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RESteve

Beach Crab
Jul 29, 2005
2
0
I find it very interesting that most of the discussions regarding falling prices are centered around "list prices". If you are not comparing last year's sales prices to this year's sales prices you are wasting your time. The fact that "list prices" are falling has nothing to do with property values. Values are determined by actual sales not "list price". The lowering of a "list price" in no way decreaes the value of the property. (It was obviously never worth the original list price). Show me a drop in sales prices on a per square foot basis of like properties from last year to this year and then we can talk about falling prices. :nono1:
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
RESteve said:
I find it very interesting that most of the discussions regarding falling prices are centered around "list prices". If you are not comparing last year's sales prices to this year's sales prices you are wasting your time. The fact that "list prices" are falling has nothing to do with property values. Values are determined by actual sales not "list price". The lowering of a "list price" in no way decreaes the value of the property. (It was obviously never worth the original list price). Show me a drop in sales prices on a per square foot basis of like properties from last year to this year and then we can talk about falling prices. :nono1:
:clap_1:
I just have not had time to say it, but was thinking it earlier today. Falling prices from original, often overpriced list, does not indicate a falling market, nor does it make the list of which Skier informed us in WaterSound at $695K a great deal just because the neighboring lots are overpriced.
 
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skier

Beach Lover
Mar 7, 2005
116
0
Smiling JOe said:
:clap_1:
I just have not had time to say it, but was thinking it earlier today. Falling prices from original, often overpriced list, does not indicate a falling market, nor does it make the list of which Skier informed us in WaterSound at $695K a great deal just because the neighboring lots are overpriced.


Joe,

Here are the most recent and very similar sales of lots on Salt Box Lane where this lot is located (per walton county records).

Lot 8--Oct 2004--$780k
Lot 63 (passages area)--Sept 2004--$899k
Lot 11--July 2004--$810k
Lot 2--July 2004--$690k

Just thought I would clear up the fact that this price is CLEARLY below the most recent market prices paid. Might be a great deal or the start of a trend. Too early to tell for sure. But, you know my opinion.
 

Travel2Much

Beach Lover
Jun 13, 2005
159
0
Smiling JOe said:
...Falling prices from original, often overpriced list, does not indicate a falling market...

My view, too. But, an interesting fact about lots with a contractual duty to build out (with only selected builders and with heavy building covenants) is that the lot is going to decrease in true value as the buildout date approaches, right? The value of a lot on which I have to build in three years is higher than one on which I have to build in three months, it would seem, for most folk. So, it would seem the market value should noticably decline as build out approaches, unless demand from true end users is so high as to offset that. I have never seen that be the case in any of the St. Joe properties.

I think Kurt is right. If St. Joe has a buy back right for original cost, if I am the only bidder on the day before the buildout date, and willing and able to start building the next day, my rational bid for the value of the lot is original price plus one dollar.
 
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Camp Creek Kid

Christini Zambini
Feb 20, 2005
1,278
124
52
Seacrest Beach
Travel2Much said:
My view, too. But, an interesting fact about lots with a contractual duty to build out (with only selected builders and with heavy building covenants) is that the lot is going to decrease in true value as the buildout date approaches, right? The value of a lot on which I have to build in three years is higher than one on which I have to build in three months, it would seem, for most folk. So, it would seem the market value should noticably decline as build out approaches, unless demand from true end users is so high as to offset that. I have never seen that be the case in any of the St. Joe properties.

I think Kurt is right. If St. Joe has a buy back right for original cost, if I am the only bidder on the day before the buildout date, and willing and able to start building the next day, my rational bid for the value of the lot is original price plus one dollar.


I believe that this is the strategy many people hope to use. It shows the drawbacks, for investment purposes, of buying a lot with build out times. Unfortunately, it won't work without the new buyer having to pay significant fines for missing the build out. Those buying lots now that have build outs coming next summer will be lucky to get things going by then. Architecture itself could take up to 1 year and then the plans have to be approved by the Architectural Committee before a permit can be pulled. That is assuming you've got a builder ready to go, which is very difficult. Also, once construction is started, you've got only one year to complete the project so you better make sure you've got a builder who is on the ball. Many builders around here are taking anywhere from 9 to 24 months to build a house.

If a seller had some good house plans to go with a decently priced lot, that lot would be more attractive to a potential buyer.

Several people have told me that St. Joe is the reason Watersound has taken so long to get going. St. Joe is concentrating all its efforts on Watercolor. There are few amenities completed at Watersound and, frankly, not a whole lot to do right now. Many people are turned off by the isolation of Watersound and choose Watercolor over Watersound for that reason.
 

Travel2Much

Beach Lover
Jun 13, 2005
159
0
Camp Creek Kid said:
I believe that this is the strategy many people hope to use. It shows the drawbacks, for investment purposes, of buying a lot with build out times. Unfortunately, it won't work without the new buyer having to pay significant fines for missing the build out. Those buying lots now that have build outs coming next summer will be lucky to get things going by then. Architecture itself could take up to 1 year and then the plans have to be approved by the Architectural Committee before a permit can be pulled. That is assuming you've got a builder ready to go, which is very difficult. Also, once construction is started, you've got only one year to complete the project so you better make sure you've got a builder who is on the ball. Many builders around here are taking anywhere from 9 to 24 months to build a house.

If a seller had some good house plans to go with a decently priced lot, that lot would be more attractive to a potential buyer.....

Yeah, I was assuming away a whole lot with the building the next day scenario. Just wanted to do the bare math, first. The build-out devaluation could be even more pronounced, in my view, because of Joe's restrictions and requirements. Not like you can just throw a mobile home on the lot.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Travel2Much said:
Yeah, I was assuming away a whole lot with the building the next day scenario. Just wanted to do the bare math, first. The build-out devaluation could be even more pronounced, in my view, because of Joe's restrictions and requirements. Not like you can just throw a mobile home on the lot.
...and I know builders who are paying $15,000-$20,000 for house plans in WaterColor.
 

RESteve

Beach Crab
Jul 29, 2005
2
0
skier said:
Joe,

Here are the most recent and very similar sales of lots on Salt Box Lane where this lot is located (per walton county records).

Lot 8--Oct 2004--$780k
Lot 63 (passages area)--Sept 2004--$899k
Lot 11--July 2004--$810k
Lot 2--July 2004--$690k

Just thought I would clear up the fact that this price is CLEARLY below the most recent market prices paid. Might be a great deal or the start of a trend. Too early to tell for sure. But, you know my opinion.


Once again, it easy to try and compare prices of properties. However, it is not a like kind comparision if you are comparing the sales prices of lots with reasonable contractual build out times to lots that may be contractualy close to non-building penalties and buy back clauses. In my opinion the sale of fee simple houses gives you the best indication of market health. Their prices are not tied to artificial contractual terms which can affect prices.
 

skier

Beach Lover
Mar 7, 2005
116
0
Camp Creek Kid said:
I believe that this is the strategy many people hope to use. It shows the drawbacks, for investment purposes, of buying a lot with build out times. Unfortunately, it won't work without the new buyer having to pay significant fines for missing the build out. Those buying lots now that have build outs coming next summer will be lucky to get things going by then. Architecture itself could take up to 1 year and then the plans have to be approved by the Architectural Committee before a permit can be pulled. That is assuming you've got a builder ready to go, which is very difficult. Also, once construction is started, you've got only one year to complete the project so you better make sure you've got a builder who is on the ball. Many builders around here are taking anywhere from 9 to 24 months to build a house.

If a seller had some good house plans to go with a decently priced lot, that lot would be more attractive to a potential buyer.

Several people have told me that St. Joe is the reason Watersound has taken so long to get going. St. Joe is concentrating all its efforts on Watercolor. There are few amenities completed at Watersound and, frankly, not a whole lot to do right now. Many people are turned off by the isolation of Watersound and choose Watercolor over Watersound for that reason.


The build out time frame is still over one year away on the lot based on the original sales date per Walton County records. Also, you must simply start construction by the drop dead date, not be complete. My understanding of the penalty situation is that the penalty for not starting by the drop dead date is $1000 per month--not very much versus taking a whole lot less than market value to sell quickly. Also, if you are actively in the design review process, St. Joe is not enforcing the penalties due to the significant backlog in the DRB. So, in this case, the price dropping does not appear to be due to impending doom on the build out date.
 

Camp Creek Kid

Christini Zambini
Feb 20, 2005
1,278
124
52
Seacrest Beach
Smiling JOe said:
...and I know builders who are paying $15,000-$20,000 for house plans in WaterColor.

That is actually a good price. Many architects charge a percentage of cost, usually 10%. So for a house budgeted at $400,000 for materials and labor, architechure would be $40,000. Of course, a builder building a spec house would have lower cost than if he was building a custom home.
 
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