A commentary on the bubble

[Smiling JOe]

The "fools" JOe mentions that bought long ago were not SPECULATORS, they were owners that used the properties. The market changed dramatically over the last 3 years with rampant speculation. Shelly is talking about this huge amount of speculative buying that has occurred over the last few years. This is a much different scenario than the buying that occurred in the "old days" that you old timers talk about.

Now how would you know? Some were speculating, some were not.

Many, many of the people I know that own property in SoWal bought numerous properties over the last 3 years (up to 10 in some cases), not to grow old in and enjoy with their kids and grandkids, but to make a quick buck. Some of these people overextended (shelly's scenario) and they need to get out soon. These people will drop prices until they sell and it will drive prices down across the board. You are blind if you don't see the current trends in the market place.

People who bought more than two years ago could have paid double what they did and still have paid less than today's market value. I cannot think of anyone who purchased three years ago who would be in any kind of trouble.

For those of you that want to keep your homes long term, that's great. You won't get hurt if you can afford the home you live in. You won't take a loss or make a gain until the "cash is in the bank." But, a large chunk of the buyers in watercolor, watersound, rosemary, etc. are not long termers. If they were, you wouldn't have over 200 properties for sale in Watercolor, 80 plus in watersound, 50 plus in rosemary, 50 plus in seaside, etc. There is a mass exodus that wants to happen, the problem is, there are no buyers. My realtor says the market is DEAD and so do my neighbors and friends that are trying to sell their homes, condos, and lots. And, I did confirm that the folks at Alys are making calls to drum up business. When was the last time a major developer along 30A had to go looking for buyers? Just last year, Arvida had 75 to 100 people in each lottery for condos and lots. SPECULATORS. No more.

Some good points, but refering to the bold, I thought you said that you were a long timer, but you placed your house on the market, because if someone wanted to overpay you, you would take it. You are an unmotivated seller, and your statement contradicts your actions.

Also, the hurricanes have made a bad situation even worse. Everyone I bump into at work or around town over the past few days tells me I am crazy if I keep my house in Florida. Friends that had an inkling to buy a beach home before the first of the hurricanes last year, no longer have an interest in beach property. Many say they will buy in the mountains or on a lake instead.

They may buy elsewhere, but they want the beach. When the storms are long gone, people will have the out of sight, out of mind mentality. They have in the past, and they will in the future.

We have definitely had a change of heart since Katrina blew through the gulf last weekend. I don't want to wake up one day and see my house leveled along with the rest of 30A. The insurance costs are excorbitant now and they will only go up. And, my property taxes are outrageous. I am no longer sitting on the fence. I am a SELLER now. I want to take my money and run. Become a renter like I used to be. Still enjoy the area, but not have to worry about hurricanes, taxes, insurance, etc. Simplify my life--one home should be enough.

I understand, but are you going to lower your price, since you claim to be a motivated seller in a stale market?

Unfortunately, I don't know if there are any buyers out there.

There is always a buyer at the right price. Maybe you are overpriced?

 

[beachmouse]

Look around Florida (including SoWal). "For Sale" signs are popping up (and staying up), open houses, balloons, banners, the words "reduced" and "quick sale" are starting to return to real estate ads. Realtors, who have multiplied like lab mice in the past couple of years, are scrambling all over each other to find listings in the $200,000 range (their inventories are FAT with million dollar homes, condos and pre-constructions that linger).

Price point makes a world of difference. The Cayo Grande apartments in Bluewater Bay are going condo right now. Bay Beacon described the project as 60% sold out in the first three days with an average sales price of $220,000.

 

[Smiling JOe]

...
Look around Florida (including SoWal). "For Sale" signs are popping up (and staying up), open houses, balloons, banners, the words "reduced" and "quick sale" are starting to return to real estate ads. Realtors, who have multiplied like lab mice in the past couple of years, are scrambling all over each other to find listings in the $200,000 range (their inventories are FAT with million dollar homes, condos and pre-constructions that linger)....

Hey Shelly, let me know if you find any home in the $200,000 range located in SoWal, or Freeport for that matter. I will take them all. No, I am not refering to mobile homes.

 

[OnMackBayou]

Hey Shelly, let me know if you find any home in the $200,000 range located in SoWal, or Freeport for that matter. I will take them all. No, I am not refering to mobile homes.

Save a few for me.

I bought a property in a South Walton neighborhood where homes were going in the 200's a few years ago. This year they have sold in the 430,000-480,000 range. The first home to be listed at or above $500,000.00 just sold after being on the market maybe four months. It was quite a bit smaller than the average home here, though nicely furnished.

Another home in the same neighborhood went on the market last month and was priced to move fast at 400,000.00. It sold in a couple of days.

 

[Bob]

Shelly, I'm asking you again, where do you live???? Reconstruction here in Orlando is mostly over. New construction is proceding as fast as it can go. Illegals are fueling the construction labor pool. Service workers aren't buying the new homes, but, guess what, they did not buy them 10 years ago. Foreign buyers, led by the Brits and a massive wave of retirees and younger northern transplants are taking their cash-out money and coming to "cheap" Florida. I live in Maitland, a relatively prosperous community of 12,000 and yet, there are fewer than 40 houses for sale in the city limits. Real Estate is local, local, local. Again, for the record, 3 hurricanes last year, housing up 36.5 percent in that year, take what you can find here. Sell your SoWal property, and ten years from now you will long be priced out of the market.

 

[PTWizard]

I couldn't agree more with Smiling Joe's response to skier. I considered myself an "investor" when I bought my first property in South Walton. That was in June of 2001 after vacationing here for over 15 years. I think most of the people who have bought property here look at themselves in this manner. However, when prices soar 100% + in a year as in 2004 it's only natural that a lot of people might decide it's time to cash in. That doesn't mean they are SPECULATORS. They're just behaving rationally. Just like the thousands of people who bought cars over the past couple of months on the employee discount plan now rather than later. Prices definately motivate both buyers and sellers. The greater the price swings the greater the motivation.

The storms of the past year have definately had an effect on the real estate market but memories fade quickly and I think the odds are that we'll go back to a more normal pattern of storms over the next few years. In that case, I think property values in our beautiful communities will resume their relentless steady climb. This is such a desirable place. With all the storms I've tried to think of other places I'd prefer to invest but all things considered I'd rather have my money invested here. I believe a LOT of others have and will come to this conclusion as well. Anyway, I just love the sitting on my porch watching the sun set over the gulf. What I paid is worth every penny just to do that when I can visit now and then.

 

[skier]

Ladies and gents--it's great to have a debate about whether there is a bubble or not and whether or not prices will go up or go down. What I find amazing is that none of you pie in the sky folks will admit that there is a glut in the market--especially in the high end areas of 30A. There may be some home selling in the 300's or 400's in other areas. But, the million dollar plus properties aren't moving, period. Those of you that see the returns of the last 2 years and think that they can continue are not dealing with reality. Too few people can afford the homes at the current prices. Greater than inflation growth would leave only a handful of people in the US capable of affording to buy. And, comparing a market like Orlando where most of the people need the homes to live in to a market like south walton is preposterous. As you said, real estate is local. And the local market in south walton stinks.

I did lower my price a couple of weeks ago. It is now below the most recent prices paid per square foot. It is also beautifully decorated, a stones throw from the beach, has top of the line finishes, is extremely well built and relatively new. Still, not even one call and only a couple of lookers (not capable of affording the home) at an open house. I also walked through a couple of the homes during the parade of homes a couple of weeks ago. One was in Watercolor. The builder had huge numbers of lookers. The house is beautiful and as close to the beach as you can get in Watercolor. It did not sell. In fact, I saw on the MLS that he just lowered his price by $400k. Those builders that don't have lots and lots of financial backing will be lowering prices like crazy to get rid of their inventory.

Sorry guys--it ain't happening in south walton right now. It may come back next spring or later, it may not. Time will tell and I may be a long term owner whether I like it or not.

 

[Miss Kitty]

Skier...are you selling because you HAVE to (can't afford) or WANT to (make a lot of money)? To my simple mind, there is a difference. IMHO...a correction in any market is a good thing...even if it means my place is worth LESS on paper. I might just be buying another place in SoWal...only have 2 bedrooms now and our plan was to have a place our hopeful grandchildren could visit! I guess it's all in one's perspective?!

 

[FoX]

Skier I enjoy your posts. Here's your dilemna - post your MLS# or house address here and someone on the board is likely to buy it just to shut you up.

Of course we all know that you wouldn't. Shut up that is.


The real estate craziness has ended in SoWal. Not much is moving now until all the dust settles. I expect that to be in the Spring/Summer next year. Then things will start moving again at a "normal" pace, but it still may be a little wierd until the truly "normal" cycle begins the year after. A lot of speculators and realtors will be gone soon.

I have yet to see any panic or dumping on the market. Until that happens - keep your "I told you so's" in check.

 

[SHELLY]

>Shelly, I'm asking you again, where do you live???? <

I live in Florida--we in SoWal who've not gone through that type of experience will not be able to relate to what the the millions of folks in 3 states--3 STATES(!!) are going through at this very instant.

I only wish I was as woefully unaware as those folks who think this tragedy will have absolutely no far-reaching effects on the national economy (which at this point in time relies too heavily on the housing market).

There are well-financed vulture capitalist (I'm not one--they make me sick) who are ready to swoop down and take advantage of this situation. They have deep pockets and long-term investment horizons unlike the unsavvy "speculators" whose investment horizon extends until the bell rings the next day at the NYSE. Just as the Hedge Funds have added liquidity to the stock market, "speculators" have added the liquidity to the housing market--for both of them, their days are numbered. The only difference is the Hedge Funds can move in the blink of an eye, whereas the "speculators" can't. When the "speculators" start to panic and flood the market with their "investments" the normal housing market will become unbalanced, supply will outstrip demand and prices will move down from their current levels.

Those of you who are comfortable with your house and your property investments shouldn't feel the need to defend your position--the fact that you do leads me to believe that your portfolio (or your job) depends on the an industry that is set to burn itself out in the not too distant future.