Growing Golden Changes

The growing concentration of wealth controlled by relatively few is resulting in a changing real estate market in Destin and South Walton, and to a large degree in many other wealth driven real estate markets in the nation.

Luxury real estate isn’t all the Destin market is composed of, but to a large degree after more than five years of appreciation the Destin market is witnessing a disparity of economic forces not seen before.

Destin is a community of just slightly more than 17,000 year round residents. The majority of its housing is composed of second homes and vacation condos. The very rich are replacing the well-to-do. Shop clerks, waiters and waitresses and others working in the service economy that supports the infrastructure of the community have been pushed out of the area, seeking housing in nearby communities.

It’s a transformation that is occurring in many other high-to-do areas of the nation like Newport Beach in California, Paradise Valley, Arizona and Greenwich, Connecticut, where New York stock brokers have pushed up home prices to record levels.

For the nation as a whole, the five-year increase in the Case-Shiller Home Price Index was 63.7%, while the increase was 79.5% for those zip codes with a median sales price of $750,000 or more, according to Fiserv Lending Solutions. Fiserv provides economic data and information to lenders.

The changing micro-economic forces in housing in Destin and South Walton have seen the market react quietly at first with a slow down in home sales, but reemerge with improved sales in the higher price ranges. The wealthy get fewer loans to make their real estate purchases.

The role of wealth is elevating many areas of the country, especially the resort markets. Economists Joseph Gyourko and Todd Sinai of the University of Pennsylvania’s Wharton University and Christopher Mayer of Columbia University have studied the changes, and released an academic paper entitled "Superstar Cities."

Most of the areas studied in their report are areas with limited land left for development or extremely restrictive zoning. Located on a peninsula Destin has a limited land mass remaining for development and South Walton County has enacted some of the most restrictive zoning laws in the state.

Condominium developments are limited to four stories in South Walton and have been now for a decade.