Unfortunately it appears the real estate boom, called for by ecopal's linked article from a tallahasee real estate conference, missed the direction of their call.
Smiling Joe has posted the October real trends #'s for Sowal, and it really looks like to me the y-o-y trends are worse than they even look like on paper (and on paper they look bad) and November it can be taken as a given, will surely be even worse.
Why do I say they look even worse then the data bears out on paper??? Let's look at dollar value of sales year over year.. Oct. 2004 520M, vs. 347M for Oct. 2005. Residential lots sales - $226M in Oct. 2004, vs. 82M in 2005. Contrast these substantial declines, with the part anecdotal, part emperical fact that listings of lots and residential homes for sale in Oct. 2005 is much much more than was for sale in 2004 on a total dollar basis, and we have the makings of a downswing that has only started, not a boom starting. It will take months and months to bear itself out, as sellers of real estate historically do not aggressively reduce their asking prices, until it's much too late. Some don't have to sell at all, particularly in South Walton. Then there are another group that probably should sell, but hang on anyway, and weather the storm. Then, unfortunately, even in South Walton you have speculators and people who stretched, who have to sell if they bought in 2004-05, because they can't afford a prospectively large capital loss, can't afford to carry the dramtically higher insurance and tax rates, in the face of rents that have been VIRTUALLY stagnant for 6 years, compared to valuations. It is these marginal buyers, who will become the marginally aggressive sellers - and there is no way around it, even in South Walton where the beaches are beautiful. To be sure, some sellers never "have" to sell and this is true of This will be doubly problematic in an area like SOWAL, where much of the activity from 2000 to 2005 has been purchases by speculators, who don't have to live there: i.e. it's an investment.
It is clear when the bulls on SoWal real estate now use phrases like "longer term" and cite the wonderful qualities of SoWal that attracted them to the place in the first instance, that the writing is on the wall.
However, having said all that, although I expect real estate values to resume a normalized annual appreciation rate of 7-9 % per year, after the next 12-18 month downturn, which I would ballpark at roughly 15-25% depending on the kind of property and location.
For those looking to hedge their exposure to South Walton real estate, but don't want to compete with all of the listings that are growing dramatically, by owner, by broker, unofficially and otherwise, the only liquid mechanism available to do so at this time is public trading equity of St. Joe Company, JOE. The perfect time to start shorting JOE however was about 4 months ago in June or July, which was as one might expect 2-4 months after the cognisenti in South Walton had realized the real estate values had stopped rising. Yes folks real estate peaked in SouthWalton somewhere between Thanksgiving of 2004 and March of 2005. It didn't go down, but it didn't continue to rise. Dentists in Birmingham, and Proctoligists in Atlanta starting reading magazine articles this spring about a pending potential real estate bubble, and they were the marginal buyers/speculators. It took the cognisenti on Wall Street, who don't have their finger on the pulse of South Walton real estate as closely as you all do, several weeks, maybe 12 weeks, to figure this out and start selling their holdings down, but there is much more downside to go, should valuations plumet an additional 20% in the area, as I expect is a good possibility and not extreme at all, given the multiple 100% increase in valuations over the past few years...
If you're someone who truly has a 25 year time horizon and have a bunch of cash, get ready to be a buyer, but don't be silly and buy the first significant dip we're about to see born out by the data soon... hold your powder until you see significantly large scales of foreclosures, probably not for 18 months or more, when interest rates on Adjustable Mortgages are back to normalized levels of between 7.5-8.5% - and payments on those mortgages rise 60% as a result, putting the final squeeze on the unfortunate marginal segment of owners.
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119
Banned
I bought a property in Watersound Beach in '05 for 30% less than the original purchaser bought it from JOE for 5 months earlier. I thought for sure he was crazy. He actually brought about 300,000 to the closing just to sell it. In his particular case I can understand it now. I think he had some real good capital gains that year and saw the 5 year outlook.
Beach Fanatic
He was right to predict a major decline, but even his dower predictions were off - we're 30 months out from his original prediction and we've seen declines of 30%-50%.
Has anybody else noticed those lots in Watersound Beach that are selling at 50% discount from 2005, and 10% discount from 2003? That really caught my eye, I was wondering when the Joe properties would start to correct, it's finally happening.
An interersting historical perspective for sure. The doomers sure got beat up a lot back then.
Check out the sales history on this Watersound property.
Five sales with the latest being about 40%
below the original purchase price from Joe in 2003 after being up over 100% at one time.http://64.234.218.210/cgi-bin/walton_display.cgi?KEY=20-3S-18-16012-000-0020&
Here is one from Watercolor showing similar pattern with four sales. Price off 70% from peak and 25% off original 2003 price.
http://64.234.218.210/cgi-bin/walton_display.cgi?KEY=14-3S-19-25400-000-0430
Edited
Banned
Check out the sales history on this Watersound property.
Five sales with the latest being about 40%
http://64.234.218.210/cgi-bin/walton_display.cgi?KEY=20-3S-18-16012-000-0020&
Here is one from Watercolor showing similar pattern with four sales. Price off 70% from peak and 25% off original 2003 price.
http://64.234.218.210/cgi-bin/walton_display.cgi?KEY=14-3S-19-25400-000-0430
I understand the Watercolor where Wachovia took possession through deed process, but who is this JMB LLC in Watersound?
Did you notice these lots placement in their neighborhoods? I know of a lot on the same street in Watersound that Trustmark is controlling that will sell for 4 times the Black to JMB lot. It's all about location.
Edited
SoWal Insider
I understand the Watercolor where Wachovia took possession through deed process, but who is this JMB LLC in Watersound?
Did you notice these lots placement in their neighborhoods? I know of a lot on the same street in Watersound that Trustmark is controlling that will sell for 4 times the Black to JMB lot. It's all about location.
Watercolor does seem to be somewhat of an enigma. If you're already built out, pirces seem to be holding pretty well right now. Lot prices though are getting pummeled. I wonder if it's comps - I haven't seen any foreclosed build outs sell, but there are a few foreclosed lots that have closed at discount.
For build outs, looks like 1.5 - 2 mil for the lower area near seaside, 1.0 - 1.2 mil for the northern part, and over on the east side 700K - 900K are the current comps. I'd bet in two years those numbers will have shifted down another 20%-30%. I doesn't look like homes have corrected much (yet).
SoWal Insider
Although, price/sq ft in 2003 looks to be around 320, with 2005 highs around 450-500? Maybe it has corrected somewhat, current homes looks to be going for around 320-420.
Beach Lover
Anyone know what risk owners face if they purchase a WS homesite below the original sale price and do not build on time?
Little Fish
Little Fish
SoWal Insider
There's a thread right below this one discussing Joe build out extensions - you might dig through that.
Build-out extensions - SoWal Beaches Forum
Build-out extensions - SoWal Beaches Forum
Banned
Anyone know what risk owners face if they purchase a WS homesite below the original sale price and do not build on time?
Little Fish
That was why I was so surprised at the time I bought the one for 30% below its original sales price. I said to myself, this Owner should be able to just not build it out and JOE will buy it back for its original sales price. I asked JOE to buy it back for the original purchase price from me, but they declined.
It's a pretty interesting legal theory, and might be one for a test case.
Edited
Beach Fanatic
That was my way of being polite, calling for a 25% decline - at the time - i was being sensitive to those close to me that were not selling at the time - I also suspected that markets overshoot both ways. my suspicions were more in the 50% range, thats why i called for folks to short JOE - at the time JOE was in the mid 60's.
What I can share with the group is that I just bot a lot a few weeks back with smiling joe's able assistance in non-pud part of Seacrest Beach , that was way way below any REO or foreclosure then availabe in the area. My wife and I absolutely have fell in love with South Walton since first visiting in 1998. Our first home we had bilt in Seagrove Beach in 1999, we sold in early 2005, and so part of my rant at that time, was just trying to prove myself corrrect. Vanity? sure, but the decision to sell was emotional since we loved the area so much - I just felt like the valuations were ridiculous at that point in early 2005 - a feeding frenzy really.
I have no crystal ball, but having travelled around the country extensively to beach locales and paid attention to prices everywhere I go, there is NO BETTER DEAL that makes sense for us than SOWal at current prices.
My other strong convictions right now are as follows:
1. Long US Dollar vs. Euro - vehicle is symbol " DRR"
bot 5 new stocks today (August 19th).. they are:
TLM - Talisman Resc.
CVP - Centerplate Inc.
RF- Regions Financial
GA- Giant Interactive
TAST- Carrolls Restaurant Grp.
Your results may vary.
What I can share with the group is that I just bot a lot a few weeks back with smiling joe's able assistance in non-pud part of Seacrest Beach , that was way way below any REO or foreclosure then availabe in the area. My wife and I absolutely have fell in love with South Walton since first visiting in 1998. Our first home we had bilt in Seagrove Beach in 1999, we sold in early 2005, and so part of my rant at that time, was just trying to prove myself corrrect. Vanity? sure, but the decision to sell was emotional since we loved the area so much - I just felt like the valuations were ridiculous at that point in early 2005 - a feeding frenzy really.
I have no crystal ball, but having travelled around the country extensively to beach locales and paid attention to prices everywhere I go, there is NO BETTER DEAL that makes sense for us than SOWal at current prices.
My other strong convictions right now are as follows:
1. Long US Dollar vs. Euro - vehicle is symbol " DRR"
bot 5 new stocks today (August 19th).. they are:
TLM - Talisman Resc.
CVP - Centerplate Inc.
RF- Regions Financial
GA- Giant Interactive
TAST- Carrolls Restaurant Grp.
Your results may vary.
He was right to predict a major decline, but even his dower predictions were off - we're 30 months out from his original prediction and we've seen declines of 30%-50%.
Has anybody else noticed those lots in Watersound Beach that are selling at 50% discount from 2005, and 10% discount from 2003? That really caught my eye, I was wondering when the Joe properties would start to correct, it's finally happening.
An interersting historical perspective for sure. The doomers sure got beat up a lot back then.
Banned
Why Regions Financial?
SoWal Insider
Why Regions Financial?
He's being "sensitive" to the current stockholders
.
Beach Fanatic
Because
because I think you'll make about 50% on your money in less than 30 days from about $ 8.15 to about $12.25
Don't tell Shelly that people Mr. and Mrs. stockowner, are making 50% per month, ( and that's without leverage)!!!
I think he'd shart his pants, while he's salting away his savings in a shiny yellow metal plodding the demise of speculators everywhere.
Monday/Tuesday may be a day to continue shorting the Euro if the US Dollar takes a breather b/c of our Paulson Bazooka festival this weekend
later..
Why Regions Financial?
because I think you'll make about 50% on your money in less than 30 days from about $ 8.15 to about $12.25
Don't tell Shelly that people Mr. and Mrs. stockowner, are making 50% per month, ( and that's without leverage)!!!
I think he'd shart his pants, while he's salting away his savings in a shiny yellow metal plodding the demise of speculators everywhere.
Monday/Tuesday may be a day to continue shorting the Euro if the US Dollar takes a breather b/c of our Paulson Bazooka festival this weekend
later..
SoWal Insider
Don't tell Shelly that people Mr. and Mrs. stockowner, are making 50% per month, ( and that's without leverage)!!!
Stock"owners" holding on the 17th will "make" a dime a share come Oct 1...not exactly 50%--unless they sell (minus commission costs and short-term capital gains tax).
Admittedly, it will be a good time to pull the trigger on Monday or Tuesday--if you dare.
.
Edited
Beach Fanatic
Seems to me that the markets hate uncertainty and now that this Freddie/Fannie stuff seems settled, the market will rally---particularly the financials. I bought UYG-- the two times the financials ETF-- a while ago. I'm still way underwater but I'm expecting a real rally in the short term.
Beach Fanatic
Seems to me that the markets hate uncertainty and now that this Freddie/Fannie stuff seems settled, the market will rally---particularly the financials. I bought UYG-- the two times the financials ETF-- a while ago. I'm still way underwater but I'm expecting a real rally in the short term.
Congrats.... UYG is printing almost $25 pre market. UYG was $14 and change on July 15th...
Beach Fanatic
Stock"owners" holding on the 17th will "make" a dime a share come Oct 1...not exactly 50%--unless they sell (minus commission costs and short-term capital gains tax).
Admittedly, it will be a good time to pull the trigger on Monday or Tuesday--if you dare.
.
Shel, how dare you belittle the 50% total paper return (by focusing solely on the dividend ex and payable date) of Mr. and Mrs. Too Much Stockowner
Banned
Seems to me that the markets hate uncertainty and now that this Freddie/Fannie stuff seems settled, the market will rally---particularly the financials. I bought UYG-- the two times the financials ETF-- a while ago. I'm still way underwater but I'm expecting a real rally in the short term.
You learn something new everyday if you're not a know it all. Thanks
Edited
SoWal Insider
Shel, how dare you belittle the 50% total paper return (by focusing solely on the dividend ex and payable date) of Mr. and Mrs. Too Much Stockowner
Call me crazy...but I only focus on "returns" one can take to the bank--as I recall, there's no "paper returns" checkbox on a deposit slip.
.
GatlsGulch2
He was right to predict a major decline, but even his dower predictions were off - we're 30 months out from his original prediction and we've seen declines of 30%-50%.
Has anybody else noticed those lots in Watersound Beach that are selling at 50% discount from 2005, and 10% discount from 2003? That really caught my eye, I was wondering when the Joe properties would start to correct, it's finally happening.
An interersting historical perspective for sure. The doomers sure got beat up a lot back then.
30A Shopper, if my predicitions are "off" again, as much as they were last time with my old handle, we may be in for a fun ride to the upside. (When I brought to the boards attention that a Newspaper article had the HEADLINE BACKWARDS, that real estate was about to implode, not take off, I was chastized or ganged up on a little bit in various threads for making some unpopular and really unthinkable predictions, (and to short JOE, which I now absolutely LOVE) .; If history is any indication, I guess the market in South Walton is not just about to rapidly stabilize and moderately accelerate - , we're probably looking at gains higher than you or I can imagine over the next decade in South Walton.
cheers,
RD.
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