The number of homes for sale on St. Croix increased substantially after Hovensa announced it was closing its refinery in January, according to data from Multiple Listing Service, an online database that tracks home listings and sales.
“The inventory jumped by about 10 percent in around 45 days,” said Julie San Martin, a realtor with RE/MAX who also publishes a monthly industry newsletter on the island.
The number of new listings has continued to rise. According to MLS, there were 277 residential properties listed with realtors on the island at the end of December 2011 and 340 by the end of March 2012, an increase of 22.7 percent.
According to San Martin, such an increase is alarming, but it could have been worse. Many of the Hovensa workers who lost their jobs lived in company owned housing. Hovensa has not attempted to sell those units, so the housing market has been insulated from some of the direct consequences of the closing.
So why the increase in listings? San Martin attributes much of it to the island’s “shadow market.”
“The shadow market is all the people who want to sell, but they’re waiting for things to get better,” she explained. “Our shadow market just decided that things were not getting better in the foreseeable future, so they might as well go ahead and list.”
While San Martin said that Hovensa’s closing certainly made the real estate market worse, she was quick to add that it wasn’t in very good shape before the announcement either.
“The real estate market in St. Croix is about 80 percent dependent on off-island buyers,” she said. “And we haven’t had our off-island buyers for the last four or five years.”
San Martin explained that the St. Croix housing market is directly related to the housing market in the United States. When the U.S. market falls, the market on St. Croix falls with it. When the U.S. market recovers, the St. Croix market recovers as well, but not nearly as fast.
Realtors on the island have seen home sales gradually slow since the financial crisis in 2008, she said.
San Martin said the residential market is performing at roughly 50 percent of what it was five years ago.
According to MLS, during the year from April 2011 to March 2012, there were 92 homes sold on the island. From April 2007 to March 2008, there were 170.
“The residential market has been the best performing segment,” San Martin added. “The condominium and land market have just been devastated.”
The wave of homes that have gone up for sale since the Hovensa announcement have only added more inventory to an already backlogged real estate market. With much more supply than demand, home prices are declining.
“From the height of our market in 2008, we’ve seen about a 30 percent decrease in housing prices, but those prices were really puffed up,” San Martin said. “I expect we’ll see another about 20 percent decrease from where we were.”
But despite the gloomy condition of her industry, San Martin said she is optimistic. She believes the housing market has just about bottomed out and that off-island buyers will start returning to the St. Croix market soon.
She said she’s especially excited about the potential for attracting retiring baby boomers. The island’s idyllic weather and low home prices could make it an attractive alternative to Florida.
San Martin, whose family has been in the real estate business on St. Croix since 1957, said the market is historically bad at the moment, but people shouldn’t panic.
“This is just one more obstacle we’ll overcome and come out the other side,” she said. “St. Croix will not become a ghost town.”