Calling The Bottom

Re: The bottom has arrived

A new low for the major developments--a house in Watersound just sold for $800k or about $250 per square foot.

Re: The bottom has arrived

If you look at the details the house was a distress sale, It was also a short sale. The house was also unfinished. The buyer has to complete the house at an estimated cost to complet of $370,000.00. The sales price as is was $870,000.00. This is not a good comparable.

Re: The bottom has arrived

Thanks for pointing that out, pete23. I will also add that while the house is in WaterSound, it is the as close to 30A as they come in WS, and is the greatest distance to the beach.

Re: The bottom has arrived

If you look at the details the house was a distress sale, It was also a short sale. The house was also unfinished. The buyer has to complete the house at an estimated cost to complet of $370,000.00. The sales price as is was $870,000.00. This is not a good comparable.

I walked through the house recently. If it's gonna cost $370k to finish that house out, someone will be throwing their money down the toilet in finish costs. When I walked the house, it appeared to be 80% plus complete.

Regardless, I wasn't implying that this was a great comparable. Just pointing out a lowball, distress sale.

Re: The bottom has arrived

I haven't walked the house and do not know the estimated cost to complete the construction, other than what is written in the sale notes. I do know that the last 20% to go into a home, is often the most expensive -- flooring, cabinets, counters, fixtures, etc. In your opinion, fisher, what would it take to complete the house as designed? Also, will the new owners be using the same builder, or do you think that builder left being owed money for work completed?

Re: The bottom has arrived

I haven't walked the house and do not know the estimated cost to complete the construction, other than what is written in the sale notes. I do know that the last 20% to go into a home, is often the most expensive -- flooring, cabinets, counters, fixtures, etc. In your opinion, fisher, what would it take to complete the house as designed? Also, will the new owners be using the same builder, or do you think that builder left being owed money for work completed?

if i recall correctly, the wood floors were in, molding was up, etc. cabinets, lighting, plumbing fixtures, appliances and finish work might cost in the range of $100k to $150k.

just my opinion though based on nice finishes in my own homes.

Re: The bottom has arrived

if i recall correctly, the wood floors were in, molding was up, etc. cabinets, lighting, plumbing fixtures, appliances and finish work might cost in the range of $100k to $150k.

just my opinion though based on nice finishes in my own homes.

Are the granite countertops in?


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Re: The bottom has arrived

I've seen $60K kitchen cabinets, with counters costing more, so I guess it all depends on the house. Was the Carriage House also needing to be completed?

Re: The bottom has arrived

I've seen $60K kitchen cabinets, with counters costing more, so I guess it all depends on the house. Was the Carriage House also needing to be completed?

before trying to pick a fight, go walk through the house like I did, then make your own estimate. i've gone through the building process on several nice houses. based on my experience with costs of those things, you could do a very, very nice finish on that house for $150k. nuff said.

Re: The bottom has arrived

Let's just say that your estimate of cost to complete is accurate. I have no more reason to doubt your estimate than the Realtor who wrote $370K in the notes. I'm guessing your estimate also includes the cost to complete the carriage house. We are still looking at over one million dollars for a house which is probably one quarter mile to the beach, so I'm not sure what that tells us about our point on the curve. There are many factors which go into pricing and if you start listening to people who are only addressing the price per sq foot, you may not be getting a complete picture. Currently, there is great fluctuation in the price of lots, and we are seeing short sales, changing the price even more. Conservative buyers are slowing increasing their positions in real estate, while the market is in their favor. In a few cases, total price per sq ft for an existing home, including the lot, is less than the cost to build new, without the lot. I think most of today's buyers are cash buyers and have done their homework. They know the pickings are good, so they pick while the tree is bearing fruit. I just wish I had $700K to spend on my housing so that I could by the house which Bobby J and Gardner have listed in Seagrove.

Re: The bottom has arrived

In the past I have offered to paint a house in my skivvies for forty grand. This time I am offering to finish the inside of this fine house in only a t-shirt personally for the 370k.

I sold at the height of the market in the South Louisiana oil field area in January and I am now liquid. I've learned that real estate, as with any speculation, is difficult. 12 or so years ago when I bought in Louisiana, even the establishment in real estate were scared, saying that prices were sky high and the cost of lumber rediculous. I bought, because I felt different and because it was time in my life. I bought new construction. 12 years later the house was 2 1/2 times what I bought it for and I was at a time in my life when I needed to do something because of a dream I wanted to follow, so I sold. Being that much of the country is down right now, and my area was up, what better time to do it. But, I cannot buy currently, even if it was bottom, because I am pursuing a writing career and not otherwise working. But, from what I can see, and Shelly, you have done an outstanding job of research and data digging (loved the past quotes of the Realtor) and maybe, just maybe if I'm successful or otherwise join the ranks of the employed, I'll get in at just the right time in a year or so. Or I'll have spent all my money and die as a struggling, misunderstood artist unvalidated and lonely under a bridge along I-10. Wow, I sure hope this works out

I sold at the height of the market in the South Louisiana oil field area in January and I am now liquid. I've learned that real estate, as with any speculation, is difficult. 12 or so years ago when I bought in Louisiana, even the establishment in real estate were scared, saying that prices were sky high and the cost of lumber ridiculous. I bought, because I felt different and because it was time in my life. I bought new construction. 12 years later the house was 2 1/2 times what I bought it for and I was at a time in my life when I needed to do something because of a dream I wanted to follow, so I sold. Being that much of the country is down right now, and my area was up, what better time to do it. But, I cannot buy currently, even if it was bottom, because I am pursuing a writing career and not otherwise working. But, from what I can see, and Shelly, you have done an outstanding job of research and data digging (loved the past quotes of the Realtor) and maybe, just maybe if I'm successful or otherwise join the ranks of the employed, I'll get in at just the right time in a year or so. Or I'll have spent all my money and die as a struggling, misunderstood artist unvalidated and lonely under a bridge along I-10. Wow, I sure hope this works out

Hopefully you can become another Eric Blair. I love reading a good book and try to read at least one book a week. Getting back to the topic at hand, It is my understanding that American home owners could lose as much as 6 trillion dollars in housing wealth over the next year.

I don't even believe the depression had those types of losses for American home owners during that time (factoring in inflation).

I further understand that the average home owner will lose $85,000 in wealth. Talk about a bad time to buy, this is ridiculous but it is what must be done in order for us to indeed find that illusive bottom.

A Washington think tank has come out and said that home prices are now starting to fall at an accelerating rate, they say that the bottom should be found by the end of the year.

I don't claim to even have finished High School, but I just don't see the bottom coming for at least another few years. I would hope we have already seen the worst but I just feel that pressure on our dollar will have many finding their way in front of a bankruptcy Judge.

The one great thing that America has going for it is, there is not another currency to go to. So until then, we will continue to blow like a flag in the wind.

The amount of wealth that will change hands over the next few years will be mind boggle-ling.

I think the bottom can not really be clear. Markets are so local in nature. We may be close here but Rockford, IL. may have a long way to go. I do know one fact. We are as busy as we have been in 2 years. Is this the bottom? Not sure, but it sure feels active. I think many economist have miscalculated how fast these foreclosures and short sales would leave the market place. Predicting the bottom is as dangerous as speculating. That's how we got in this mess!

Same here Bobby. The activity has been strongest since about 2004 (maybe early 2005), I'd say. We've been putting a lot of offers in and have a few executed contracts. Closed numbers are up in certain communities as well so something is definitely picking up.

As of today in S. Walton East and West and South SRB we have 1447 active single family home listings, of those there are 83 short sales or roughly 6%. If you go through the pendings or under contract with contingencies you'll find over 50% are short sales. Why? Because they are supposedly market value. Search any subdivision for active listings and 9 times out of 10 the lowest priced properties are disclosed as short sales. They are priced low to attract offers of which most times the bank will counter.

According to Forbes recent article "Fire Sale" the banks are finally wising up and moving at a much more effective pace in dealing with short sales and are getting them executed and closed much faster:
http://www.forbes.com/forbes/2008/0407/040.html

Glad you brought up the short sales Joe because have had some recent discussions with one of my realtors. I'm afraid as usual, the banks may have wised up a little late. We've had quite a few signed contracts waiting on the banks which just came back too high or took too long and the buyers walked. The problem is compounded by multiple lenders on many of the short sales. We had contracts twice on the same property and the banks just wouldn't respond. The owners even had a paid mediator to deal with the banks. After the second buyer walked, the bank wanted to talk. Unfortunately the owners claimed bankruptcy and I feel was largely due to the banks.

We have been hearing from an overwhelming number of agents that they don't even show short sales and we are seriously considering avoiding the language of "short sale" in favor of "pre-forclosure". It's the sellers choice of course but I think that marketing as a short sale has become a deterrent. My agents do show them because we want our clients to have full knowledge of what's out there but we've had much more luck taking an agressively priced unit and lowballing it. Sellers seem to understand that if they are lucky enough to get an offer, they better seriously consider it.

True story,

Well anyway I was talking to him last night and he was saying he felt like he should end it all and kill himself. I asked him what the heck was he thinking. Be careful in buying real estate, the days in flipping a condo are gone with the Dinosaur's.

If you buy something let it be because you want the house to live in and not to make a profit, there are much easier ways to make a buck than to flip a condo that is on this beach. If you will wait you can get some killer buys no pun intended.

How sad Sandy. I'm so sorry for your friend and he's not alone. Many people are struggling right now. Real estate has always been an excellent long term investment. It is a tried and true way to make money. The "Donalds" are buying now, not 2 years ago. They started looking about a year ago and they are beginning to write contracts now. This isn't speculation, it's personal knowledge. Of course, these people aren't buying homes or single condos and you don't see these sales in the MLS.

The Real Trend report is a good overall statistic, but by breaking up the sales into specific areas, you will see that there are hot spots for sales, as shown above. Remember that if there are hot spots which increase the overall average, there are also cold spots, which are under-performing when comparing 2008 to 2007.

Very good point SJ which I know we've made before. Looking at trends for all of ECAR is about as indicative of the market as looking at nationwide statistics. The numbers are tremendously different in different areas and in different sectors (SFH,Condos, Commercial & Land).

Someone also mentioned something about lenders not lending and how it's affecting sales. The one's we've got are either cash deals or just under jumbo if they are financed.

Back to the lounge

Am I seeing things, or is the Walton County appraiser listing zero sales for April? I did a quick off the cuff itemization of total sales over the last three years from their sales lists - it doesn't look good.

yeah, you're seeing things. I purchased something in April, so that would have at least made 1.
I think the appraisers site takes a few days to populate each months sales. Right now, the link for April will work, but the field is empty... same thing happenned last month for a while.

yeah, you're seeing things. I purchased something in April, so that would have at least made 1.
I think the appraisers site takes a few days to populate each months sales. Right now, the link for April will work, but the field is empty... same thing happenned last month for a while.

March sales figures are also wrong. When April figures get posted, the correct closing numbers for March will also repopulate the site.

Also, as Joe frequently points out, some areas have been hotter than others. The Walton County website gives figures for the entire county. Finally, the real trend report is a good double check on the sales figures for all of Walton County and the figures off the Real Trend report for 2008 look better than the Appraiser site figures (Real Trend is published once a month on WaltonSun.com).

I can't seem to find that report on their site, is it only available in the online edition?

We have been hearing from an overwhelming number of agents that they don't even show short sales and we are seriously considering avoiding the language of "short sale" in favor of "pre-forclosure".

Question: If a potential buyer sees "pre-foreclosure" won't he assume foreclosure is imminent and wait until that happens so he can get a better deal?

Question: If a potential buyer sees "pre-foreclosure" won't he assume foreclosure is imminent and wait until that happens so he can get a better deal?

All changing the language does is give a false impression - they still have to go through the process that is turning buyers off! IMO this tactic will create more nibbles, but also more frustration and false hope.

Question: If a potential buyer sees "pre-foreclosure" won't he assume foreclosure is imminent and wait until that happens so he can get a better deal?

I have buyers contacting me because they are targeting short sales or pre-foreclosures. I sift through the data on the property and then advise them as to our chances of closing and a time frame.

Many factors to consider are if there are more than one mortgage, who the lender(s) are, mortgage payoff to market value difference, if lis pendens has been filed, seller's financial status and the listing agent's short sale experience.

Some are worth pursuing in "pre" status while others you can get an accurate read that they are a long shot to close before foreclosure and it is better to wait on the foreclosure and then the REO listing.

Gosh, and I was hoping that the bottom would wait until this fall...

It seems that the greater SoWal market is factored upon vacation rentals. This may not be as true as it was, say, ten years ago because so many permanent residents have relocated to the area but, assuming my assumption is valid, how does the vacation rental market look? Gasoline appears to be headed to $4.00 + per gallon. Any odds on how this will affect vacation plans?

people will continue to take vacations, and more will likely select drive-to destinations, rather than flying, so SoWal should continue to have it's share of visitors. The average visitor to SoWal is coming from a 500mi radius, so for math purposes, let's give them a 1000 mile, round trip to get to SoWal and back home. Gas prices last year were around $2.50 per gallon, and we will use your $4 per gallon for this year. The average SUV gets around 15 mpg, so 1000miles divided by 15mpg gives us a total fuel usage of 66 gallons for the round trip. Last summer, that would cost $165. This year, $266. I don't think $100 difference for a family of four will stop visitors. To help offset that $100, I have seen the price of rental units falling slightly as there is now more competition.

people will continue to take vacations, and more will likely select drive-to destinations, rather than flying, so SoWal should continue to have it's share of visitors. The average visitor to SoWal is coming from a 500mi radius, so for math purposes, let's give them a 1000 mile, round trip to get to SoWal and back home. Gas prices last year were around $2.50 per gallon, and we will use your $4 per gallon for this year. The average SUV gets around 15 mpg, so 1000miles divided by 15mpg gives us a total fuel usage of 66 gallons for the round trip. Last summer, that would cost $165. This year, $266. I don't think $100 difference for a family of four will stop visitors. To help offset that $100, I have seen the price of rental units falling slightly as there is now more competition.

If gas prices were the only problem.....

I think overall inflation and rising unemployment are going to be the driving forces. Increases in not only fuel but also food, education, medical care, utilities, financial services, etc., are now just starting to be felt by consumers.

I think people will still come down for vacations, but I predict the vacations will be shorter and folks will economize more by eating in the condo rather than going out every day for one or two meals. Additionally, I think short-stay hotels and motels will do much better than condos and houses that require a full 7-day stay.

Moreover, I believe more people will be holding out for last-minute booking for four reasons
(1) To ensure they don't 'waste' a deposit if the weather happens to suck;
(2) to hopefully snag a last-minute cut-rate deal from desperate condo owners;
(3) to ensure they're still employed when vacation time rolls around;
(4) to ensure they've got money to cover the costs since credit is getting tighter and more expensive and HELOCs are being shut down.

I agree that there are factors other than gas, which will affect people's vacationing habits. I think you are right about people changing their eating choices, which is probably the second most expensive part of the their costs for vacation, but I think they will not likely cut short their week vacation in order to save a little money. Maybe they come off-season when the rates are cheaper, or they stay further off the beach, or negotiate with a VRBO.