A commentary on the bubble
- Thread starter GVM
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As an example, I have friends who bought a condo in Waikiki about 8 years ago when they bought it very inexpensively because people thought there was a bubble (or maybe it wasn't as attractive a place to buy yet). Today, it is worth much, much more and they are delighted to have it and use it frequently. I know another person who had a house on the Big Island of Hawaii and they said they couldn't sell it about 8 years ago. So they rented it out instead and are very happy now that they didn't sell it because the price has increased dramatically.
Seems like property around here is well worth it if you can have some patience and not be tied to short-term ups and downs.
Given all the talk about the bubble and the hurricanes, people have to be careful not to think short-term (and to be sure they have good insurance in place!) or over-extend themselves. Other than those caveats, I feel like those of us who bought places here are in very good shape indeed. And, as long as they don't overextend themselves and think longer-term, people who buy here in the future should be in good shape as well. It's a beautiful place and a fantastic community.
Seems like property around here is well worth it if you can have some patience and not be tied to short-term ups and downs.
Given all the talk about the bubble and the hurricanes, people have to be careful not to think short-term (and to be sure they have good insurance in place!) or over-extend themselves. Other than those caveats, I feel like those of us who bought places here are in very good shape indeed. And, as long as they don't overextend themselves and think longer-term, people who buy here in the future should be in good shape as well. It's a beautiful place and a fantastic community.
All very interesting... my question is: How many millionaires (billionaires) can there be? Everytime I see another million dollar beach place going up, I wonder who are these people that are buying these million dollar second homes? Naples has the appeal to the really wealthy, and it's been booming with new development for a long time. There are also many other "hot spots" at beaches across both coasts and the gulf-- and even in Mexico! (Of course, there are no other better beaches anywhere than SoWal, but as you mentioned, some people are in it for the golf and year-round weather-- nobody can deny that SoWal really slows down in winter) Either there is an endless supply of very wealthy (conservative) investors, or there is rampant speculation that inevitably culminates in a bursting bubble. I tend to think the speculation is a major part of what's going on.
I think there is some short-term enthusiasm that may slow a bit, but only for a bit.
When we consider who has lots of money, I think there's going to be an influx of money to a generation of people whose relatively well-off parents die and who leave them quite a bit of money. The people who inherit the money will have paid for most or all of their current home and will see investing in a second home as a great option for using their inheritance. It would be a wonderful concrete and happy gift from their parents and a sweet way to remember them.
And there are still plenty of very nice properties within a very short walk to the beach (including 3-4 bedroom places, some 2-3 stories if you like big places) around that are under a million dollars. My recommendation for people who are buying for the long-term is to remember that once you buy the place, you have to be able to afford the monthly bills, taxes, and upkeep without worrying month-to-month or depending too much on rentals to pay the bills (in case rentals slow down due to storms during some periods). This way, you don't have to worry about selling your property during a temporary down-turn in the economy or housing market. If you can do this, then SoWal is a rare and unique beautiful beach haven (particularly because it has a slower season, the weather is reasonable all year round, and it won't have malls, high rises, or Wal Marts along 30A -- yet if you want them you can drive 20-30 minutes and find them).
I don't know what advice to give people who want to buy and flip right now --realtors and economists know more about the wisdom of that strategy right now.
When we consider who has lots of money, I think there's going to be an influx of money to a generation of people whose relatively well-off parents die and who leave them quite a bit of money. The people who inherit the money will have paid for most or all of their current home and will see investing in a second home as a great option for using their inheritance. It would be a wonderful concrete and happy gift from their parents and a sweet way to remember them.
And there are still plenty of very nice properties within a very short walk to the beach (including 3-4 bedroom places, some 2-3 stories if you like big places) around that are under a million dollars. My recommendation for people who are buying for the long-term is to remember that once you buy the place, you have to be able to afford the monthly bills, taxes, and upkeep without worrying month-to-month or depending too much on rentals to pay the bills (in case rentals slow down due to storms during some periods). This way, you don't have to worry about selling your property during a temporary down-turn in the economy or housing market. If you can do this, then SoWal is a rare and unique beautiful beach haven (particularly because it has a slower season, the weather is reasonable all year round, and it won't have malls, high rises, or Wal Marts along 30A -- yet if you want them you can drive 20-30 minutes and find them).
I don't know what advice to give people who want to buy and flip right now --realtors and economists know more about the wisdom of that strategy right now.
Hey everybody! Chill out!!! If you bought real estate in the South Walton area for a quick killing that was kind of silly. Who could spend any time here and not fall in love with this place. I've traveled all over the US as well as many places around the world and constantly compare every place I visit to 30-A. Very rarely do I ever find our little community suffers by the comparison.
As fare as real estate values go, just look at the history of property values here over the last 10-15 years. It's a pretty impressive record of appreciation and I don't see anything significant that would impact this long term record going forward. Yes, the storms of the last 12 months have put the real estate market on "pause" for a while but this area has survived such storms in the past and real estate has continued to increase in value.
In fact, I believe this area is just now entering a "golden age" in terms of property appreciation. I have been vacationing here since 1985 and my sense of the situation is that we only now reaching a critical mass in terms of the size and amenities necessary to establish a reputation as one of the United States elite vacation destinations.
Consider the valuable infrastructure improvements currently in the works such as the new international airport and highways. I don't think you can underestimate the impact of these transportation improvements. They will open up large new markets for our communities throughout the Midwest (Minneapolis, Chicago, Detroit, Cleveland, Pittsburg) and Northeast (DC, Philadelphia, New York and Boston) which currently have only limited access and therefore limited knowledge of our community. I believe that in 5-10 years all that will change and our little community will become a highly popular destination for this large weathly winter warmth seeking population. Then just wait and see what happens to real estate prices then!
If you doubt the impact of an effective transportation network just look at Atlanta. At the time the airport (the first one) was first built both Birmingham and Atlanta were competing for this development. Both cities were about the same size at the time. No offense to Birmingham. I love it there. But, Atlanta won the competition and the rest is history.
Anyway, if you own real estate here because you love it relax!!! You can enjoy the beach and ambiance for the next 5-10 years and retire in comfort. At least that's my plan and I'm sticking to it!
As fare as real estate values go, just look at the history of property values here over the last 10-15 years. It's a pretty impressive record of appreciation and I don't see anything significant that would impact this long term record going forward. Yes, the storms of the last 12 months have put the real estate market on "pause" for a while but this area has survived such storms in the past and real estate has continued to increase in value.
In fact, I believe this area is just now entering a "golden age" in terms of property appreciation. I have been vacationing here since 1985 and my sense of the situation is that we only now reaching a critical mass in terms of the size and amenities necessary to establish a reputation as one of the United States elite vacation destinations.
Consider the valuable infrastructure improvements currently in the works such as the new international airport and highways. I don't think you can underestimate the impact of these transportation improvements. They will open up large new markets for our communities throughout the Midwest (Minneapolis, Chicago, Detroit, Cleveland, Pittsburg) and Northeast (DC, Philadelphia, New York and Boston) which currently have only limited access and therefore limited knowledge of our community. I believe that in 5-10 years all that will change and our little community will become a highly popular destination for this large weathly winter warmth seeking population. Then just wait and see what happens to real estate prices then!
If you doubt the impact of an effective transportation network just look at Atlanta. At the time the airport (the first one) was first built both Birmingham and Atlanta were competing for this development. Both cities were about the same size at the time. No offense to Birmingham. I love it there. But, Atlanta won the competition and the rest is history.
Anyway, if you own real estate here because you love it relax!!! You can enjoy the beach and ambiance for the next 5-10 years and retire in comfort. At least that's my plan and I'm sticking to it!
I can say my property is "worth" X Million, but that figure is just smoke and mirrors until the cash is in the bank. Any property is only "worth" (after tax, title, and shipping) what the biggest fool will pay for it.
There can be no denying that many Florida (and nationwide) properties are heavily leveraged with cheap money by speculators looking to make a killing as quickly as possible. For the past year or so, as each second ticked by and their properties' "worth" increased, speculators have been getting very itchy. Their gut is telling them to pull the trigger and cash in....but their greed won't let them.
Florida's prices are getting toppy and many of these speculators are now playing a game of chicken. They're up to their eyeballs in "designer" loans to support their "investments" and are teetering on the edge. If some "event" should occur that upsets the balance in their life, they will panic and frantically try to unwind their investment. When this "event" only happens to a single individual, the "bubble" won't burst--but what if this "event" is catastrophic enough to touch tens of thousands?
Look around Florida (including SoWal). "For Sale" signs are popping up (and staying up), open houses, balloons, banners, the words "reduced" and "quick sale" are starting to return to real estate ads. Realtors, who have multiplied like lab mice in the past couple of years, are scrambling all over each other to find listings in the $200,000 range (their inventories are FAT with million dollar homes, condos and pre-constructions that linger).
I don't believe there are enough old, rich baby boomers in the entire universe to fill all the speculative properties currently in investors hands. The phrase "long term investment" is lost on the thousands and thousands of real estate speculators who are snapping up 2-year option ARMs that they secured with the help of CPA Moms:
http://www.cpamomsunlimited.com/LettersMortgageLoans.htm
The music is playing, they are circling the chairs....remember the uneasy feeling you felt in the pit of your stomach when you believed the music played just a little too long?......speculators who believe they are overextended in real estate feel that way as each new day dawns. One thing is for certain--the music will stop--and some of them will lose the game. (For those who follow the economy, it's extremely entertaining to watch this thing play out.)
There can be no denying that many Florida (and nationwide) properties are heavily leveraged with cheap money by speculators looking to make a killing as quickly as possible. For the past year or so, as each second ticked by and their properties' "worth" increased, speculators have been getting very itchy. Their gut is telling them to pull the trigger and cash in....but their greed won't let them.
Florida's prices are getting toppy and many of these speculators are now playing a game of chicken. They're up to their eyeballs in "designer" loans to support their "investments" and are teetering on the edge. If some "event" should occur that upsets the balance in their life, they will panic and frantically try to unwind their investment. When this "event" only happens to a single individual, the "bubble" won't burst--but what if this "event" is catastrophic enough to touch tens of thousands?
Look around Florida (including SoWal). "For Sale" signs are popping up (and staying up), open houses, balloons, banners, the words "reduced" and "quick sale" are starting to return to real estate ads. Realtors, who have multiplied like lab mice in the past couple of years, are scrambling all over each other to find listings in the $200,000 range (their inventories are FAT with million dollar homes, condos and pre-constructions that linger).
I don't believe there are enough old, rich baby boomers in the entire universe to fill all the speculative properties currently in investors hands. The phrase "long term investment" is lost on the thousands and thousands of real estate speculators who are snapping up 2-year option ARMs that they secured with the help of CPA Moms:
http://www.cpamomsunlimited.com/LettersMortgageLoans.htm
The music is playing, they are circling the chairs....remember the uneasy feeling you felt in the pit of your stomach when you believed the music played just a little too long?......speculators who believe they are overextended in real estate feel that way as each new day dawns. One thing is for certain--the music will stop--and some of them will lose the game. (For those who follow the economy, it's extremely entertaining to watch this thing play out.)
SHELLY said:
I know many "fools" who bought property here long ago, and people said they were stupid. I wonder, who is really the fool?
Are you married to Skier?
Sounds like some people fully support the bubble (which may or may not exist for the short term). Maybe they want to help promote a panic and bring prices down so they can swoop in and buy some property(ies) to sell later at a higher price. Call me crazy, but I'm keeping my cottages on 30A. They're so sweet and they make me happy regardless of any potential bubble. And owning them keeps me from wasting money in ways that don't bring happiness or that don't add value...
Smiling JOe said:
You guys know I agree with all the things Shelly has been saying. I am not married to her, but my wife is even more convinced of the bubble than me or Shelly.
The "fools" JOe mentions that bought long ago were not SPECULATORS, they were owners that used the properties. The market changed dramatically over the last 3 years with rampant speculation. Shelly is talking about this huge amount of speculative buying that has occurred over the last few years. This is a much different scenario than the buying that occurred in the "old days" that you old timers talk about.
Many, many of the people I know that own property in SoWal bought numerous properties over the last 3 years (up to 10 in some cases), not to grow old in and enjoy with their kids and grandkids, but to make a quick buck. Some of these people overextended (shelly's scenario) and they need to get out soon. These people will drop prices until they sell and it will drive prices down across the board. You are blind if you don't see the current trends in the market place.
For those of you that want to keep your homes long term, that's great. You won't get hurt if you can afford the home you live in. You won't take a loss or make a gain until the "cash is in the bank." But, a large chunk of the buyers in watercolor, watersound, rosemary, etc. are not long termers. If they were, you wouldn't have over 200 properties for sale in Watercolor, 80 plus in watersound, 50 plus in rosemary, 50 plus in seaside, etc. There is a mass exodus that wants to happen, the problem is, there are no buyers. My realtor says the market is DEAD and so do my neighbors and friends that are trying to sell their homes, condos, and lots. And, I did confirm that the folks at Alys are making calls to drum up business. When was the last time a major developer along 30A had to go looking for buyers? Just last year, Arvida had 75 to 100 people in each lottery for condos and lots. SPECULATORS. No more.
And those of you that actually think that Shelly or I could create a panic that would result in bargains that we would somehow take advantage of are crazy. You have mighty big imaginations. No individuals could create panic in the market. The market is moving. If you can't see it, you need to open your eyes. You can pie in the sky all day about ever increasing returns, but the current facts don't back you up.
Also, the hurricanes have made a bad situation even worse. Everyone I bump into at work or around town over the past few days tells me I am crazy if I keep my house in Florida. Friends that had an inkling to buy a beach home before the first of the hurricanes last year, no longer have an interest in beach property. Many say they will buy in the mountains or on a lake instead.
We have definitely had a change of heart since Katrina blew through the gulf last weekend. I don't want to wake up one day and see my house leveled along with the rest of 30A. The insurance costs are excorbitant now and they will only go up. And, my property taxes are outrageous. I am no longer sitting on the fence. I am a SELLER now. I want to take my money and run. Become a renter like I used to be. Still enjoy the area, but not have to worry about hurricanes, taxes, insurance, etc. Simplify my life--one home should be enough.
Unfortunately, I don't know if there are any buyers out there.
skier said:Unfortunately, I don't know if there are any buyers out there.
Always - if the price is right. If you are really a seller you will find out what that price is. ;-)