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Some compelling evidence

Beach Comber
5,129 views
Our family has been searching for property along 30A for nearly one tear now. Back in April/May, it appeared that we had "missed the boat" as our desires were in one of the planned communities (Watercolor, Watersound, Alys Beach etc) and these areas had realized substantially jumps in values since our search began. So I decided to track prices as I anticipated some froth was coming into the market.

The way I did this was to print out available lot listings for Watercolor and Watersound that appealled to me. I first did this on 5/10/05. At this time, I only did a select number as I didn't expect my results to be dramatic. I then went back On July 26, 2005 and printed out all listings for the two properties and once again I did the same test yesterday September 15, 2005.

Since there has been so much talk about statistical sampling on this board, I decided to include the entire population for these two communities. I do realize that this only is a test of listing price and does not fully reflect the market as sales are not included and I recognize that sales are the key element here. However this was easier for me and I thought it would provide some interesting reading.

In the first test, I included the sampling of lots I chose in May 2005 that had price changes more than once between May and September. Out of 50 lots chosen for sale (out of an estmated 170 during May 2005 in those communities), 19 had multiple price changes - ALL DOWN! The average lisitng price on 5/10/05 for these 19 lots was $1,800,631. On September 15, 2005, the average for the same lots had dropped to $1,376,579 - this is a drop of 23.6% :cool:

I then took the test one step further - I compared the MLS listing for the 2 communties for July 26 versus September 15 - here are some results.....

Watercolor :

Listings - July 26 - 93 Lots Sept 15 - 105 lots

# of lots out of the 93 listed in July with price changes during the seven week period = 37 or 40%

Average price of these 37 lots on July 26 = $902,500

Average listing price on Sept 15 of same lots = $799,500

Average drop in listing price = 11.4%

The same info is available for Watersound - but I will save that for another day if this info is useful. I provide this info not as a negative aspect of the market as I feel Sowal is the most beautiful place in the US, however as useful info to ppl out there like me who if prices kept increasing would never have had a chance to call this area a home (albeit a 2nd one).

Replies

34
Smiling JOe avatar
SoWal Expert
#2
Now, you just have to figure out where the bottom is so that you can buy. Good luck.:D
picky
#3
Now, you just have to figure out where the bottom is so that you can buy. Good luck.:D

It's like the stock market! We were driving ourselves crazy with that, trying to figure out the absolute best time to buy and sell, and finally we got exasperated enough with the guessing game to cash out entirely. Now we own mutual funds--boring ride, but that's okay. (And stocks are small peanuts compared to buying houses at the beach!)
Smiling JOe avatar
SoWal Expert
#4
It's like the stock market! We were driving ourselves crazy with that, trying to figure out the absolute best time to buy and sell, and finally we got exasperated enough with the guessing game to cash out entirely. Now we own mutual funds--boring ride, but that's okay. (And stocks are small peanuts compared to buying houses at the beach!)

FYI - You didn't really cash out since mutual funds buy stocks. You just get a wider spread of risk because the funds are required to own a minimum of 20 stocks.
Beach Fanatic
#5
Compelling evidence that their are listing price corrections going on in SoWal. This is somewhat natural in boom markets even though it is causing some to push the doom and gloom or the "sky is falling" theory it frankly is evident that the pricing and runup in some of the communities was not sustainable.

Again, I do not believe that this spells crash or bust (bubble) throughout SoWal but some correction was/is needed in some respects. :idontno: :blink:
picky
#6
FYI - You didn't really cash out since mutual funds buy stocks. You just get a wider spread of risk because the funds are required to own a minimum of 20 stocks.

Yes, of course it's risk spread wide as opposed to singly. The thrill of the chase isn't there but on the other hand it makes for a more restful night!
Smiling JOe avatar
SoWal Expert
#7
Yes, of course it's risk spread wide as opposed to singly. The thrill of the chase isn't there but on the other hand it makes for a more restful night!

In some respect, the stock market is similar to real estate in the way of investments, and your behavior. Some people look like walking heart attacks, worrying on an hourly basis about what their investment is doing at that snapshot in time. These people do not rest well at night. When making an investment, no matter stocks or real estate, remember that it is important to be able to sleep at night with your investment. I studied the stock martket closely for several years, and learned that the emotional buy and sell is where you can get burned. I believe the same to be true if you are buying real estate for an investment. Sure, people often buy a beach home based on their emotions and I think that is fine. It is your body's way of telling you to act. However, these people see their beach home as a lifestyle choice first. Investment is secondary. For those of you who invest on emotion, I encourage you to think twice. If you need to know the market value of your home on a daily or weekly basis, you are missing out on life.

It sounds like Mermaid has learned a great thing in life. :lol:
Cork On the Ocean avatar
directionally challenged
#8
Compelling evidence that their are listing price corrections going on in SoWal.
Again, I do not believe that this spells crash or bust (bubble) throughout SoWal but some correction was/is needed in some respects. :idontno: :blink:

At this point, I totally agree with you Willy, There's no doubt that the beginning of the year brought in many properties priced at 100% over last year which was just too much. If the comparisons are made back to last year, the prices are up from last year (at least this was the case in June). Probably should redo sales comparison from 9/04 - 9/05 to see if this is still the case. I also suspect when you compare 5/05 to 5/06 (rather than 8/05), we'll see a nice appreciation.

Joe, You hit it! We all know that last year's 2 month flips for profit were not going to continue. If someone needs to make a profit over a matter of days, they need to be a day trader, not a real estate investor.

Edited

Beach Fanatic
#9
Compelling evidence that their are listing price corrections going on in SoWal. This is somewhat natural in boom markets even though it is causing some to push the doom and gloom or the "sky is falling" theory it frankly is evident that the pricing and runup in some of the communities was not sustainable.

Again, I do not believe that this spells crash or bust (bubble) throughout SoWal but some correction was/is needed in some respects. :idontno: :blink:
I think you nailed it WW. The key term here is "correction" not "crash". The fundamentals are still sound, but the prices moved too quickly. Not too high, since I personally believe there is still room for them to rise further, but too quickly. It's now, in my opinion, going to pull back a little, slow down a lot, catch it's breath, then start back up (hopefully at a more restrained pace). Because it still is not "overpriced" relative to other, comparable beachfront markets.

You thought it was bad when the people from Atlanta, Birmingham and New Orleans bid up the prices over the last few years? Wait until the people from California, New York and Chicago start doing it.
Dabell avatar
Beach Fanatic
#10
This is something that interest most people. May I say you cannot find a Home anywhere by the beach, on the beach or waterfront in NEW YORK or on Long Island for under $1,000,000.00 and if you do, It will need work. I do not understand why, with the beaches so beautiful down in South Walton why are the prices of homes going down? Is it the schools? Is it No high paying jobs? In South FL anything By, next to or on the water, never stops going down in price. What is wrong here?
Beach Fanatic
#11
What is wrong here?
In stock market terms, we are seeing what they call a "profit taking correction", albeit one that is being fueled with a little buyer skepticism...won't last, IMHO.

The should not be taken to mean that I consider real estate markets and the stock market to behave the same. They have their similarities, but they have their differences, too. I just think we're seeing a similar psychology on the part of buyers and sellers as you do when anything (stocks, properties, currencies, etc.) runs up real high, real fast.
Smiling JOe avatar
SoWal Expert
#12
About 2-3 years ago, I recall many lots in Pt Washington area with for sale signs. Price? - around $35K for 1/4 ac lot. They were everywhere. When they jumped to $40K a few months later, people were saying that there is no way they will sell. There is too much inventory, and they just paid $20K-$35K for them. Are these people crazy?

Some 1000% increase in price later (today), those lots are selling anywhere from $190K-$300K. There was a time between then and now, where you could not find a single lot with a for sale sign. My point is that real estate has cycles. One thing that drives demand is supply. When there is nothing to buy, everyone wants it. When there are too many choices, people question why everyone is selling. Maybe they know something we don't.

The time will again come when you don't see any for sale signs on those same streets. If someone wants to buy one, they will have to pay a premium. Then the whole vicious cycle goes around again.
SHELLY avatar
SoWal Insider
#13
I do not understand why, with the beaches so beautiful down in South Walton why are the prices of homes going down? Is it the schools? Is it No high paying jobs? In South FL anything By, next to or on the water, never stops going down in price. What is wrong here?

People who "invest" and live in the area assume that everyone in the entire world thinks as they do--that the beach is heaven on earth. That narrow-minded approach works for the developers trying to push their projects, but doesn't apply to the entire world population.

Believe it or not, there are people who prefer the rolling green hills of Kentucky, mountains of Colorado, deserts of Arizona, lakes of Minnesota, mesas of New Mexico or city lights of New York to some hot, sticky, dog-fly-biting, hurricane sucking beach (their words, not mine). And not all of them would swap their current locale for retirement in a cement condo crowded along the concrete canyon/parking lot that is Destin or PCB (contrary to what developers are touting in their slick pre-construction brochures and rah-rah parties).

One person's paradise is another person's hell on earth. "Investors" need to keep that in mind before taking out their next Option ARM--whereas people who plan on making a home and raising a family here should not be concerned what other people think.

Edited

Rita avatar
margarita brocolia
#14
.....

Believe it or not, there are people who prefer the rolling green hills of Kentucky, mountains of Colorado, deserts of Arizona, lakes of Minnesota, mesas of New Mexico or city lights of New York to some hot, sticky, dog-fly-biting, hurricane sucking beach (their words, not mine).

:doh: :nono1: Shelly hasn't been keeping up with the "October" threads.
Go for it girl, you tell them! But you forgot the gators, skeeters, and plenty of other October negatives.
Miss Kitty avatar
Meow
#15
:doh: :nono1: Shelly hasn't been keeping up with the "October" threads.
Go for it girl, you tell them! But you forgot the gators, skeeters, and plenty of other October negatives.


Thanks for reminding Shelly of the rest of the horrors, Rita!!! You are a class act!
Beach Fanatic
#16
In all seriousness, I know of four different families in the last two years that moved to SoWal, to be permanent residents (NOT second-homers) and moved back shortly afterwards. One couple only lasted six months.
iwishiwasthere avatar
Beach Fanatic
#17
Why? My husband and I considering moving from our present location and wanted to know the pitfalls...any advice? We were thinking south or east. We are just ready for different vistas.
Camp Creek Kid avatar
Christini Zambini
#18
In all seriousness, I know of four different families in the last two years that moved to SoWal, to be permanent residents (NOT second-homers) and moved back shortly afterwards. One couple only lasted six months.


And I know at least 20 different families in the last four years that moved to SoWal to be permanent residents and they LOVE it here. Maybe your friends were expecting to move here and be on a permanent vacation. Reality Check! You still have to grocery shop, do the laundry, work, take kids to soccer practice, and, depending on where in SoWal you live, you have to drive quite a bit. At least you can do all those things in SoWal!
Smiling JOe avatar
SoWal Expert
#19
In all seriousness, I know of four different families in the last two years that moved to SoWal, to be permanent residents (NOT second-homers) and moved back shortly afterwards. One couple only lasted six months.

Yes, please tell us the circumstances of each family as to their reasons for moving.
Beach Fanatic
#20
Maybe your friends were expecting to move here and be on a permanent vacation.
Definitely the case for a couple of them. The others claimed they could never find any kind of serious work (although I question how seriously they tried). Two of them found work as housecleaners for a while, but didn't like it much and finally went back to the corporate thing in Atlanta.

If you're gonna move here, you better be entrepreneurial. You can't just show up and go to work 9-5 somewhere with a big paycheck and benefits. Not yet, anyway. Down here, you pretty much make your own life. Good or bad, it's up to you.

On Edit: One other couple I know who did the same thing had some legitimate concerns about telecommuting with an office located in the DC area, and moved back for that reason. Can't really put them in this group.

Edited

SHELLY avatar
SoWal Insider
#21
Maybe your friends were expecting to move here and be on a permanent vacation. Reality Check! You still have to grocery shop, do the laundry, work, take kids to soccer practice, and, depending on where in SoWal you live, you have to drive quite a bit.

That pretty much hits the nail on the head. Residing in "paradise" can be a chore if you have to work for a living. I had the "opportunity" to live and work in Hawaii for several years. It wasn't much fun trudging off to work and completing daily chores while all those around you are on vacation. Add to this the fact that the demographics change every week or two so you never have the opportunity to "get used to" the routine--driving habits and dining/touring habits of varying age groups and nationalities change on a weekly basis--so you've got a brand new set of problems to contend with week-in and week-out.

Finding a job with "living wage" in SoWal is pretty much impossible unless you bring your job with you (Dr, Lawyer, Indian Chief). Full-time rental housing is nonexistent and housing prices are out of reach for working people. Service workers, including teachers, police, firefighters, A/C technicians and plumbers are at a disadvantage and shortages in these trades may eventually add to the problems in the area. Moreover, the shops and restaurants can't find employees to fill traditionally low-wage jobs which in turn cause problems for the managers/owners. The good news is this last problem, may be eliminated in the near future as the real estate industry recedes and current local real estate agents (who already have residences in the area) start looking for work.
Teresa avatar
SoWal Guide
#22
In all seriousness, I know of four different families in the last two years that moved to SoWal, to be permanent residents (NOT second-homers) and moved back shortly afterwards. One couple only lasted six months.


This is nothing new at all. For many, many years people have moved to the area and some of them do not find what they are looking for, such as jobs. Or they are not satisfied with a small community and need more "stuff" to do. Or they find that it just wasn't what they expected. Now, there are substantially more people moving here from all over, and I expect some of them will find that this is not the place for them.

Sowal is a wonderful family-oriented community with beautiful natural resources. In many ways it is not the real world. It isn't a typical community in any respect. Finding friends is the easy part. Finding the right job may take time. Starting a business is always risky in a seasonal market. Finding housing takes $$. We've got Publix, but any other shopping you'll need to take a trip to the big city! That's fine with me. Got the internet. We have cultural arts galore these days if you are interested. Pretty good entertainment here and there.

I think its perfect since we have Publix! Not everyone would agree...

okay, not perfect - there are way too many tourists in June and July (far more than 10 years ago), and we get way too many out of town visitors at our house! other than that, its all good as it gets.
Beach Fanatic
#23
okay, not perfect - there are way too many tourists in June and July (far more than 10 years ago), and we get way too many out of town visitors at our house!

Thank goodness the word is out about how terrible the month of October is in SoWal! :biggrin:
iwishiwasthere avatar
Beach Fanatic
#24
Glad to hear some positive thoughts. My belief is EVERYTHING is better at the beach....rain, cooking, laundry. The place calms me unlike any other. Glad to know the arts are accessble. What about medical care?
Beach Fanatic
#25
Excellent medical care at the new Sacred Heart Hospital near Destin. Pensacola also continues to offer very good medical care, at the same hospital.
Miss Kitty avatar
Meow
#26
Glad to hear some positive thoughts. My belief is EVERYTHING is better at the beach....rain, cooking, laundry. The place calms me unlike any other. Glad to know the arts are accessble. What about medical care?

I remember one year when we were staying at Seaside, it was raining (I love rain at the beach!) and I just picked up the broom and started sweeping up sand and with a big grin on my face, I thought how wonderful my life was!!!! That's being under the spell of SoWal, for sure!

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