Real Estate Supply

prime real estate isn't a lot different from blue chip stocks, except that you can have more fun on the beach than reading your monthly brokerage report.

But the fun ends when you have to board up the windows, tear out the drenched carpeting and deal with insurance adjusters; or you can sit in your recliner, sipping a martini while reading the brokerage report--and if you want to go to the beach or anywhere else in the world, rent a place.

I don't know who your boomer friends are but my booming buddies would dearly LOVE a condo on the beach.

So what's stopping them from buying one??

So what's stopping them from buying one??

Simple answer: Money.

The ones that have enough already own one or more. The ones that don't have enough dream of owning one.

Personally, I'm working towards having a condo in Colorado and JUST one or two somewhere here on the coast.

But the fun ends when you have to board up the windows, tear out the drenched carpeting and deal with insurance adjusters; or you can sit in your recliner, sipping a martini while reading the brokerage report--and if you want to go to the beach or anywhere else in the world, rent a place.

Actually, all that's pretty easy to deal with in a condo. Just don't sit on the board. Its a house where you're on your own. Been there, done that.

You must own a lot of stocks. Anywhere in the world, huh - anytime you want to go? I've always wanted to see Hong Kong, the Great Wall of China, an around the world cruise and that's just the first couple months. So I can sell my real estate and travel till I'm dead.

Now if I run out of money before I'm dead, I'm going to blame you.

Simple answer: Money.

Local RE types tell us boomers are FLUSH with cash and they ALL want to come to the "undiscovered" panhandle--so I guess that's not always the case--a bit of "puffery" I suppose.

Excuse me for bucking the cynical posts, but thinking of one's home (primary or otherwise) as an investment is sound financial planning. Well located real estate has been and will continue to be one of the most successful investments one can make, if only one can come up with the initial capital. California is the nation's most expensive real estate market, yet has remained a place where well located properties continue to appreciate at a higher rate than anywhere in the nation. South Walton will reflect this trend in the long run, so long as it protects its natural resources and quality of life. The best real estate in the world is along coastlines and South Walton offers one of the world's most beautiful.

Shelly, the real estate world doesn't need another cheerleader, but you are entirely too cynical. Real estate trends are much more resilient that you seem to believe and good real estate locations (read = coastal areas) seldom experience more than a temporary lull in market conditions. You could look it up.

Interesting letter from a pre-construction condo "investor" and what happens when it comes time to come up with the mortgage payments.

Gee Whiz--you mean I have to pay for these condos?

You must own a lot of stocks.

Actually, I'm diversified (Domestic/Int'l Stocks/Bonds; RE; REITs; Utilities; Precious Metals; CDs & some cash)

Well located real estate has been and will continue to be one of the most successful investments one can make, if only one can come up with the initial capital.

But what happens if, after scratching up "initial capital," one can't maintain the mortgage payments, taxes, insurance, maintenance, utilities or feed the kids? Lots of folks found they can come up with the "initial capital" (80/20 piggyback, subprime loan) to "buy" more house than they need, but a slowing RE environment makes that investment far too risky, especially when one's primary family residence is at stake.

Excuse me for bucking the cynical posts

Please do ! As an observer of real estate market trends and behavioral investing I enjoy reading posts from real estate bulls. <seriously>

But what happens if, after scratching up "initial capital," one can't maintain the mortgage payments, taxes, insurance, maintenance, utilities or feed the kids? Lots of folks found they can come up with the "initial capital" (80/20 piggyback, subprime loan) to "buy" more house than they need, but a slowing RE environment makes that investment far too risky, especially when one's primary family residence is at stake.

Shelly, the same thing will happen to those folks as the people who borrowed on their stocks to buy more stocks back in 2000. However, that does not prevent primary residences from being sound investments. They can be excellent investments and sometimes the profits can be tax free.

I am beginning to believe that you are a stock broker. :funn:

Shelly, the same thing will happen to those folks as the people who borrowed on their stocks to buy more stocks back in 2000. However, that does not prevent primary residences from being sound investments. They can be excellent investments and sometimes the profits can be tax free.

An obvious point SJOe. Thanks for making it. The % of people purchasing in SoWal that might fit shelly's scenario would be very small. (I would think)

Local RE types tell us boomers are FLUSH with cash and they ALL want to come to the "undiscovered" panhandle--so I guess that's not always the case--a bit of "puffery" I suppose.

About 6 months ago I discussed the market with a local RE agent who I would say is well entrenched, knowledgable and honest. We talked about cash buyers, who are the Holy Grail in markets of million-dollar-plus homes. Most of the time -- and this is not as true perhaps as it was five years ago, but I still believe it is generally true -- buyers of $1 million houses are cash buyers. Or will be again. Especially secondary homes.

Well, as of six months ago those cash buyers weren't showing up. Logic tells you that their return will happen, but they will trickle into the market, not flood it. For the market to be in a healthy balance again, we have to go back to fundamentals, which mostly means cash or almost-cash buyers. And we WILL get them. Slowly. And those condos being built will sell off. Eventually. But I think it's going to be a long process.

Please do ! As an observer of real estate market trends and behavioral investing I enjoy reading posts from real estate bulls. <seriously>

Donna didn't sound like a "bull" in her post to me. She may or may not be, but one thing for sure, she is one well-informed, common-sense person who approaches problems with an attitude that things can get done and she is in there willing to help out however is needed.

Read through her posts on all subjects and you will learn a lot, but not necessarily on bullishness.

I would like to take this opportunity to thank all of you for bothering to post and share your knowledge and experiences. Everyone knows about diversifying, but many of you have brought out interesting points here and there that I had not thought about. Keep them coming.

And a successful New Year to you all - no matter how you define "success".

... but I still believe it is generally true -- buyers of $1 million houses are cash buyers. Or will be again. Especially secondary homes....

Recently I read a brief article in Florida Realtor, Jan 2006, p8, entitled "Mortgage Free," which stated that the US Dept of Housing and Urban Development and the US Census Bereau reported "that close to 40% of the nation's residential properties do not have mortgages." This covers owner-occupied homes and rentals. The name of the report is "Residential Finance Survey: 2001."

I know that number has changed since in the last five years due to many people taking out home equity loans, but I thought the article was relevant to this discussion. You can learn more at www.HUD.gov

Husband and I had a good laugh at the idea of me/us being "bullish" investors. We are quite conservative and highly diversified, believing in diversified long-term high yield mutual funds and "blue chip" stocks combined with bonds and cash instruments, real estate holdings via the strategy of location/location/location and contained in low-interest, fixed-rate mortgages, absolutely no debt but for those mortgages, and having an annual budget that we live well within at all times. We have learned from friends more affluent than us what the very wealthy have always known, that one can have many of life's luxuries at very minimal or even no cost. For example, we travel often and usually first-class, seldom purchasing an airline ticket, because we put every possible expense on a credit card offering air miles and pay the balance each month. I enjoy a week at Canyon Ranch every year, compliments of a little investment portfolio that yields the cost of the trip and then some, an investment made with that goal in mind. We are not necessarily market savvy investors, but we like to sleep nights and plan to fully retire early in life.

Back to the subject at hand...I believe that South Walton has yet to see its real estate values peak. That will come with the advent of the new international airport and as baby boomers seek quality of life retirement places without the necessity of proximity to major employment opportunities. Our species will always be drawn to coastal areas, our attraction to the primordial soup. The largest concentration of our national population and the most highly educated and highest income segment is largely centered along the country's coastal areas. And when this occurs, the stodgy naysayers of the investment world (probably entry level stockbroker types and insurance peddlers) will be sinking into their firmly planted footprints in the sand, still screeching, "Chicken Little is right!" You know the real estate investors' prayer, "Please, Lord...give me just one more real estate boom and I promise not to p--- it away this time." :clap_1:

Great post Donna - one of the BEST I've read in this Forum :clap_1:

Great post Donna - one of the BEST I've read in this Forum :clap_1:

No doubt. Words to live by right here:

We are quite conservative and highly diversified, believing in diversified long-term high yield mutual funds and "blue chip" stocks combined with bonds and cash instruments, real estate holdings via the strategy of location/location/location and contained in low-interest, fixed-rate mortgages, absolutely no debt but for those mortgages, and having an annual budget that we live well within at all times.

:clap_1: :clap_1: :clap_1:

Back to the subject at hand...I believe that South Walton has yet to see its real estate values peak.


Go Donna! Go Donna! Go Donna!

I know there are many more people out there who do and will believe the same....(because it's true!).

..... And when this occurs, the stodgy naysayers of the investment world (probably entry level stockbroker types and insurance peddlers) will be sinking into their firmly planted footprints in the sand, still screeching, "Chicken Little is right!" ....

There is one thing that can scare away potential buyers and that is "insurance." What if you buy and then your insurance company drops your coverage. I have read that some owners are not going to insure their property and take a chance that nothing happens. We certainly couldn't afford that chance.

There is one thing that can scare away potential buyers and that is "insurance." What if you buy and then your insurance company drops your coverage. I have read that some owners are not going to insure their property and take a chance that nothing happens. We certainly couldn't afford that chance.

Many Gulf Front owners can afford this. Many of the Gulf front homes are older, and the land may be worth more with a clean slate.

We are quite conservative... absolutely no debt but for those mortgages, and having an annual budget that we live well within at all times.

Excellent strategy! As a "quite conservative" investor, I'm betting you don't hold a fistful of pre-construction condo contracts? I'd be interested in hearing your personal thoughts (not the rah-rah real estate slant) on current preconstruction sale investments and the condo market glut along the panhandle. Do you envision y-o-y double-digit appreciation in these completed units (and resale condos) over the next couple of years--or ever again?

Also, if you envision SoWal built out (and up) with affluent communities (of ever-increasing property appreciation) populated with folks who don't have to work for a living, where are the folks who will be required to service this booming population (i.e., non-affluent people who DO have to work for a living) supposed to live?

Also, if you envision SoWal built out (and up) with affluent communities (of ever-increasing property appreciation) populated with folks who don't have to work for a living, where are the folks who will be required to service this booming population (i.e., non-affluent people who DO have to work for a living) supposed to live?

Yeah, I'm sure developers are too dumb to realize there will eventually be opportunity to make money on these types of products to serve that need further inland. You're right, no affluent communities that I can think of out there seem to have service workers available to support them from surrounding communities that are more affordable. That could never happen!

Just seeing what it's like to be a cynic.......I think I like how it feels to be positive better!

Recently I read a brief article in Florida Realtor, Jan 2006, p8, entitled "Mortgage Free," which stated that the US Dept of Housing and Urban Development and the US Census Bereau reported "that close to 40% of the nation's residential properties do not have mortgages." This covers owner-occupied homes and rentals. The name of the report is "Residential Finance Survey: 2001."
I know that number has changed since in the last five years due to many people taking out home equity loans

Personally I think Florida Realtor is REALLY going out on a limb with this ditty--using 2001 figures?? -- Now that's a stretch! (I see you caught that too!)

Three things come to mind:

1) LOTS of homes have changed hands since 2001

2) many buyers would have been CRAZY to have paid cash when the banks were essentially giving money away in the last couple of years.

3) From 2001 to 2004 homeowners have pulled $330 Billion out of their homes and another $160+ Billion predicted for the year 2005.

My guess is that Florida Realtor reporters must have all been on vacation in December and had some high school intern come up with that "timely story." :funn: