Here's an interesting column I came across on-line. The author is a business journalist in the mid-west, I think.
The Real Estate Bubble Pops Here
Posted by Dana Blankenhorn
A post card came in the mail, from a Keller-Williams agent. (Is it just my imagination or have they taken over the market lately?) It was about the Gary house, down the street from me.
The asking price is $334,900.
I remember the Garys, from back in the day. Nice people. Salt of the earth. He was a deacon at the church. She loved him desperately. The mantle was already filled with pictures of grandchildren when I met them, in the early 1980s. I went there regularly for block meetings. They said we were crazy to pay $49,000 for our house.
Mr. Gary passed away in the late 1990s. (God rest his soul.) She finally moved out with some of those grandchildren, a few years later.
They had gotten an unbelievable offer.
The seller this time gave her that offer, which doubled property taxes all over the block. Now they?re looking for an unbelievable profit. They might get it.
It?s ironic that FNMA (Fannie Mae) and FHMC (Freddie Mac), which were created to make housing affordable, have in the last years done just the opposite. But food is energy, and too much obesity, I guess.
The problem is that Fannie and Freddie buy anything. As a result there?s no longer any risk in mortgage lending. The banker moves the paper to the government, which turns it into a security. Everyone takes a fee. All the incentives are one-way.
So you get 40 year mortgages, you get adjustable rate mortgages, you get interest-only mortgages, you get adjustable rate interest only mortgages. These were fine for investors, who could pay off called loans, but for ordinary people it leaves you one pink slip or one rate hike away from bankruptcy.
And you?ve gotta do it. The price of housing is tied to the price of money, and the availability of loans. With the spigots turned on high, a conservative buyer has as much chance of closing as a value investor chasing Google.
We?ve had bubbles before. Some are old enough to remember 1974, the last time Atlanta housing crashed. It stayed crashed for many years. But most aren?t old enough to remember that.
So the bubble gets bigger and bigger and bigger. Prices go only one way. It ends when everyone?s in the game, when there are no more buyers, or when the price of money shoots up, as it might with this $2.50/gallon gasoline.
Until then, $335,000 for a three bedroom, two bath in Kirkwood is just the price.
Replies
96
Beach Fanatic
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.
SoWal Expert
...
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.
Beach Lover
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.
SoWal Insider
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.
Beach Lover
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.
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.
Beach Lover
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.
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.
Meow
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?!
Beach Fanatic
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. :floor:
Of course we all know that you wouldn't. Shut up that is. :razz:
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.
Of course we all know that you wouldn't. Shut up that is. :razz:
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.
SoWal Insider
>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.
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.
Meow
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. :floor:
Of course we all know that you wouldn't. Shut up that is. :razz:
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.
You are correct on this one...I asked for the MLS# months ago and was told by skier that he would not divulge that info!!!! Fear for his privacy or just a bad business move (?), I'm not sure, but you echo my feelings...post it here and it just might sell...if priced sensibly!!!
Beach Lover
I can't believe I am arguing about a real estate bubble with all the tragedy unfolding in New Orleans, Miss and Ala. Sorry.
That's it for me. I'll lurk from time to time. But, no more arguing. Good luck everyone.
That's it for me. I'll lurk from time to time. But, no more arguing. Good luck everyone.
Meow
I can't believe I am arguing about a real estate bubble with all the tragedy unfolding in New Orleans, Miss and Ala. Sorry.
That's it for me. I'll lurk from time to time. But, no more arguing. Good luck everyone.
You don't need to argue skier...just asking for info on your sale. BTW...IMHO, life goes on around the country and it needs to, that's what will help this disaster in the long run. Sitting around wringing our hands is fruitless.
SoWal Expert
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.
Addressing the bold statements:
-While I am not a Pie in the Sky person, I have been saying that there are too many listings on the market. The majority are unmotivated sellers like yourself. If they were motivated, they would find a price point that moves. I you don't have people looking at your house, it is overpriced. For the right price, I know many people that would buy your home.
A motivated seller prices his property to sell. Dropping your price below recent sales price, does not mean much of anything if you still don't have lookers. You may take a loss to move your property. A truely motivated seller would do so.
I know plenty of builders, none of which is looking to decrease inventory. If they decrease inventory, they will not be able to build anything, thereby losing their job. Builders are not going to be selling at losses. They cannot operate if they do so.
Skier, I don't disagree with some of your statements. There is much inventory on the market. Buyers, as we have known them, are getting outpriced. (I think the people we call buyers will be changing over the upcoming years.) Many people are speculating and will get hit hard. If you want to dance, you have to pay the band. While there are many speculators, there are also many people who are looking ahead to their retirement. As long as people have some retirement years ahead of them, buying a house in this area for retirement, will probably pay off much more greatly than protecting the money in a Roth IRA.
SoWal Insider
Well said SJ!! :clap_1:
margarita brocolia
.........
I have been saying that there are too many listings on the market. The majority are unmotivated sellers like yourself. If they were motivated, they would find a price point that moves......
Skier, I don't disagree with some of your statements. There is much inventory on the market. Buyers, as we have known them, are getting outpriced. .... While there are many speculators, there are also many people who are looking ahead to their retirement. As long as people have some retirement years ahead of them, buying a house in this area for retirement, will probably pay off much more greatly than protecting the money in a Roth IRA.
:clap_1: Agreed.
Flippers and speculators are willing to take the risks. Some will lose this time around. So, what else is new? - this happens other places also and will happen again. :idontno: That just slows the market in that respect, it will make the adjustments needed and that is a good thing.
If Skier was truly interested in selling his property, he would be marketing it the best way he could. My GUESS is that it is an overpriced property which is not in MLS. (Are you a speculator that got caught in this and really couldn't afford the risk you took?)
Edited
Beach Fanatic
I recommend for those who can do so to have the property and the roth IRA (diversify, diversify, diversify). And, as SJ said, for people who want to move to this area for life style now and in the future (rather than just speculation and flipping), they should be quite fine with their choice. I just don't have enough info to know how the speculators will fare.
SoWal Expert
WaterColor detached sing. fam. homes for sale (listings)
active listings 79
avg price $2,197,595
avg price per sq ft $849.46
median price $1,875,000
low price $1,250,000
high price $3,895,000
Currently, there are 79 homes actively listed for sale in WaterColor. No wonder Skier has not found any lookers. Really high prices and way too many choices. Keep lowering that price and you will find a buyer.
active listings 79
avg price $2,197,595
avg price per sq ft $849.46
median price $1,875,000
low price $1,250,000
high price $3,895,000
Currently, there are 79 homes actively listed for sale in WaterColor. No wonder Skier has not found any lookers. Really high prices and way too many choices. Keep lowering that price and you will find a buyer.
SoWal Insider
I can't believe I am arguing about a real estate bubble with all the tragedy unfolding in New Orleans, Miss and Ala. Sorry.Skier, my comments were meant as an answer to Shelley about here sweeping statements about the whole of Florida. Living in Pensacola does not make you knowledgeable about Orlando and vice versa. A tradgedy elsewhere does not preclude discourse about much of anything the way I see it. In fact, I think it's healthy to not be overwrought about any one thing. Argument brings about knowledge if both sides listen. I understand the top half of SoWal's market is rather dead now. The high end of any market is the first to pause or contract. So be it, but that does not dovetail into Florida/SoWal going straight to hell. SoWal has so many submarkets within it's narrow area proving the statement about real estate and locality.
That's it for me. I'll lurk from time to time. But, no more arguing. Good luck everyone.
Meow
WaterColor detached sing. fam. homes for sale (listings)
active listings 79
avg price $2,197,595
avg price per sq ft $849.46
median price $1,875,000
low price $1,250,000
high price $3,895,000
Currently, there are 79 homes actively listed for sale in WaterColor. No wonder Skier has not found any lookers. Really high prices and way too many choices. Keep lowering that price and you will find a buyer.
This has been like pulling teeth....is skier's property in WC? This has been like some state secret!
SoWal Expert
This has been like pulling teeth....is skier's property in WC? This has been like some state secret!
Yes, Skier says his house is in WaterColor. I can understand why he is not placing the specific info on this board. He sees how critical we are, and he does not want to get drilled on minor things. I would not want to either. I don't believe he is fearful that we will do harm to his house. If it is listed in the MLS as he states, just look through all 79 listings and you will find his. If memory serves me correctly, you should be able to go back through his posts and get a basic price range based on the other prices he mentions. Then, if you are still interested, you can look to see which properties in WC dropped in price in the past few weeks. Should be fairly easy to find out which house is his. Personally, I don't know why you would want to do so. I don't care. Skier describes his house very nicely and I am sure it is a lovely place. I like the looks of most homes in WaterColor. Let's not beat up on him and Shelly too much. Stick with the facts or insight. Anyone can guess what the market will do in the future, but the truth is, we have no accurate way of knowing until that point in time comes about.
Meow
Yes, Skier says his house is in WaterColor. I can understand why he is not placing the specific info on this board. He sees how critical we are, and he does not want to get drilled on minor things. I would not want to either. I don't believe he is fearful that we will do harm to his house. If it is listed in the MLS as he states, just look through all 79 listings and you will find his. If memory serves me correctly, you should be able to go back through his posts and get a basic price range based on the other prices he mentions. Then, if you are still interested, you can look to see which properties in WC dropped in price in the past few weeks. Should be fairly easy to find out which house is his. Personally, I don't know why you would want to do so. I don't care. Skier describes his house very nicely and I am sure it is a lovely place. I like the looks of most homes in WaterColor. Let's not beat up on him and Shelly too much. Stick with the facts or insight. Anyone can guess what the market will do in the future, but the truth is, we have no accurate way of knowing until that point in time comes about.
I hear you SJ...I just didn't understand why things got so out of hand. I have asked skier some ?'s in the past and he has basically ignored them. Some people can dish it out, but can't take it in.
SoWal Insider
Skier, I hope you find a seller for your house. I like arguing your points. I have learned some info along the way. I do believe you will be OK, but may have to market your home more/drop price somewhat. Shelley, you need a vacation, or a move from the panhandle, because hurricanes are in your future.
Beach Comber
Is this ludicrous or plausable?
To start with, I feel sorry for all the folks that got hit by Katrina. I even sent in a donation to the Red Cross. I know this is a sensitive subject for everybody and my heart goes out to all of the effected people. That being said, So. Walton is mostly a destination location. We know that some of the people/investors/retirees around the US will look elsewhere because of Katrina. I mean who wants to be hit by a hurricane.
However, on the other side of the coin, many will look at this as a buying opportunity. Also, and this is just speculation but think about this;
If New Orleans population was around 600,000 and you add the other effected towns and cities of about 100,000, that's 700,000 people that need a new place to live. If 75% decide to rebuild in the same place, that leaves 175,000 that will go elsewhere. Divide that number by the average size of a family household (2.5) and you get 28,000 families. Now of these families lets say 2/3 decide to leave the coastal area altogether and 1/3 love the coast. That means that 9,240 families will be looking for a new home or a place for a new home in a coastal area. To be on the safe side, lets cut that number in half and say 4,620 families will be looking for a place to live or build along the coast. That's 4,600 new buyers that have been injected into the coastal market that will need to find a place to be.
I don't think this will happen in the next week but I do think it could happen. They have to find a place to live. The devastated areas will not be ready for a long while. This would be a good time for the sellers to clean up their properties. Again, this Katrina storm is the most awful and terrible thing that I have ever seen. I am not trying to be insensitive to this at all. I am just an optimist and am looking for any ray of sunshine about it.
BTW, I just heard on the news that Greenspan is going to halt raising interest rates until we recover from this disaster. Good for the market? Should be.
To start with, I feel sorry for all the folks that got hit by Katrina. I even sent in a donation to the Red Cross. I know this is a sensitive subject for everybody and my heart goes out to all of the effected people. That being said, So. Walton is mostly a destination location. We know that some of the people/investors/retirees around the US will look elsewhere because of Katrina. I mean who wants to be hit by a hurricane.
However, on the other side of the coin, many will look at this as a buying opportunity. Also, and this is just speculation but think about this;
If New Orleans population was around 600,000 and you add the other effected towns and cities of about 100,000, that's 700,000 people that need a new place to live. If 75% decide to rebuild in the same place, that leaves 175,000 that will go elsewhere. Divide that number by the average size of a family household (2.5) and you get 28,000 families. Now of these families lets say 2/3 decide to leave the coastal area altogether and 1/3 love the coast. That means that 9,240 families will be looking for a new home or a place for a new home in a coastal area. To be on the safe side, lets cut that number in half and say 4,620 families will be looking for a place to live or build along the coast. That's 4,600 new buyers that have been injected into the coastal market that will need to find a place to be.
I don't think this will happen in the next week but I do think it could happen. They have to find a place to live. The devastated areas will not be ready for a long while. This would be a good time for the sellers to clean up their properties. Again, this Katrina storm is the most awful and terrible thing that I have ever seen. I am not trying to be insensitive to this at all. I am just an optimist and am looking for any ray of sunshine about it.
BTW, I just heard on the news that Greenspan is going to halt raising interest rates until we recover from this disaster. Good for the market? Should be.
Beach Fanatic
I can't believe I am arguing about a real estate bubble with all the tragedy unfolding in New Orleans, Miss and Ala. Sorry.
That's it for me. I'll lurk from time to time. But, no more arguing. Good luck everyone.
We know you love it.
SoWal Insider
Greenspan will not be Fed Chairman by the time NO is rebuilt.
Checking your forum account
Please wait while we verify your forum account.