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skier

Beach Lover
Mar 7, 2005
116
0
In response to Bob on property flippers thread--

I hope you aren't betting your life savings on the up, up and up theory. I agree wth pg0178. The demographiscs and prices and inventory don't add up to any more growth. In fact, all the signs point to a nasty fall. Any historical runup in stocks, real estate, bonds, gold, silver, etc. like the current runup in real estate has ALWAYS historically ended in a crash. If you own property, but your life, net worth and living don't depend on these high prices, you will be fine. But, watch out if you're betting the farm.

The market in SoWal isn't just frothy, there is "irrational exuberance" abounding with all of those that don't see the warning signs staring them in the face.

Within 12 months, come back and read these posts by us pessimists (I believe most of us on the pessimistic side are trained financial professionals). I hope you can call me chicken little at that time, but I wouldn't bet on it. 100% appreciation over the course of a year of two is not reasonable. Those that have been in for a couple of years should be okay. those that got in the last 12 to 18 months will get slaughtered if they were counting on flipping at a profit and they don't have the staying power to hold the property (or in the case of some of the developments, heaven forbid that must build a house within 2 to 3 years of purchase).

I remember having these exact same conversations with the stock market Bulls in 1999. They were sure the model had changed forever and that the old ways of looking at the market were no longer valid. They laughed at me for putting my money in money market funds. they weren't laughing in 2000/2001. And, look at the market since the crash. It's basicaly been flat for 5 years. Look at Japan. Stagnant for 20 years after huge runups in real estate and then a crash. The current runup looks too good to be true--so it probably is.

All that said, I still love my home in SoWal.

good luck.
 

Buckhead Rick

Beach Lover
Feb 15, 2005
140
5
Keep it up Skier, there is nothing like a good panic attack and front page stories in the press to make me feel the real estate market is still fine.

This market had its roots in the 1930's. the children of the depression were the world greatest savers, and they are now making the greatest wealth transfer in history to me (actually to other baby boomers, my Mom and Dad didn't have much), as they die and those baby boomers believe in the Mark Twain quote of " it is not the return ON my money, it is the return OF my money" that I am concerned about. So they invest in T bills and (guess what) real estate.
As I said many months ago, I know nothing about real esate, but as the first baby boomer I cannot think the market on second/retirement homes hit it's top BEFORE I hit 60.
I love the smell of nap... make that panic in the morning. OK what movie is that from?
 

Travel2Much

Beach Lover
Jun 13, 2005
159
0
Hi there--I have been lurking here since after Ivan, but this is my first post. I bought a second house in SoWal last year, and so of course threads like this make me panic. For assorted reasons, I had to buy last year and since I was long term I figured that if I shopped wisely I could avoid the bubble. So, I bought a relatively inexpensive house in the Seacrest area (outrageously expensive by my standards, but inexpensive by SoWal standards), avoided condos, and avoided particularly any property by St. Joe, where there is clearly an outrageous bubble. I still don't know who pays 2.0 million for a "beach house" that is nearly a mile from the beach.
 

BrettMan

Beach Comber
Apr 15, 2005
34
0
Well said Kurt. That's exactly why I'm switching from a short-term to a long-term view. You have to adjust your style with market conditions and it's definitely time to start thinking long term. From that perspective, nothing on 30-A is a bad deal - even at today's prices - because if you plan on living in it, or renting it (and you can handle any negative cash flow as an investment) over the long term, you'll be in great shape.

Long term being 10+ years...
 

skier

Beach Lover
Mar 7, 2005
116
0
Fox,

I hope I am wrong on my predictions. To answer your question about falling prices, it depends on which prices you are talking about. Are you asking about the current prices people are asking and not getting or are you asking about the prices actually paid for property 6 months ago?

I would say if the average home along 30A sold for $750k one year ago, I would bet that within 12 to 18 months the average price will be 20 to 40 percent less than that. For those in the higher end places like watercolor, seaside, etc., I would bet that those currently asking $1000 plus will not be aboe to sell for over $700 per square foot.

Again, I hope I am wrong
 

skier

Beach Lover
Mar 7, 2005
116
0
Fox,

If you will notice in my post, I mentioned that the price for homes actually purchased (ie: real cash changed hands if you don't understand that financial concept) 12 months ago will likely go down by 20 to 40% over the next 12 to 18 months. However, that will only be for those that choose to sell and convert back to cash (a difficult financial concept I know). For those that choose to hold after values fall, they might make their initial investment back in the long term. But, as seen in many previous bubble bursts (Japan, Houston, etc) it can take decades to recoup the initial investment.

I did mention that for folks in the higher end communities "asking" prices will not be met and to sell, most will have to lower prices in the short term by 30% plus. Hope this helps explain my comments.

You can argue all you like. Bottom line, no one knows for sure. we are all speculating aobut a bubble or a continued bull market. Time will tell. Lets chat again in 12 months. Hope you didn't invest your nest egg in the market over the last 12 months or so.
 
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