Bubble bursting???

[Travel2Much]

Forgive me for chiming in again, here, but I do not understand skier's logic. While I tend to feel there is a bubble going on (and do not have my life savings invested in SoWal), like everywhere in the country, I can't see why houses not in high end communities are predicted to drop 20-40% from LAST YEAR's actually selling prices, but those in high end communties might have to lower prices 30% from THIS YEAR's asking prices (which probably have gone up 40% from last year's asking prices), in the short term at that. There's this house at Seaside that goes up several hundred thousand dollars every quarter, from the advertisement.

I would actually think it might be the other way around or at least equal, since few ordinary people, the bread and butter of real estate markets, can afford anything in the high end communities anymore, so that's where the major speculation by investors, realtors, and builders is. I came real close twice to buying in one of those, but since I was buying for real live personal use couldn't stomach having my neighbors be a limited liability company, a real estate development group, and a local realtor flipping the property. My neighbors/fellow owners in where I eventually bought appear to be real live human beings, and that makes me happy and cozy.

That said, I shall shut up and return to my corner.

 

[SoWalSally]

Travel - from the attempts at sarcasm in skier's post - me thinks there is either fear of loss at play, or bitterness from being on the outside. If I'm wrong, feel free to bash away.

There are sensible people here I've been listening to for a long time. No one expected the rapid rise of prices to continue forever. "Irrational exuberance" is a tired phrase. Sure some people got caught up with dollar signs and wanted to cash in. And no doubt a few people might have made some questionable moves.

Bubble is another term that is a little out of place in real estate. Bubble is associated with burst. In real estate, balloon might be a better word. As the balloon expands to a larger size, the market has to take a breath.

No one here now is talking much about buying and flipping. They expect some asking prices to become more realistic, and sales prices to grow steadily. If prices were to dip a little in the short term, who's going to really care?

 

[Paula]

If one buys in SoWal as a quick investment, then this investment is as risky as any other quick investment and requires significant due diligence and the stomach and financial slack to ride whatever happens.

As for me, I'm glad we bought our two little cottages not as investments but as places our family and friends can grow to love and spend time at over several decades. The investment has turned out to be excellent so far and having the rental income doesn't hurt at all. But, I don't know what I would do if I were thinking about SoWal as a short-term investment right now. I'd do a lot of homework first. But I suppose that's what people said 3 years ago, 2 years ago, 1 year ago. We bought our second cottage next door to our first cottage just a little over a year ago for about $65,000 more than we paid for pretty much the same thing 2 years ago. That hurt quite a bit at the time, but the pain has been relieved. It has done very well as an investment already even though we thought the price was high then. But, as with the first cottage, we bought it as a place to enjoy for a long time, so the short-term returns weren't important.

Also, just as a suggestion, rather than buy one big place, it has worked out very well to have two small places next door to each other. If we ran into financial difficulty, we could sell one without losing our "home" in SoWal. If we come down there and don't need both cottages for family/friends, we can just use one and continue to rent out the other.

 

[OnMackBayou]

Gee, it really is easy to tell the haves, (not me) from the have nots (me). The fact that there is even a message board such as this with so many active contributors, and lurkers (again me) so hyped about the SoWal real estate market tells me one big thing. All of us reading this are also scouring the real estate sections every week, and we're looking on the internet to try and decipher a trend.

I predict that at the first sign of a decrease there will be no shortage of buyers trying to get in on what they consider to be a good deal, and any fall in asking prices will be short lived. Too many people want to live here, for good reason. Where are they going to go?

 

[Kurt]

Gee, it really is easy to tell the haves, (not me) from the have nots (me). The fact that there is even a message board such as this with so many active contributors, and lurkers (again me) so hyped about the SoWal real estate market tells me one big thing. All of us reading this are also scouring the real estate sections every week, and we're looking on the internet to try and decipher a trend.

I predict that at the first sign of a decrease there will be no shortage of buyers trying to get in on what they consider to be a good deal, and any fall in asking prices will be short lived. Too many people want to live here, for good reason. Where are they going to go?

Good post!

Don't be such a lurker.

 

[Georgian]

Skier,
To be successful in Real Estate you"ll have to forget everything you have read or learned from the equity markets including all those sound bites.

When did California's bubble burst?

On Your comment "Any runup in stocks, real estate,... has ALWAYS ended in a crash"

Perhaps you should read more non-fiction. Or at least visit a different library.

And when the Real Estate market did experience a period of slight decline or low growth where were the interest rates compared to where they are now?

 

[njackie]

This is a great response and thanks for educating others on the board as to this philosphy!

 

[beachmouse]

California had a serious real estate crash in the late 80s. It took some areas quite a while to regain pre-crash values.

Florida had a major real estate crash during the Great Depression. If you look at the lending practices then and now, there are some interesting parallels. (though I think the market is in way better shape now than it was then)

 

[SHELLY]

Does anyone think the present "unattractive" state of the SoWal beaches will slow the market down a bit (or result in price reductions by motivated sellers)?

 

[chrisv]

Does anyone think the present "unattractive" state of the SoWal beaches will slow the market down a bit (or result in price reductions by motivated sellers)?

I'd say it depends on what is "motivating" them.

Florida also felt a hurtin' from the weak market in the 80's. Look, no locale is immune from a "bubble", but I'll put my waterfront up against any investment of any kind...