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pat3797

Beach Comber
Apr 22, 2005
8
0
Our family has been searching for property along 30A for nearly one tear now. Back in April/May, it appeared that we had "missed the boat" as our desires were in one of the planned communities (Watercolor, Watersound, Alys Beach etc) and these areas had realized substantially jumps in values since our search began. So I decided to track prices as I anticipated some froth was coming into the market.

The way I did this was to print out available lot listings for Watercolor and Watersound that appealled to me. I first did this on 5/10/05. At this time, I only did a select number as I didn't expect my results to be dramatic. I then went back On July 26, 2005 and printed out all listings for the two properties and once again I did the same test yesterday September 15, 2005.

Since there has been so much talk about statistical sampling on this board, I decided to include the entire population for these two communities. I do realize that this only is a test of listing price and does not fully reflect the market as sales are not included and I recognize that sales are the key element here. However this was easier for me and I thought it would provide some interesting reading.

In the first test, I included the sampling of lots I chose in May 2005 that had price changes more than once between May and September. Out of 50 lots chosen for sale (out of an estmated 170 during May 2005 in those communities), 19 had multiple price changes - ALL DOWN! The average lisitng price on 5/10/05 for these 19 lots was $1,800,631. On September 15, 2005, the average for the same lots had dropped to $1,376,579 - this is a drop of 23.6% :cool:

I then took the test one step further - I compared the MLS listing for the 2 communties for July 26 versus September 15 - here are some results.....

Watercolor :

Listings - July 26 - 93 Lots Sept 15 - 105 lots

# of lots out of the 93 listed in July with price changes during the seven week period = 37 or 40%

Average price of these 37 lots on July 26 = $902,500

Average listing price on Sept 15 of same lots = $799,500

Average drop in listing price = 11.4%

The same info is available for Watersound - but I will save that for another day if this info is useful. I provide this info not as a negative aspect of the market as I feel Sowal is the most beautiful place in the US, however as useful info to ppl out there like me who if prices kept increasing would never have had a chance to call this area a home (albeit a 2nd one).
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Now, you just have to figure out where the bottom is so that you can buy. Good luck.:D
 

Mermaid

picky
Aug 11, 2005
7,871
335
Smiling JOe said:
Now, you just have to figure out where the bottom is so that you can buy. Good luck.:D

It's like the stock market! We were driving ourselves crazy with that, trying to figure out the absolute best time to buy and sell, and finally we got exasperated enough with the guessing game to cash out entirely. Now we own mutual funds--boring ride, but that's okay. (And stocks are small peanuts compared to buying houses at the beach!)
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Mermaid said:
It's like the stock market! We were driving ourselves crazy with that, trying to figure out the absolute best time to buy and sell, and finally we got exasperated enough with the guessing game to cash out entirely. Now we own mutual funds--boring ride, but that's okay. (And stocks are small peanuts compared to buying houses at the beach!)

FYI - You didn't really cash out since mutual funds buy stocks. You just get a wider spread of risk because the funds are required to own a minimum of 20 stocks.
 

wetwilly

Beach Fanatic
Jul 11, 2005
536
0
Atlanta, Ga.
Compelling evidence that their are listing price corrections going on in SoWal. This is somewhat natural in boom markets even though it is causing some to push the doom and gloom or the "sky is falling" theory it frankly is evident that the pricing and runup in some of the communities was not sustainable.

Again, I do not believe that this spells crash or bust (bubble) throughout SoWal but some correction was/is needed in some respects. :dunno: :blink:
 

Mermaid

picky
Aug 11, 2005
7,871
335
Smiling JOe said:
FYI - You didn't really cash out since mutual funds buy stocks. You just get a wider spread of risk because the funds are required to own a minimum of 20 stocks.

Yes, of course it's risk spread wide as opposed to singly. The thrill of the chase isn't there but on the other hand it makes for a more restful night!
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Mermaid said:
Yes, of course it's risk spread wide as opposed to singly. The thrill of the chase isn't there but on the other hand it makes for a more restful night!

In some respect, the stock market is similar to real estate in the way of investments, and your behavior. Some people look like walking heart attacks, worrying on an hourly basis about what their investment is doing at that snapshot in time. These people do not rest well at night. When making an investment, no matter stocks or real estate, remember that it is important to be able to sleep at night with your investment. I studied the stock martket closely for several years, and learned that the emotional buy and sell is where you can get burned. I believe the same to be true if you are buying real estate for an investment. Sure, people often buy a beach home based on their emotions and I think that is fine. It is your body's way of telling you to act. However, these people see their beach home as a lifestyle choice first. Investment is secondary. For those of you who invest on emotion, I encourage you to think twice. If you need to know the market value of your home on a daily or weekly basis, you are missing out on life.

It sounds like Mermaid has learned a great thing in life. :lol:
 

Cork On the Ocean

directionally challenged
wetwilly said:
Compelling evidence that their are listing price corrections going on in SoWal.
Again, I do not believe that this spells crash or bust (bubble) throughout SoWal but some correction was/is needed in some respects. :dunno: :blink:

At this point, I totally agree with you Willy, There's no doubt that the beginning of the year brought in many properties priced at 100% over last year which was just too much. If the comparisons are made back to last year, the prices are up from last year (at least this was the case in June). Probably should redo sales comparison from 9/04 - 9/05 to see if this is still the case. I also suspect when you compare 5/05 to 5/06 (rather than 8/05), we'll see a nice appreciation.

Joe, You hit it! We all know that last year's 2 month flips for profit were not going to continue. If someone needs to make a profit over a matter of days, they need to be a day trader, not a real estate investor.
 
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SlowMovin

Beach Fanatic
Jul 9, 2005
485
42
wetwilly said:
Compelling evidence that their are listing price corrections going on in SoWal. This is somewhat natural in boom markets even though it is causing some to push the doom and gloom or the "sky is falling" theory it frankly is evident that the pricing and runup in some of the communities was not sustainable.

Again, I do not believe that this spells crash or bust (bubble) throughout SoWal but some correction was/is needed in some respects. :dunno: :blink:
I think you nailed it WW. The key term here is "correction" not "crash". The fundamentals are still sound, but the prices moved too quickly. Not too high, since I personally believe there is still room for them to rise further, but too quickly. It's now, in my opinion, going to pull back a little, slow down a lot, catch it's breath, then start back up (hopefully at a more restrained pace). Because it still is not "overpriced" relative to other, comparable beachfront markets.

You thought it was bad when the people from Atlanta, Birmingham and New Orleans bid up the prices over the last few years? Wait until the people from California, New York and Chicago start doing it.
 

Dabell

Beach Fanatic
Sep 15, 2005
471
0
New York
This is something that interest most people. May I say you cannot find a Home anywhere by the beach, on the beach or waterfront in NEW YORK or on Long Island for under $1,000,000.00 and if you do, It will need work. I do not understand why, with the beaches so beautiful down in South Walton why are the prices of homes going down? Is it the schools? Is it No high paying jobs? In South FL anything By, next to or on the water, never stops going down in price. What is wrong here?
 
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