Pricing graphs

30ashopper, regarding how people are purchasing these days, I found the following regarding single family detached home sales including all areas of South Walton, only.

2004 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 52%
2005 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 57%
2006 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 52.2%
2007 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 56.1%
2008 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 25.2%

A lot of people were taking cash out of equity (that today doesn't exist) and using that to invest. I think these numbers reflect the fact that we have gone back to the old way of doing things. People with credit get loans and buy homes with 15%+ down. The investulators are gone from the market. This implies even more downward pressure on price because these folks don't throw money out the window expecting to flip property 3 months later.

The wild roller coaster market of 2001 -> 2007 is over.

If you look at it from the perspective that consumer costs to put gas in the truck and groceries on the table, if labor costs are staying the same, they have really gone down, since everything else has increased with inflation.

Relative to 1999 labor costs have gone up considerably more than the rate of inflation and they are a higher percentage of the overall cost of a home. During the peak of the market, subs could charge a contractor whatever they wanted if they were reliable and showed up to the job--classic supply and demand. Subs now want to charge the same high prices, which the market can't support. "Paper only" contractors are hurting because they can't afford the high labor costs. Contractors who are doing a lot of the work themselves are the only ones who can afford to build and sell within a reasonable price point. The problem with that is that when a contractor is doing his own work on-site, he doesn't have the time to manage several jobs (if he can get multiple jobs) and so his company has greatly reduced revenue. The construction industry and all supporting industries are really hurting right now.

But I digress. My point is that in spite of what 30AShopper hopes/predicts, it is not likely that prices will to drop to 1999 prices. Replacement costs are at least 50% higher than 10 years ago and price increases are from more than just an inflated market--there are legitimate reasons why homes prices have increased which are related to costs.

The forum is Sowal centric-- and rightly and gladly so!! But, there is no second home market in America that will stabilize or increase in value until the primary residence market in middle America stabilizes. People in poo dunk, USA are not going to buy a second home anywhere until their view of their economic well-being improves.

I disagree. If people think that great potential for increase in value over time exists in second home markets, they will put their money into those markets. Many owners in South Walton have more value in their secondary home than they do in the primary residence.

I disagree. If people think that great potential for increase in value over time exists in second home markets, they will put their money into those markets. Many owners in South Walton have more value in their secondary home than they do in the primary residence.

...and many of them extracted the value out of their primary residence to purchase/carry their secondary home--now both are in the ditch.

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But I digress. My point is that in spite of what 30AShopper hopes/predicts, it is not likely that prices will to drop to 1999 prices. Replacement costs are at least 50% higher than 10 years ago and price increases are from more than just an inflated market--there are legitimate reasons why homes prices have increased which are related to costs.

Why would the existing home market be affected by replacement costs? These costs indicate a major decline in home building and new home purchases as people snap up existing homes. Looking at the inventory numbers there certainly are plenty of those to go around.

...and many of them extracted the value out of their primary residence to purchase/carry their secondary home--now both are in the ditch.

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'tis true, but there are many who bought prior to 2003, who bought their second home to have for vacations and possible retirement, and they are nowhere near the ditch.

'tis true, but there are many who bought prior to 2003, who bought their second home to have for vacations and possible retirement, and they are nowhere near the ditch.

Take a look at this graph below. Isn't it true that as this bubble heated up many, many who bought prior to 2003 sold and took a profit while new construction was getting off the ground? Isn't it true that the number of new and used homes peaked in 2004 and prices continued to rise over the next 2 years with many of the same homes and condos being sold again and again at ever higher prices. And what I've found just by casually looking at homes/condos that are currently on the market at (what some might believe are) reasonable prices--not short sales or foreclosures--are folks who bought pre-bubble and rode it up one side and down the other now deciding to get out before all their equity (if they haven't HELOCed it to kingdom come) disappears.

I believe that the lions share of 2nd/vacation/investulator homes and condos from Pensacola to PCB were purchased during the frenzy and, of those, almost all are certainly worth less today than what the owners (lenders) paid for them.



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You fail to take into account the replacement value of a home which will never go back to 1999 values and, therefore, homes will never go back to 1999 prices. Right now we are nearing replacement value per square foot on homes that are not in the large developments (Rosemary, Watercolor, etc.). Excluding land, a builder is looking at around $150.00 per square foots in just costs (materials, labor) in an averagely finished home. This does not figure in the builder's profit (salary). Using these figures and taking into account that the houses that are selling are under $349,999, a modestly sized home of 2,300 square feet could be BUILT for $150.00 per square foot of COST and be at the price point to sell. However, this does not include land or builder's salary. So, it is very unlikely that prices will continue to fall.

IMHO, you are dead wrong-especially in the major developments along 30A. Alys, Rosemary, Watersound Beach, Seaside, Watercolor, etc are all going to continue to see values shrivel. Too much inventory, too many REO's, too many foreclosures, too many folks not paying HOA dues, etc, etc.

The underlying cost of land was the major driver of the huge spike in values in these areas several years ago. Those land prices continue to crater. Land prices will go back to 2001(or prior) price levels before this cycle is all said and done. Therefore, home prices will continue to fall to. In addition to falling land prices, cost of construction has been falling. Two to three years ago, it cost $250 plus to build an average home in these communities. Now, as noted by AAbsolute, it can cost $150 to $200 to build an average home in these communities. And, these costs may continue to fall (we are potentially facing stagflation or deflation in coming years). Nope, there is a long way to go before prices stabilize--especially in these high end markets.

There are very few people I have met in the past 20 years working in construction who can give an accurate cost of 100% of the materials only to build a home.

Exercise:

Calculate how many dumptruck loads of minimum cleared vegetation are on a lot.
Calculate the amount of concrete in a footing and stem wall or pier.
Calculate the cost of framing materials.
Calculate the cost of siding, trim and roofing materials.
etc. etc. etc.

I don't even know 1 Architect who can quote the actual cost of materials only within 3% today. For that matter I don't even know 1 Architect who can calculate the actual material list today.

'tis true, but there are many who bought prior to 2003, who bought their second home to have for vacations and possible retirement, and they are nowhere near the ditch.

IMHO, you are dead wrong-especially in the major developments along 30A. Alys, Rosemary, Watersound Beach, Seaside, Watercolor, etc are all going to continue to see values shrivel. Too much inventory, too many REO's, too many foreclosures, too many folks not paying HOA dues, etc, etc.

The underlying cost of land was the major driver of the huge spike in values in these areas several years ago. Those land prices continue to crater. Land prices will go back to 2001(or prior) price levels before this cycle is all said and done. Therefore, home prices will continue to fall to. In addition to falling land prices, cost of construction has been falling. Two to three years ago, it cost $250 plus to build an average home in these communities. Now, as noted by AAbsolute, it can cost $150 to $200 to build an average home in these communities. And, these costs may continue to fall (we are potentially facing stagflation or deflation in coming years). Nope, there is a long way to go before prices stabilize--especially in these high end markets.

Fisher is innocent. Fisher doesn't know me. Don't hurt Fisher. Please..

IMHO, you are dead wrong-especially in the major developments along 30A. Alys, Rosemary, Watersound Beach, Seaside, Watercolor, etc are all going to continue to see values shrivel. Too much inventory, too many REO's, too many foreclosures, too many folks not paying HOA dues, etc, etc.

The underlying cost of land was the major driver of the huge spike in values in these areas several years ago. Those land prices continue to crater. Land prices will go back to 2001(or prior) price levels before this cycle is all said and done. Therefore, home prices will continue to fall to. In addition to falling land prices, cost of construction has been falling. Two to three years ago, it cost $250 plus to build an average home in these communities. Now, as noted by AAbsolute, it can cost $150 to $200 to build an average home in these communities. And, these costs may continue to fall (we are potentially facing stagflation or deflation in coming years). Nope, there is a long way to go before prices stabilize--especially in these high end markets.

IMHO, re-read my original post. I was clearly talking about homes outside of the major developments.

IMHO, re-read my original post. I was clearly talking about homes outside of the major developments.

IMHO, you can build for a LOT LESS than $150 per square foot outside the major developments. So, the argument still holds true. Prices everywhere have a ways to go down.

IMHO, you can build for a LOT LESS than $150 per square foot outside the major developments. So, the argument still holds true. Prices everywhere have a ways to go down.

I know this is off topic, but it may have some relevance. I built a home in Point Washington a few years back to try and spread some good will to two decent people. I charged them about $55.50 per square foot and broke even. That's got to be proof that the cost of construction is largely dependant on the cost of labor.

Some workers will welcome the opportunity to work at a fair rate when they want to provide for their family. This economy has humbled some of our neighbors.

AAB, I really appreciate your honesty on building prices. What do you think break even prices would be on that same house today?

AAB, I really appreciate your honesty on building prices. What do you think break even prices would be on that same house today?

IMO, that home where it sits is worth $170,000 today.

The cost of materials only to build that home today in the current International Building Code would be + or - $92,800.