The Real Story: More Woe at St. Joe

Shares of all homebuilders have been pounded like cheap beer at a fraternity house, but St. Joe (JOE Quote) stands out from the group -- and not in a good way.

St. Joe operates mainly in northwest Florida, which had seen a boom in development with buyers and visitors drawn to the pristine beaches on the Gulf of Mexico. St. Joe hoped that demand would continue, as it sold homes away from the beach and even in the woods. To put it plainly, it ain't happening, judging by recent events at a few St. Joe developments.

St. Joe was scheduled to release 12 condo units to the public last week in its Watersound Beach development. However, the sale was postponed, according to a St. Joe sales associate. The sales office does not yet have a date when the release will take place and was not given a reason for the delay.

It was due to a lack of demand, according to a real estate agent in the area, who requested anonymity, as he primarily sells St. Joe properties and is in litigation with the company. There are currently 52 St. Joe condos at Watersound up for resale, providing competition to the 12 new ones the company planned to sell.

According to several sources, the resale condos are in better locations than the 12 planned for release by St. Joe. There are currently 94 lots and 8 homes for resale in Watersound Beach as well.

Curiously, when asked for comment, St. Joe spokesman Jerry Ray said there are no condos in Watersound Beach, despite several listed for sale on St. Joe's Web site.

Ray did not respond to repeated followup calls seeking clarification.

Meanwhile, prices are plummeting in the development. The real estate agent is currently listing a lot for $465,000 that his client bought for over $800,000. He said he'll be lucky to get $450,000 for it.

A look at the prices of lots for resale shows either some desperate or unrealistic sellers. For example, one lot is being offered at $1.3 million, while the one next to it (which appears slightly larger) sold for $660,000 in March -- and we know prices haven't doubled in the past three months. Next to that one, a larger lot is being offered at $1.285 million, while an adjacent and similarly sized property is listed at $595,000.