"...I know people (one of which is related to me) who have paid a boatload of money for beach-view property but haven't started building because they know they won't be able to get insurance..."
Just the sort of catalyst that could start the deflation
of the "bubble."
Assuming, of course, one is of the opinion that real property
in South Walton has been experiencing a bubble.
There will always be those with sufficient funds to pay cash
for beachfront, and they will continue to bid-up the prices
for beachfront, regardless of the insurance situation.
But (2) or (3) tiers or more back from the beach the property is, in
my opinion, more vulnerable to price deflation. The "super rich"
want to be "on the beach," not "an easy walk to the public access."
These properties, generally, are bought by those who must utilize
financing. Financing requires insurance. No insurance, no finanacing,
and no sales. No sales leads to decreased demand which leads to
falling prices.
Also, many buyers count on rental income to defray the costs of
owning this property. Increased insurance costs will likely increase
rental rates: at what level do rental rates make vacation alternatives
(cruises, etc.) more financially favorable? At what level does Walton
County price itself out of the reach of it's customers?
I made the mistake of riding one real estate boom too long: long-term
rental property in Branson, MO, in the mid-90's. Literally, 6 months meant
the difference between selling at a nice profit, and not being able to sell
at cost. Guess who "rode" too long?
It is my belief that the strength of the nation's housing
markets in general can be credited primarily to the easing
of credit restrictions, allowing marginal buyers to enter the
market and increase demand for housing. Tightening credit
requirments would almost certainly result in the opposite:
removal of a large segment of the home-buying public would
lessen demand, and lower demand would lead to lower prices.
If what could be termed "marginal buyers" (by South Walton standards: any
where else in the country they would be "top tier" buyers) are removed from
the South Walton market due to insurance considerations, who will replace
them? And can current prices (much less expectations of future appreciation)
be supported without replacing this segment of the buying public?
Sure, everyone wants a "place at the beach," but at what point do
they look at the hurricanes and the insurance and say, "it's just
not worth it?"
I do not own real property in South Walton, and although I would have
considered buying it in the past (if I had the money) I would not buy it
now. Possibly in the future, if prices really do deflate.
Just my opinion.
And I always have one.
Just the sort of catalyst that could start the deflation
of the "bubble."
Assuming, of course, one is of the opinion that real property
in South Walton has been experiencing a bubble.
There will always be those with sufficient funds to pay cash
for beachfront, and they will continue to bid-up the prices
for beachfront, regardless of the insurance situation.
But (2) or (3) tiers or more back from the beach the property is, in
my opinion, more vulnerable to price deflation. The "super rich"
want to be "on the beach," not "an easy walk to the public access."
These properties, generally, are bought by those who must utilize
financing. Financing requires insurance. No insurance, no finanacing,
and no sales. No sales leads to decreased demand which leads to
falling prices.
Also, many buyers count on rental income to defray the costs of
owning this property. Increased insurance costs will likely increase
rental rates: at what level do rental rates make vacation alternatives
(cruises, etc.) more financially favorable? At what level does Walton
County price itself out of the reach of it's customers?
I made the mistake of riding one real estate boom too long: long-term
rental property in Branson, MO, in the mid-90's. Literally, 6 months meant
the difference between selling at a nice profit, and not being able to sell
at cost. Guess who "rode" too long?
It is my belief that the strength of the nation's housing
markets in general can be credited primarily to the easing
of credit restrictions, allowing marginal buyers to enter the
market and increase demand for housing. Tightening credit
requirments would almost certainly result in the opposite:
removal of a large segment of the home-buying public would
lessen demand, and lower demand would lead to lower prices.
If what could be termed "marginal buyers" (by South Walton standards: any
where else in the country they would be "top tier" buyers) are removed from
the South Walton market due to insurance considerations, who will replace
them? And can current prices (much less expectations of future appreciation)
be supported without replacing this segment of the buying public?
Sure, everyone wants a "place at the beach," but at what point do
they look at the hurricanes and the insurance and say, "it's just
not worth it?"
I do not own real property in South Walton, and although I would have
considered buying it in the past (if I had the money) I would not buy it
now. Possibly in the future, if prices really do deflate.
Just my opinion.
And I always have one.
. Caveat Emptor