and triple-digit percentage growth between January 1998 and July 2003, according to an analysis done by the St. Petersburg Times.

Prices also spiked in Gulfport (85 percent), South Pasadena (71 percent) and Tierra Verde (81 percent).

For years, Miami, Naples and Fort Lauderdale were the hot spots in Florida, but Plumlee said that has changed. "They've discovered us. All of a sudden, they've said look at the Suncoast."

Well-to-do baby boomers from the bay area and across the country are putting their money in beach properties. For the time being, it's a better investment than the stock market, a 401(k) or the money markets.

"It's a good place to put your money," said Joan Walker, a broker for Frank Hurley Associates, a real estate office that has been in business in St. Pete Beach since 1918.

The company recently sold a parcel of waterfront property for $1.9-million. And a 1940 two-bedroom cottage with a garage apartment sold in September for $520,000 after being on the market only two days.

"Pass-a-Grille has had booms before," said Frank Hurley, resident historian and a pre-eminent real estate agent south of the Don CeSar Beach Resort and Spa. "This one exceeds any of them."

* * *

Vacant land is scarce, so more and more buyers are knocking down older houses and building new ones. "Whoever gets my dad's is going to do the same," said Hankey, who is selling the Isle of Capri house with his brother.

The lot itself is valued at $400,000, Hankey said. Since November, he has received about six inquiries a day, he said.

"We're in absolutely no hurry," Hankey said. "We're not going to give it away. It will sell, but it takes the right combination."

"They'll get it," said builder Paul Haggar, 36, who is overseeing some of those makeovers on the beaches and on Snell Isle in St. Petersburg.

He started building homes on Snell Isle in 1990. About four years ago, he began getting clients on the beach.

Some of those "teardown" homes, especially ones on the water, are selling before a For Sale sign hits the front yard, Haggar said.

It's the land they want, not necessarily the home. "People are willing to a pay a premium to be on the water," he said.

Joe Girolamo, a former Belleair Beach council member, welcomes the large house being built next to his waterfront home on Harbor Drive. "It's just going to make my value go up," said Girolamo, 55. "It's pretty hard to complain about it."

Haggar says the federal government has something to do with the trend in teardowns. The Federal Emergency Management Agency's flood insurance regulations prohibit owners from spending more than 50 percent of their structure's worth when remodeling. It's supposed to lead older homes to be elevated or torn down once they reach a certain stage of deterioration.

Haggar's company, Bright Bay Builders, has almost completed a two-story Mediterranean-style house with a spectacular view of Tampa Bay. The 4,000-square-foot house with four bedrooms and 41/2 baths easily trumps the 1957 house that once stood on the lot on E Vina Del Mar.

The owners, David and Stacey Robinson, had lived on Vina Del Mar, but they weren't on open water. When the house overlooking Tampa Bay was put up for sale in 2001, they grabbed it.

"The view, that's the No. 1 reason," Mrs. Robinson, 35, said, adding that the family-oriented neighborhood is good for their two children and is within walking distance to the beach.

Nearby Pass-a-Grille is one of the most expensive places in the county to buy a house, said Property Appraiser Jim Smith. The community within a community has a quaint downtown, fire station, a church and parks.

Cyd and Peter Styren were vacationing in St. Pete Beach last month when they stopped at Hurley's office on Pass-a-Grille Way. The couple from Oslo, Norway, both small-business owners, were looking for a home to buy to live in on long holidays.

They spied a two-bedroom house on the bay with a covered dock. It was just what they were looking for, but the price wasn't. The home is listed at $875,000.

"That's kind of steep," Cyd Styren, 45, said.

* * *

The Tides Beach Club, which replaced an old resort in North Redington Beach in the late 1990s, triggered a building boom of luxury gulf-front condos. Buyers paid about $300,000 to live in the 214-unit, six-building complex that has a jogging path, cafe, library and clubhouse.

The Tides was a steal compared to today's prices. Here are some examples in Indian Shores, which leads the beach communities in new condos:

- A unit in the Sea Star condominium goes for $1,495,000, which pays for a complete floor with a private elevator, four bedrooms and a cabana.

- The condos in the Pallazo del Mare are listed at $1,295,000. Residents get a gulfside tub room in the master bath and SurroundSound in the media and great rooms.

- The eight units at the Fairwind, each with 3,500 square feet of living space, are selling for $1,155,000 each.

And there's more to come.

The Flagship Motel on Gulf Boulevard in North Redington Beach sold last March for $2.35-million. Ocean Twelve, a 12-unit condominium, will soon take its place. Two weeks ago, only four of the $1-million units were left.

"I'm sorry to see some of these mom-and-pops go, but when you dangle $2-million in front of them, what can they do?" said Steve Busse, a RE/MAX agent who has been selling residential and commercial properties on the beaches since 1987.

New condos and townhomes are selling out before the buildings are completed, according to Realty Times, a real estate site on the Internet.

"They all want waterfront," summed up longtime real estate agent Plumlee, who said one of her clients paid $2.7-million in cash for a penthouse.

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