Back from vacation--market looks very soft

Discussion in 'Real Estate' started by skier, Jul 20, 2005.

  1. skier

    skier Beach Lover

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    Hey guys, back from my extended vacation on the gulf coast. It was great except for being chased away for three days by a guy named Dennis.

    What I noted during my time in on 30-A is a continued softening of the market. While a several high dollar homes have sold over the last couple of months in Rosemary, Seaside, Seacrest, Watercolor, Grayton, etc, the number of new listings hitting the market far exceeds the number being sold. The inventory is building rapidly and those that need to get out of the market are lowering asking prices dramatically. I saw some homeowners drop prices twice just over the past four weeks. Some price decreases over the last few months are in excess of 20%. In Watercolor, there were approximately 125 properties on the market in mid-May. Today the number approaches 180 (that's between 20 and 25% of the total units!!!!). I think Rosemary has close to 100 properties on the market, Seaside 40ish, etc, etc. I believe the inventory growth situation is similar up and down 30-A. That's a bit scary to me. Are all of these folks selling because they need to (are they flippers that never intended to own long term or multiple property owners that now need to dump some investments), are they simply trying to cash out, or are they just testing the market?

    I also tried counting the number of properties on the MLS from Sandestin to the east end of 30-A. There are over 700 properties for sale in excess of $1.5 million and another 1000 plus in the $750k to $1.5 million range. At recent rates of sale (based on Walton County tax appraiser site), that makes for about 4, 5 or more years of inventory (as opposed to less than a years inventory last year) of these high value properties and the number is growing weekly. My figures might be off because I am not privy to all the facts that a real estate agent is so someone should check my numbers.

    I do believe the market is very desirable and sales will pick up once the prices fall enough and the market stabilizes. I heard a few potential buyers say that they were waiting on the sidelines until things "bottom out" in terms of prices.

    Don't want to start another war, just looking to see how others see the current market.
     
  2. lollygal

    lollygal Beach Fanatic

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    So glad you're back with such upbeat info, Skier . . . :blink:
     
  3. skier

    skier Beach Lover

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    Just trying to report what I saw and nothing else and get others perspectives. Reality, not hype. I wish the facts were different. This forum appears to be for the discussion of real estate sales and development. That's all I am trying to discuss in a fair and honest way.

    Other than the Dennis related threads and the restaurant reviews, I believe the last thread I started regarding a bubble was the most hotly debated and widely viewed thread on the website. The debate was informative on both sides, included some fun, and was civilized most of the time.

    I look forward to hearing the opinion of others more in tune to the market than I am.
     
    Last edited: Jul 20, 2005
  4. Philip_Atlanta

    Philip_Atlanta Beach Lover

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    I checked the MLS system and only found 94 properties in Watercolor (I'm not sure where your numbers come from or if perhaps I searched wrong). I don't know how many units are in Watercolor, but I'd guess somewhere around 1k, so around 10% are up for sale. In comparison, my subdivision in the relatively flat Atlanta market currently has about 10% of the homes on the market (a sample of 700 homes).

    I'd chalk it up to we are in the height of the selling season and plenty of people are fishing all across the country.
     
  5. RiverOtter

    RiverOtter got any pics?

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    Things do seem quite skier :idontno:
     
  6. skier

    skier Beach Lover

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    Philip,

    I get the list of properties directly from Arvida sales (it only includes listings by Arvida and not other realtors) and it includes about 120 properties--land, condos and homes. The rest I got by going to Destin Properties website and counting those listed by other agents. Its at least 180. Not sure why the MLS you were looking at had so few of the total listings. In terms of total units, there will eventually be about 1k, but Arvida still has a lot of unsold lots in phase IV and many lots it still owns in Phase III. So, in terms of non-Arvida owned units, the inventory is in the range of 20-25%.
     
  7. Philip_Atlanta

    Philip_Atlanta Beach Lover

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    Hmm. Sounds like you have more accurate information then. Perhaps Arvida doesn't list each individual property in the system. In that case, then all I can say is 25% inventory is a rather daunting number, especially if you are a flipper and you need to unload. I'm interested to see more responses to this thread...
     
  8. skier

    skier Beach Lover

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    And the Arvida listings for Watersound exceed 40. There are MANY others listed by other agents/brokers.
     
  9. kurt

    kurt Admin Staff Member

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    Welcome back. Why is it scary to you? I thought you weren't concerned about your own situation?


    Bubbles, hurricanes, sharks, erosion, dune destruction, and cuisine are popular. :lol:
     
  10. DBOldford

    DBOldford Beach Fanatic

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    I am a homeowner (house not on the market nor are we in the market for a purchase) and certainly don't think of this board as a real estate guide. What we enjoy is hearing about the condition of the beaches, getting to "know" others who enjoy or live in South Walton County, and seeing the photos since we can't be there as often as we might like. We like the restaurant reviews and the occasional seafood recipe, too. The board has been especially helpful to us for opportunieis to identify and patronize local businesses, since we live elsewhere. Kurt's advertising and virtual tour of our home has offered great results in combination with our rental/management company. And I can't even say how important this board has been as we watch storms and try to assess their aftermath accurately or how our property fared.

    What I have seen over the past few weeks is a number of postings from individuals who seem to have lowering real estate prices in the area as their objective. The claims are not based on credible evidence and it appears that several of those posting wish to create a panic situation so that property prices drop. Could it be there is some self interest involved here?

    Well located real estate will always hold its value. Don't be fooled by this kind of unsubstantiated hype. And those waiting for prices to go down may be crying crocodile tears a year from now when a slight correction occurs and interest rates have gone up even more. The speculation in preconstruction condominiums will cool by virtue of its own dynamic. But this is a specific niche in the market there. Keep your eye on the ball.
     
  11. TooFarTampa

    TooFarTampa SoWal Insider

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    I agree with you that the market has softened. It doesn't seem like it's a bad thing, though; these kinds of gains could not continue and eventually the investors were going to go away. Meanwhile, nearly every property owner in the area who bought a year or more ago is looking at significant paper gains and a staggering number are looking to cash in. So everyone put their house on the market at once (or it seems like it). Some may have had to, many were testing the market, some just thought some quick cash would be nice.

    Those paper gains aren't real. It's not going to hold up in the short term. There are too many sellers and not enough buyers at those prices, especially given the multiple, nationally publicized warnings of a bubble. Most of the sales along 30-A are second homes or investment properties. People can wait a couple years for the second home; they want to see what the prices end up doing. As far as investment -- well, you can't usually cover costs with rental income, and if the prices aren't continuing to climb, where is the short-term investment?

    So of course it is a buyers' market. And it needs to stabilize.

    Only those who are pure investors and can't really afford their property are the ones who should be scared. It might take two or three years to weed all those people out of the market. Predictably, they will lower their prices to make their homes more attractive in a huge sea of listings so they can get out.

    I'll admit it -- we are investors. But something funny happened while we were watching the prices rise. We fell in love with the area. :wub: Absolutely fell in love with it! We have a house (on the rental program) and also a lot 50 yards from a walkover in Seagrove. We are now emotionally attached and instead of thinking of selling either of them, we are dreaming of long-term involvement. Fun family gatherings, vacations in the summer and long weekends when we can. We are thinking of, eventually, building our own retirement home in Seagrove. SoWal has that kind of effect on people.

    This devotion is a lot of work and for now means a negative cash flow. But that's OK. Because once we get out we know we won't be able to get back in.

    That's the inherent value in the area -- it's a winning combination of the beaches, the emerald water, the small-town feel and most of all, the people. As long as it is not allowed to become another Destin (let's hope the county understands this) and we don't have a 20-year devastating cycle of hurricanes, I think we'll be OK in the long term. The baby boomers are not a myth and neither is the new airport. I am looking for prices to stay fairly stable for awhile but rents to go up. Those who absolutely have to sell now will have to lower their prices, but unless they just bought they should still walk away with some nice profits.
     
  12. kurt

    kurt Admin Staff Member

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    Another winning entry ftom TFT. :clap_1:
     
  13. skier

    skier Beach Lover

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    Kurt,

    The scary part of the housing issue is not related simply to SoWal. I am more worried about the bigger housing market in the US and SoWal is just a small piece of the bigger picture. Rapid declines in housing prices would not be good for the economy. Personally, related to my own investment in Fla, I am not scared.

    TFT,

    Very well said.
     
  14. kurt

    kurt Admin Staff Member

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    Don't forget to relax. At least when you visit us. ;-)
     
  15. phdphay

    phdphay Beach Fanatic

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    Agreed. We adore this place!
     
  16. STL Don

    STL Don Beach Fanatic

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    TFT--very well said and quite balanced.

    Skier--too much doom and gloom
     
  17. drsvelte

    drsvelte Beach Fanatic

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    An informative and timely thread. I appreciate the perspectives of both TFT and Skier. I love the one year doubling of my home's value (on paper :blink: ) as much as anyone, but that's clearly not sustainable. Skier's numbers don't suggest doom and gloom, just a sense of reality.
     
  18. Philip_Atlanta

    Philip_Atlanta Beach Lover

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    Agreed - I don't think Skier's post is "doom and gloom" - simply putting out some numbers to ponder. Clearly, 20-25% of the properties on the market would not be considered "healthy". I don't consider the properties that I own pure investments (there are intrisic values outlined in TFT's post); however, being informed about the market we are in is quite useful information.
     
  19. Linda

    Linda Beach Fanatic

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    TFT - My sentiments exactly!
     
  20. Camp Creek Kid

    Camp Creek Kid Christini Zambini

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    I know a family with 3 homes on the market--two investments and their current permanent home. Their permanent home is for sale at a ridiculous price and they know it. My friends hadn't intended to put their home on the market until their neighbors put their house up for sale at an even more ridiculous price.

    I imagine that there is a lot of this going on. My friends are in no hurry to sell and they won't sell unless they get the ridiculous price they're asking. Their plan is to live in whichever of the three houses doesn't sell.
     

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