Coastal Resort Mrket - How did we get here?

[Kurt]

there are awesome deals right now BUT IT COULD BE 5-10 YEARS BEFORE ANYONE BUYING EVEN NOW COULD SEE ANY APPRECIATION.

Has the flipper mentality of instant profit ruined real estate investment or will intelligence and patience return?

 

[Bobby J]

I actually work in the trenches of RE and because of all the negativity I stopped following it as closely on forum boards and random news channels and began to focus on my business. The results were amazing. The market in my little world is hot. We are actually having a hard time finding product once again for certain buyers. Buyers were set on all these low bottom deals and many of these deals are simply gone. When you see products that can not be rebuilt for the cost of construction, look closely. A builder will not be repeating that performance. Some foreclosure homes will have 5 bids plus in an hour of being on the market. Try to buy one of those in this down market! The home WILL sell and will not be available for purchase later. I have no clue where we are in the market place but I know we are busy. I think the prices have gotten so good that folks are getting back in. As I said earlier, the buyer never left. The value did. Once a property hits the right price it is gone in days. BTW, these buyers have money, most pay cash and will not be letting there property go at a loss anytime in the near future. If you were one that was concerned that you were not going to get a chance to own a piece of paradise in the past now I can really begin to see where that may be headed. Wealthy people are buying great deals near the water with intent on a long term hold. The area(30A) is truly being bought up by the wealthy. I would predict that in 10-15 years the 30A area will be for the wealthy only. Locals, get a good look at Freeport because with time that's where many of us will be(as soon as they put a damn grocery store).

I would like to add the deals right now are vacant land and many are beginning to look at vacant land as the next direction. Builders get ready. It has been a long road for many builders and once the construction loans loosen up, we will start to see homes come out of the ground again.

Walk to the beach lots for under $60,000! Come on. Some of this stuff is cheaper then third world country lots. It will not last.

None of this is speculation or a guess. Look at the stuff leaving the market.

Before Shelly writes, "is this time to buy?" I have no clue. I just go to work and let the market decide that.

 

[Bobby J]

Has the flipper mentality of instant profit ruined real estate investment or will intelligence and patience return?

Flips are over but improving homes and vacant land buildouts for profit can happen today.
Once construction loans loosen up, look out. Walk to the beach for $60,000! When your neighbor paid $450,000. I think you stand a good chance on a spec if you watch your cost. The cheap homes along 30A are gone. Time to build more.

 

[GoodWitch58]

Agree with BobbyJ, at the right price, the property is gone in a flash; and the deals are cash.

So, if you are interested in this area as a long term investment and a great place to live or have a second home, now is the time to get a good buy. It is happening.

Now, if we can just get the banks/lenders to move a bit faster on some of the abandoned developments...

 

[fisher]

coastal edge you have to understand things about people like shelly. TO HER THE GLASS IS ALWAYS AND I MEAN ALWAYS 1/2 EMPTY. My question to shelly is very simple.lets put the shoe on the other foot and look at your record.you being right about real estate now is not the question but how many years ago did you call for its demise? 10,12,15 years? i'm willing to wager if shelly was in the area in the late 90's she was negative and calling for the bust of the real estate mkt from 1999-2006 and each and every year as it appreciated 20-40% year after year. I know from 1995-2006 i said it couldn't keep appreciating at these incredible rates and sure enough it did. shelly is forgetting about the 1000's who made buckets of money here and KEP IT. remember much of this financing by flippers was 100% loans so in the end the bank is the one who lost not many of the flippers.before this is over banks like regions and suntrust and 1000's of other banks could be mortally wounded.there are awesome deals right now BUT IT COULD BE 5-10 YEARS BEFORE ANYONE BUYING EVEN NOW COULD SEE ANY APPRECIATION. Even after all the damage in places like water color homes don't seem to be selling for less than $300-$350 a square foot .Just like the negativity toward stocks this past year. Sharp traders made fortunes buying all huge dips and those who bought for a trade in feb-march got the biggest fastest returns in history with many stocks rising an incredible 1-4 times in only 5 months. if one was very early they still made good money on most stocks. naysayers on 30-a will never buy no matter how low prices go thinking they will go even lower and 10-15 years from now they'll be saying why didn't i buy.None of us knew the future and can only gloat after the fact that we knew this would happen. Sure all of us in the early 2000's knew this would pop someday but it went on much much longer than any of us dreamt of. In that time of denial by many naysayers people got filthy rich and many did exit with there money in tact. theres 2 sides to every story.

Until lot prices stop falling (when lot inventory gets to reasonable levels and foreclosures have dried up), only then will home prices stop falling. That has not happened yet and it likely won't happen for several years. The free falling prices have probably come to an end, but a slow decline will continue (unless Obamas money printing creates rampant inflation).

 

[fisher]

Flips are over but improving homes and vacant land buildouts for profit can happen today.
Once construction loans loosen up, look out. Walk to the beach for $60,000! When your neighbor paid $450,000. I think you stand a good chance on a spec if you watch your cost. The cheap homes along 30A are gone. Time to build more.

How far is a "walk to the beach"? Depending on the distance, I think within two years you will see prices in the $30 to $40k range for places within a reasonable walk to the beach. In fact, there are already some LISTINGS BELOW $60k for walk to the beach lots (village of BM as an example or even Cypress Dunes for $40k today if you don't mind a short bike ride to beach access) and they aren't exactly flying off the shelf at those prices. Still way too much inventory and foreclosures for stable prices. The RE price slide is not over yet.

 

[30ashopper]

Has the flipper mentality of instant profit ruined real estate investment or will intelligence and patience return?

Real estate really isn't a very good investment, by in large you get back exactly what you put into it in the end. You would be far better off as an investor putting your money in the stock market. Real estate is more about enjoying a place to live or a second home.

For example, add up of the typical real estate "investment" in sowal - 4-6% annual appreciation. Add "free rent", subtract loan costs, insurance, taxes, maintenance costs, and inflation. When you sell you're left with what, maybe a negative gain or if you're lucky and you pick the right property, maybe 2-3% return? Compare that to say buying apple at 80 and selling it at 300.

 

[30ashopper]

there...he said it.

30Ashopper...what about the retiree market?

Sure, the folks who retired, sold their house in Austin or Dallas or Altanta and moved down. They have the money. Five years ago a guy making 50K a year could get a 650K loan for a house and flip it. Today that same loan would require 15-20% down (130K cash up front) stellar credit and income around 200K a year.

 

[Smiling JOe]

Some foreclosure homes will have 5 bids plus in an hour of being on the market. Try to buy one of those in this down market! The home WILL sell and will not be available for purchase later.

Absolutely correct. I put in an offer on a property which was on the market for seven days, and the seller had four other offers, all within two days of each other. The good deals are waiting to be gobbled by end users and savvy long-term investors. If you are a buyer, you better have your financing pre-approved or proof of funds ready to submit with your offer, and clear your contingencies as quickly as possible, such as insurance costs, mortgage rates, etc, and perhaps even home inspection. With five offers, if you really want the property, you better come in with a strong purchase price offer, high Earnest Money Deposit, and very few contingencies, if you really want the property.

That brings another thing to mind -- Pricing. There are two ways to price property:
1) price higher than your expected selling price, leaving room for negotiation.
2) price at the expected realistic selling price (not some lofty dream-like hopeful number), leaving very little room for negotiation.

With strategy #1, you will not get as many potential buyers to see your property, because it isn't priced at a "good buy."

With strategy #2, you should expect to receive several offers, with at least one being fairly close to listing price if not above listing price. When a property is perceived to be a good value, buyer's don't want to lose the opportunity to buy, because about only 1-5% of the current inventory is priced right (in buyers' perceptions). They will come in with strong offers, while the properties priced with negotiation room (strategy #1) will still be waiting as the median price continues to decrease slowly.

 

[30ashopper]

Agree with BobbyJ, at the right price, the property is gone in a flash; and the deals are cash.

So, if you are interested in this area as a long term investment and a great place to live or have a second home, now is the time to get a good buy. It is happening.

Now, if we can just get the banks/lenders to move a bit faster on some of the abandoned developments...

"right now" is not the only time to get in on a good deal. Those good deals will keep popping up for 3-5 years. There's no need to rush into anything. In fact, rushing in today will likely result in an investment you'll take a loss on over the next year or two. Which isn't to say now isn't a good time to go shopping, it's just that if you shop today or a year from now or two years from now, you'll still be in a good position find reasonable priced property.

There is so much inventory out there, and the foreclosures continue to occur. The "great unwind" in the sowal realestate market will take years to complete.