Pricing graphs

[SHELLY]

I disagree. If people think that great potential for increase in value over time exists in second home markets, they will put their money into those markets. Many owners in South Walton have more value in their secondary home than they do in the primary residence.

...and many of them extracted the value out of their primary residence to purchase/carry their secondary home--now both are in the ditch.

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[30ashopper]

But I digress. My point is that in spite of what 30AShopper hopes/predicts, it is not likely that prices will to drop to 1999 prices. Replacement costs are at least 50% higher than 10 years ago and price increases are from more than just an inflated market--there are legitimate reasons why homes prices have increased which are related to costs.

Why would the existing home market be affected by replacement costs? These costs indicate a major decline in home building and new home purchases as people snap up existing homes. Looking at the inventory numbers there certainly are plenty of those to go around.

 

[Smiling JOe]

...and many of them extracted the value out of their primary residence to purchase/carry their secondary home--now both are in the ditch.

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'tis true, but there are many who bought prior to 2003, who bought their second home to have for vacations and possible retirement, and they are nowhere near the ditch.

 

[SHELLY]

'tis true, but there are many who bought prior to 2003, who bought their second home to have for vacations and possible retirement, and they are nowhere near the ditch.

Take a look at this graph below. Isn't it true that as this bubble heated up many, many who bought prior to 2003 sold and took a profit while new construction was getting off the ground? Isn't it true that the number of new and used homes peaked in 2004 and prices continued to rise over the next 2 years with many of the same homes and condos being sold again and again at ever higher prices. And what I've found just by casually looking at homes/condos that are currently on the market at (what some might believe are) reasonable prices--not short sales or foreclosures--are folks who bought pre-bubble and rode it up one side and down the other now deciding to get out before all their equity (if they haven't HELOCed it to kingdom come) disappears.

I believe that the lions share of 2nd/vacation/investulator homes and condos from Pensacola to PCB were purchased during the frenzy and, of those, almost all are certainly worth less today than what the owners (lenders) paid for them.

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[fisher]

You fail to take into account the replacement value of a home which will never go back to 1999 values and, therefore, homes will never go back to 1999 prices. Right now we are nearing replacement value per square foot on homes that are not in the large developments (Rosemary, Watercolor, etc.). Excluding land, a builder is looking at around $150.00 per square foots in just costs (materials, labor) in an averagely finished home. This does not figure in the builder's profit (salary). Using these figures and taking into account that the houses that are selling are under $349,999, a modestly sized home of 2,300 square feet could be BUILT for $150.00 per square foot of COST and be at the price point to sell. However, this does not include land or builder's salary. So, it is very unlikely that prices will continue to fall.

IMHO, you are dead wrong-especially in the major developments along 30A. Alys, Rosemary, Watersound Beach, Seaside, Watercolor, etc are all going to continue to see values shrivel. Too much inventory, too many REO's, too many foreclosures, too many folks not paying HOA dues, etc, etc.

The underlying cost of land was the major driver of the huge spike in values in these areas several years ago. Those land prices continue to crater. Land prices will go back to 2001(or prior) price levels before this cycle is all said and done. Therefore, home prices will continue to fall to. In addition to falling land prices, cost of construction has been falling. Two to three years ago, it cost $250 plus to build an average home in these communities. Now, as noted by AAbsolute, it can cost $150 to $200 to build an average home in these communities. And, these costs may continue to fall (we are potentially facing stagflation or deflation in coming years). Nope, there is a long way to go before prices stabilize--especially in these high end markets.

 

[AAbsolute]

There are very few people I have met in the past 20 years working in construction who can give an accurate cost of 100% of the materials only to build a home.

Exercise:

Calculate how many dumptruck loads of minimum cleared vegetation are on a lot.
Calculate the amount of concrete in a footing and stem wall or pier.
Calculate the cost of framing materials.
Calculate the cost of siding, trim and roofing materials.
etc. etc. etc.

I don't even know 1 Architect who can quote the actual cost of materials only within 3% today. For that matter I don't even know 1 Architect who can calculate the actual material list today.

 

[Miss Kitty]

'tis true, but there are many who bought prior to 2003, who bought their second home to have for vacations and possible retirement, and they are nowhere near the ditch.

 

[AAbsolute]

IMHO, you are dead wrong-especially in the major developments along 30A. Alys, Rosemary, Watersound Beach, Seaside, Watercolor, etc are all going to continue to see values shrivel. Too much inventory, too many REO's, too many foreclosures, too many folks not paying HOA dues, etc, etc.

The underlying cost of land was the major driver of the huge spike in values in these areas several years ago. Those land prices continue to crater. Land prices will go back to 2001(or prior) price levels before this cycle is all said and done. Therefore, home prices will continue to fall to. In addition to falling land prices, cost of construction has been falling. Two to three years ago, it cost $250 plus to build an average home in these communities. Now, as noted by AAbsolute, it can cost $150 to $200 to build an average home in these communities. And, these costs may continue to fall (we are potentially facing stagflation or deflation in coming years). Nope, there is a long way to go before prices stabilize--especially in these high end markets.

Fisher is innocent. Fisher doesn't know me. Don't hurt Fisher. Please..

 

[Camp Creek Kid]

IMHO, you are dead wrong-especially in the major developments along 30A. Alys, Rosemary, Watersound Beach, Seaside, Watercolor, etc are all going to continue to see values shrivel. Too much inventory, too many REO's, too many foreclosures, too many folks not paying HOA dues, etc, etc.

The underlying cost of land was the major driver of the huge spike in values in these areas several years ago. Those land prices continue to crater. Land prices will go back to 2001(or prior) price levels before this cycle is all said and done. Therefore, home prices will continue to fall to. In addition to falling land prices, cost of construction has been falling. Two to three years ago, it cost $250 plus to build an average home in these communities. Now, as noted by AAbsolute, it can cost $150 to $200 to build an average home in these communities. And, these costs may continue to fall (we are potentially facing stagflation or deflation in coming years). Nope, there is a long way to go before prices stabilize--especially in these high end markets.

IMHO, re-read my original post. I was clearly talking about homes outside of the major developments.

 

[fisher]

IMHO, re-read my original post. I was clearly talking about homes outside of the major developments.

IMHO, you can build for a LOT LESS than $150 per square foot outside the major developments. So, the argument still holds true. Prices everywhere have a ways to go down.