Are prices falling-and example from watersound

[Camp Creek Kid]

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.

Several lots have build out dates coming up later summer/fall of 2006, which is just over a year away. Everything I've seen says that there is a COMPLETION date of one year after the "drop dead" date (or build out date). I guess this is to ensure that a home is actively being built (as opposed to putting in the footers and letting it sit for several months).

Of course the drop in price is because of the build out date. My husband is a contractor so I'm very familiar with what is going on. Owners in Watersound are paying association fees, taxes, and probably interest on their lots already and surely don't want to add $1,000 per month. Many of the current owners bought their lots with the intention of flipping them and there is the possibility that they can't actually afford to keep them long term.

 

[Travel2Much]

Hmmm, from what CCK says, wouldn't there be a point in the build-out period where the lot is for all intents and purposes unsaleable to the general market? (And thus, would have a "market value" of zero). Owner could alter this date by getting plans, approvals etc., which would involve more sunk costs. But, it would seem at a particular point in the three year build-out, owner pretty much is going to have to build (or resell back). Not a bad thing if you intended to build and can, at all. Not such a good thing if you didn't or really can't.

 

[Camp Creek Kid]

Hmmm, from what CCK says, wouldn't there be a point in the build-out period where the lot is for all intents and purposes unsaleable to the general market? (And thus, would have a "market value" of zero). Owner could alter this date by getting plans, approvals etc., which would involve more sunk costs. But, it would seem at a particular point in the three year build-out, owner pretty much is going to have to build (or resell back). Not a bad thing if you intended to build and can, at all. Not such a good thing if you didn't or really can't.

The whole point of a build out period is to get people to build. Obviously many people have ignored this at Watersound and are now stuck. There is no way the houses are going to get built in such a short time. Rather than have to sell back to St. Joe at the original price (around $250,000) I'm sure investors/owner's would rather take a smaller loss. If I paid $550,000 for a lot last year, I'd much rather sell it at $550,000 than $250,000!

 

[Travel2Much]

The whole point of a build out period is to get people to build. Obviously many people have ignored this at Watersound and are now stuck. There is no way the houses are going to get built in such a short time. Rather than have to sell back to St. Joe at the original price (around $250,000) I'm sure investors/owner's would rather take a smaller loss. If I paid $550,000 for a lot last year, I'd much rather sell it at $550,000 than $250,000!

Yeah, I am not crying in my beer for them. When I was in the market, I felt like a freak because if I bought I lot I darn well intended to build on it. What an odd alien concept.

Wow, I forgot the remote owner problem. So, Buyer 1 buys at 250k. Buyer 2 buys at 550k. Buyer 3 buys at 850k. Buyer 3 if they can't build has to resell to Joe at 250k, Buyer 1's price? If so, that too would depress value further as buildout period continues. Shorter period of time to get your stuff together, and real financial loss for Buyer 3 if you can't. No problem if Buyer 3 wants to build, again, and can in the short time frame, but sort of an idiotic move if they don't or can't.

 

[30AOnline.com]

I ran detailed statistics on the real estate asking and sold prices for the area for the last 12 years recently and posted an article with the results. I have not run new statistics for the time since I did that just before summer and now. I'd like to do it. My own personal feel is that you may see some lower prices after a hurricane when tourism traffic is not as high as it could be because of walkovers being down, bad publicity from the hurricane, etc. But, these are temporary issues. Historically, these are the best times for investors to grab some deals. The statistics I compiled gave the yearly change for the last 12 years in the average sold price and the % the average sold was of the average list. I then took the average increase for every 2 year period. i.e. 92-94, 93-95, etc. What I found is that over some 1 year periods there were some incredibly high returns and some low returns and that over a 2 year period the were very good. If you're buying for a 1 year quick flip, my personal opinion is we're lower this summer after the storm than we will be next year at this time without another major storm. It could be a very good time to buy. But, if you count on keeping the property 2+ years, it's a great time to buy. The average return over the last 12 years for each 2 year period was over 40%. Can that keep up? I doubt it because we've hit a new market. Where our prices are now take a lot of people out of the market. But, remember, those returns are on leveraged money in most cases. You're not putting out $2M for a $2M investment, you're putting out maybe $400k to $500k sometimes more sometimes less of course financng dependent. If you even clear 10% over a 2 year period on the whole investment amount, you've made a 40-50% return on the funds you actually use. If you hit on one of the 2 year periods that's 40%+ you can literally triple your actual out of pocke investment. The market didn't go down over any 2 year period over the last 12 years I had access to the data. There is still a significant difference in the prices a home sells for in a community like Rosemary, Seaside, Watercolor, Watersound, etc and the price an identical home would sell for elsewhere. There always will be a difference, but, I think indication of prices stabalizing would be indicated by prices around the most desirable communities approaching those communities.

I've seen a number of deals I would buy if I were shopping. Just bought one myself though in May and I'm not looking right now. I'm still thrilled with the deal got then.

 

[Franny]

I'm confused CCK..why does a spec home cost less to a builder vs custom..

 

[Camp Creek Kid]

I'm confused CCK..why does a spec home cost less to a builder vs custom..

We're talking cost as it relates to architecture fees. The builder is the owner of a spec house and takes his profit at the sale of the house. Therefore total cost will be less.

A custom home has higher total cost to the homeowner because the contractor's profit is added into the total raw cost of the house. Therefore, an architect who has a fee of 10% of total construction costs will make more on a custom house than when he/she works with a builder directly.

I was just commenting on SJ's remark that builders were paying $15-$20,000 for houseplans at Watercolor. This is actually a very good price considering that costs are at least $200 sq ft not including the contractor's fee.

 

[RiverOtter]

We're talking cost as it relates to architecture fees. The builder is the owner of a spec house and takes his profit at the sale of the house. Therefore total cost will be less.

A custom home has higher total cost to the homeowner because the contractor's profit is added into the total raw cost of the house. Therefore, an architect who has a fee of 10% of total construction costs will make more on a custom house than when he/she works with a builder directly.

I was just commenting on SJ's remark that builders were paying $15-$20,000 for houseplans at Watercolor. This is actually a very good price considering that costs are at least $200 sq ft not including the contractor's fee.

I saw a lot for sale in Rosemary several months ago. Forgot the price but they said it was a good buy because it included the $50,000 (yes that's $50,000) architectual plans :shock:

 

[Buckhead Rick]

A realtor at W/C also said they allow a "grace period" i.e. no $1,000 fee to builders they know who can't get the house going on time but will soon and are building for themselves and the sale will be listed with Joe. Also if you allow St. Joe to build you get alot of "grace period".
WaterSounds like alot of speculators got caught with their hand in the cookie jar. Now I wonder about the multi owners of condo's in PC?

 

[gr8mom]

I saw a lot for sale in Rosemary several months ago. Forgot the price but they said it was a good buy because it included the $50,000 (yes that's $50,000) architectual plans :shock:

$50,000!!!!!! Is that normal, or even ballpark for architectural plans in the area?