The following is an interesting article titled Doom, Gloom and Reality. The author is discussing St. George Island, but that market is very similar to ours. I lived through the cycles Olivier mentions when I owned a home on Cape San Blas. Time will tell if his predictions are correct.
By Olivier Monod, CCIM
Special to Business Matters
All of us have heard that the real estate market at the coast is depressed - and it is. All of us have heard stories of people making millions of dollars, by accident, after buying a beachfront lot in 1991 for $100,000 - a lot now worth $2.2 million - and these stories are true!
Wouldn't we all be wealthy if we had known long ago what would happen to the Forgotten Coast? We all want a sneak preview of the future, yet it seems impossible to unveil.
Now, returning to the main topic of real estate: Was it really hard to forecast, 15 years ago, that prices would grow by a factor of 22 for a beachfront lot in the Plantation of St. George Island from $100,000 to $2,200,000?
Actually, not. In 1991, wealthy buyers already were paying $2 million plus for beachfront lots in trendier Florida areas. In 1991, demographers could have told you about the forthcoming retirement of baby-boomers. Even then, all of us already knew that the Sun Belt in general, and Florida in particular, was the place to retire. It was a time when the general public started to appreciate nature vs. overdevelopment. We knew all of the elements of the puzzle, but most of us had failed to put them together to recognize the obvious.
Is reading into the future so difficult? Not if you take the time to make a list of determining factors and draw logical conclusions.
Real estate, like most markets, goes through cycles. In my experience, since 1988, we went through three depressed phases. They lasted between six months and two years each. During these times, the prophets of doom-and-gloom were asserting that prices had maxed out and that nothing good would ever come again from the coast. I remember in 1997 when beachfront lots were trading at $350,000, some people thought it was high time to sell before the market collapsed. These lots do now appraise for $2.2 million!
Let's take a broader view to the Florida coastal real estate market. Some buyers are paying between $100,000 and $125,000 per front beach foot in some other areas. This would translate to a Plantation beachfront lot selling for $10 to $12.5 million. Lunacy? No. Reality? Probably yes, in 5 to 8 years.
If our market aspires one day to command such prices, our beaches and region must offer major and unique benefits. What are they?
Here's my list:
Small villages vs. suburbia
Nature vs. man-made
Low density vs. packed housing
Single family homes vs. high rise condos
In short, space is the ultimate luxury. When money is not the object, buyers seek their own private island or by default, very large lots for privacy. The Forgotten Coast offers this commodity. It's just a matter of time before the $12 million buyers discover us. -
Now, let's get back to our future. Of course, today, the coastal market is slow. Therefore, now is the time to buy because you can pick and choose the best values and the best properties for a fraction of the prices they will command in a few years. A beachfront lot worth $12 million seems absurd today in the same way a beachfront lot worth $2 million seemed insane when they were selling for $100,000.
It is a human trait to look elsewhere for the treasures buried in our own back yard. When (not if) the market picks back up, possibly as early as next month and most probably before the end of next year is over, expect beachfront lots to break the $3 million, $4 million and $5 million benchmarks-quickly... and the $10 million threshold is likely to be reached as the new decade begins.
SandcastleSandcastleBeach FanaticTallahassee, Florida342 postsJoined View profileMessageBeach Fanatic
SandcastleBeach FanaticTallahassee, Florida342 postsJoined View profileMessageBeach Fanatic3,919 views
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dsilvardsilvarBeach FanaticMiramar beach307 postsJoined View profileMessageBeach Fanatic
dsilvarBeach FanaticMiramar beach307 postsJoined View profileMessageBeach FanaticWhen (not if) the market picks back up, possibly as early as next month and most probably before the end of next year is over, expect beachfront lots to break the $3 million, $4 million and $5 million benchmarks-quickly... and the $10 million threshold is likely to be reached as the new decade begins.
Shelly..take note!!
This forecast is not only historically accurate but supported by the changing babyboomer demographics.
Market mechanics never lies, just follows the fundamental rules of supply and demand. ad infinitum. Q.E.D.
SHELLYSHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal Insider
SHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal InsiderShelly..take note!!
This forecast is not only historically accurate but supported by the changing babyboomer demographics.
Market mechanics never lies, just follows the fundamental rules of supply and demand. ad infinitum. Q.E.D.
And the author would be THE Olivier Monod, CCIM of Anchor Realty & Mortgage Co. (Cape San Blas), "Your Local Realtors" specializing in waterfront and investment properties. - 4693 Cape San Blas Road (C30-E), Cape San Blas, Florida 32456?? (Article may be an indication that baby needs some new shoes.)
Which reminds me.....Smiling JOE: Got those Walton Stats yet? :confused:
dsilvardsilvarBeach FanaticMiramar beach307 postsJoined View profileMessageBeach Fanatic
dsilvarBeach FanaticMiramar beach307 postsJoined View profileMessageBeach FanaticAnd the author would be THE Olivier Monod, CCIM of Anchor Realty & Mortgage Co.
...and Olly cannot be impartial regardless of his affiliations? He sees the cup half full and you see it...well, we know!
Aside..I do enjoy your posts, Shelly, they really keep the balance on this board that has a tendency toward mutual admiration and 30A exclusivity!!
Smiling JOeSmiling JOeSoWal Expert31,643 postsJoined View profileMessageSoWal Expert
Smiling JOeSoWal Expert31,643 postsJoined View profileMessageSoWal ExpertAnd the author would be THE Olivier Monod, CCIM of Anchor Realty & Mortgage Co. (Cape San Blas), "Your Local Realtors" specializing in waterfront and investment properties. - 4693 Cape San Blas Road (C30-E), Cape San Blas, Florida 32456?? (Article may be an indication that baby needs some new shoes.)No, never received them. I may forgoe posting the Real Trend Report and start posting my own stats so that I can post them when I am ready to post them instead of waiting on Real Trend. I think mine are more useful anyway. ;-)
Which reminds me.....Smiling JOE: Got those Walton Stats yet? :confused:
Cork On the OceanCork On the Oceandirectionally challengedSeacrest Beach2,450 postsJoined View profileMessagedirectionally challenged
Cork On the Oceandirectionally challengedSeacrest Beach2,450 postsJoined View profileMessagedirectionally challengedThe article is great sandcastle and accurately expresses my beliefs on the market. I've been in Florida most of my life and have watched the sustained growth in spite of periodic stalls. If I had purchased real estate more agressively 20 years ago, I'd be sitting in the south of France right now having crepes (again!) on the harbor in Monaco :lolabove: . Ah yes, another happy thought! :floor:
SJ the stats are great. I used to do them and soooo time consuming. can you email me with where you get them? Thanks.
SJ the stats are great. I used to do them and soooo time consuming. can you email me with where you get them? Thanks.
SHELLYSHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal Insider
SHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal InsiderNo, never received them. I may forgoe posting the Real Trend Report and start posting my own stats so that I can post them when I am ready to post them instead of waiting on Real Trend. I think mine are more useful anyway. ;-)
Thx JOE--the stat lists that you posted previously were, in a word, awesome :clap_1: .
Is there maybe something behind Real Trend not providing local stats? The Fed is no longer posting M3 (total US money supply)--coincidence? :idontno:
SHELLYSHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal Insider
SHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal InsiderMarket mechanics never lies, just follows the fundamental rules of supply and demand. ad infinitum. Q.E.D.
I agree DS.
The housing inventory is rising in Florida and across the nation. So the fundamental rules of supply and demand dictate that an increase in supply (housing) with constant (or decreasing) demand (buyers) will DECREASE the equilibrium price.
SlowMovinSlowMovinBeach Fanatic483 postsJoined View profileMessageBeach Fanatic
The housing inventory is rising in Florida and across the nation. So the fundamental rules of supply and demand dictate that an increase in supply (housing) with constant (or decreasing) demand (buyers) will DECREASE the equilibrium price.
Not exactly. The equilibrium price remains constant unless there is a shift in supply and/or demand. The movement of market prices relative to the equilibrium price then creates shortages or surpluses.
If you assume that we began this decade in a situation in which supply did not meet demand, then you would expect to have seen the market price move upwards towards the equilibrium price. You would also expect suppliers to have increased production in response. I think both are a fair description of what we have been seeing over the last few years.
As market prices increase and move closer to equilibrium, a heated market cools. Again, a fair description of the current situation.
...an increase in supply (housing) with constant (or decreasing) demand (buyers) will...It depends on where market prices are relative to the equilibrium point. If market prices have moved beyond equilibrium then the current slowdown may be signaling an upcoming reversal. On the other hand, market prices simply may have jumped higher and quicker than usual...resulting in a short-term retreat as the market 'backfills' and returns to an underlying upward trend. Perhaps we are overextended and a crash has started. Or perhaps housing prices are taking what stock market pundits call a "breather" before moving further up.
Unfortunately, equilibrium is more of a theoretical concept than a calculatable value so there is no quantitative way to answer that question.
SandcastleSandcastleBeach FanaticTallahassee, Florida342 postsJoined View profileMessageBeach FanaticAuthor
SandcastleBeach FanaticTallahassee, Florida342 postsJoined View profileMessageBeach FanaticAuthorI met Olivier Monod of Anchor Realty 15 years ago. He managed properties for several of our neighbors on Cape San Blas. He has grown his business nicely through all of the ups and downs. He recently entered the Tallahassee market. I haven?t seen him in over 10 years, but he still sound as optimistic as ever.
I agree, Cork. My wife keeps reminding me that we should have bought more beach properties and fewer (no) stocks 20 years ago. She wanted to do it and I hesitated :idontno: . At least, we bought one and I really enjoy sitting on that porch drinking a martini.
I agree, Cork. My wife keeps reminding me that we should have bought more beach properties and fewer (no) stocks 20 years ago. She wanted to do it and I hesitated :idontno: . At least, we bought one and I really enjoy sitting on that porch drinking a martini.
PiratePirateBeach Fanatic331 postsJoined View profileMessageBeach Fanatic
PirateBeach Fanatic331 postsJoined View profileMessageBeach FanaticHmmmm.... Reality?
This article presents a very interesting opinion. Here is another opinion that might interest the people wearing rose colored glasses. There are somewhere around 30,000 people in the entire country with a net worth in excess of $10m. These are 2004 numbers but you should check it for yourself. Where are this writers' imaginary buyers going to come from, another planet? How many people will hang around the $5m beachfront when the payment is 50k a month? How many have the staying power? Not many. The scariest part of this is how many beachfront houses there are around the entire coast of the United States? A hell of alot more than even 10 times this number. I keep hearing that 80 percent of the buyers of the homes over 1 million are cash buyers so these 30k must be the people we are talkng about, unless buyers are putting their entire portfolios into 1 beach house :funn: I wonder if the reason these sales might show up as cash is the magical "home equity line" on the primary residence, interest only ARM no doubt. I'm sure no one here knows anyone that has done that. :roll: There are only a small percentage of people who can REALLY afford the prices now, even double the 30k stat and say there are 60,000 people who are capable and it still looks mighty ugly to me. I own a house there (yes, it's off the beach) and love the run up, but the market is out of hand. Credit crunch is comin to town. This is the first time I have been a bear on the market since the early 90's, but these are the reasons houses are sitting on the market. I will have my checkbook out come fall or winter this year. 0-2% fed rate is not a free market, this is what happens when mortgage money is thrown at people. For our next excercise, lets see how many people have a net worth of $1m without their primary residence and crunch that a while........
This article presents a very interesting opinion. Here is another opinion that might interest the people wearing rose colored glasses. There are somewhere around 30,000 people in the entire country with a net worth in excess of $10m. These are 2004 numbers but you should check it for yourself. Where are this writers' imaginary buyers going to come from, another planet? How many people will hang around the $5m beachfront when the payment is 50k a month? How many have the staying power? Not many. The scariest part of this is how many beachfront houses there are around the entire coast of the United States? A hell of alot more than even 10 times this number. I keep hearing that 80 percent of the buyers of the homes over 1 million are cash buyers so these 30k must be the people we are talkng about, unless buyers are putting their entire portfolios into 1 beach house :funn: I wonder if the reason these sales might show up as cash is the magical "home equity line" on the primary residence, interest only ARM no doubt. I'm sure no one here knows anyone that has done that. :roll: There are only a small percentage of people who can REALLY afford the prices now, even double the 30k stat and say there are 60,000 people who are capable and it still looks mighty ugly to me. I own a house there (yes, it's off the beach) and love the run up, but the market is out of hand. Credit crunch is comin to town. This is the first time I have been a bear on the market since the early 90's, but these are the reasons houses are sitting on the market. I will have my checkbook out come fall or winter this year. 0-2% fed rate is not a free market, this is what happens when mortgage money is thrown at people. For our next excercise, lets see how many people have a net worth of $1m without their primary residence and crunch that a while........
SHELLYSHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal Insider
SHELLYSoWal Insider5,763 postsJoined View profileMessageSoWal Insider...and Olly cannot be impartial regardless of his affiliations? He sees the cup half full and you see it...well, we know!
He could...but when it comes to their "product," all salesmen are hardwired to sell the sizzle. I'd be surprised if he didn't say those things.
SlowMovinSlowMovinBeach Fanatic483 postsJoined View profileMessageBeach Fanatic
There are somewhere around 30,000 people in the entire country with a net worth in excess of $10m. These are 2004 numbers but you should check it for yourself.Granted, I limited my "research" on this to Google queries, but I could find no truly reliable information (i.e. IRS or census data, for instance) on the number of households in the US with net worth in excess of $10 million. What information I did find, though, suggested higher numbers.
A new study by Edward N. Wolff, a New York University economist who tracks the distribution of wealth in the United States, found that 4.1 million of the nation's 102 million households had a net worth of $1 million or more last year...Make the wealth cutoff $10 million or more, and 275,000 households qualified in 1998, up from 190,000 in 1995, a 44.7 percent increase.--From "More Wealth, More Stately Mansions," Louis Uchitelle, published in NY Times, 1999; http://web.nps.navy.mil/~relooney/3040_889.htm
While the above was from 1999, I also found the World Wealth Report of 2005 (Merrill Lynch/CapGemini) which stated that the number of millionaires with net worth between $5 million and $30 million worldwide was 774,800 with the US having the highest percentage thereof. They indicated the number has been steadily growing year over year.
http://www.us.capgemini.com/worldwealthreport/
Finally,
The number of superwealthy in the U.S. has surged, with 430,000 households now worth more than $10 million.--Robert Frank, Wall Street Journal, 2005
http://www.realestatejournal.com/buysell/relocation/20050523-frank.html
Unfortunately the Journal did not cite their source for the figure.
RitaRitamargarita brocoliaDune Allen Beach5,207 postsJoined View profileMessagemargarita brocolia
Ritamargarita brocoliaDune Allen Beach5,207 postsJoined View profileMessagemargarita brocoliaNot all are purchased by single parties, therefore that needs to be considered - making the numbers more complicated.
SlowMovinSlowMovinBeach Fanatic483 postsJoined View profileMessageBeach Fanatic
For our next excercise, lets see how many people have a net worth of $1m without their primary residence and crunch that a while........I'm sorry, I forgot to mention this earlier. Net worth is typically defined as liquid assets minus liquid liabilities, including long-term retirement accounts but excluding home equity. Investment property equity, though, is usually included.
Cork On the OceanCork On the Oceandirectionally challengedSeacrest Beach2,450 postsJoined View profileMessagedirectionally challenged
Cork On the Oceandirectionally challengedSeacrest Beach2,450 postsJoined View profileMessagedirectionally challengedHmmmm.... Reality?
This article presents a very interesting opinion. Here is another opinion that might interest the people wearing rose colored glasses. There are somewhere around 30,000 people in the entire country with a net worth in excess of $10m. These are 2004 numbers but you should check it for yourself. Where are this writers' imaginary buyers going to come from, another planet? How many people will hang around the $5m beachfront when the payment is 50k a month? ....
Great links SlowMovin, got to find the time to read them. Just one thing, Pirate. There is beachfront here for less than $5m. In fact there's a beachfront lot in west PC that we're looking at that's significant less than $2M (maybe $1.4 or $1.6). I also just got something on beachfront land in Cape san Blas less than $1M but I would want to do some checking on that with their erosion problem in some areas . Anyway, beachfront can be had for less than $5 million here so we're not to that point yet.
PiratePirateBeach Fanatic331 postsJoined View profileMessageBeach Fanatic
PirateBeach Fanatic331 postsJoined View profileMessageBeach FanaticThanks for correcting me. I was using a figure that was for individuals with a net worth of 30m plus and I apologize. I will use your 400,000 figure and say this. Do you think there are only 400,000 multi million dollar vacation homes owned by individuals from the U.S.? No chance. Do a search on the amount of beach along the U.S. coastline and the amount of property is incredible. Add in mountain homes, river and sound places, the carribean, etc. Nothing I say will sway anyones opinion here, but the posted article seems biased with the backup being that the author thinks so.
I didn't say the beachfront was all 5 million, I feel someone with a multi-million dollar vacation home should have at least several million to invest. Additionally, Panama City isn't in Walton but there were multiple houses on that beach under 500k 3-4 years ago. Cape San Blas loses entire lots right into the ocean that cost over a million, then the owners put the sand back for a hundred thousand and a few weeks later it is gone again. A 30-40 percent discount off a 300-400 percent increase still doesn't look like a good deal to me.
The fact that the area costs less than Naples isn't a reason to buy. There should be some basis for an investment besides the fact that the current mortgage payment is affordable.
CCIM sure is a great training organization. Ever check the cap rate on a beach house? 😱
I didn't say the beachfront was all 5 million, I feel someone with a multi-million dollar vacation home should have at least several million to invest. Additionally, Panama City isn't in Walton but there were multiple houses on that beach under 500k 3-4 years ago. Cape San Blas loses entire lots right into the ocean that cost over a million, then the owners put the sand back for a hundred thousand and a few weeks later it is gone again. A 30-40 percent discount off a 300-400 percent increase still doesn't look like a good deal to me.
The fact that the area costs less than Naples isn't a reason to buy. There should be some basis for an investment besides the fact that the current mortgage payment is affordable.
CCIM sure is a great training organization. Ever check the cap rate on a beach house? 😱
DuneDogDuneDogBeach Lover56 postsJoined View profileMessageBeach Lover
Thanks for correcting me. I was using a figure that was for individuals with a net worth of 30m plus and I apologize. I will use your 400,000 figure and say this. Do you think there are only 400,000 multi million dollar vacation homes owned by individuals from the U.S.? No chance. Do a search on the amount of beach along the U.S. coastline and the amount of property is incredible. Add in mountain homes, river and sound places, the carribean, etc. Nothing I say will sway anyones opinion here, but the posted article seems biased with the backup being that the author thinks so.
😱
I would believe that a lot of beachfront property as well as other high profile property in this country is owned by foreign interests.
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