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Correction: Panhandle real estate sell off just starting

Discussion in 'Real Estate' started by GaltsGulch, Dec 1, 2005.

  1. SHELLY

    SHELLY SoWal Insider

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    The only "market" developers care about is the initial (or pre-construction) first sale...they couldn't care less what happens to the market after that. They will keep building new condos as long as they can sell them out. Once they unload their stock in one building, they're done with it...they simply move on to the next. Problem is, there will be plenty more condos than there are now when you put yours on the market for $1 million down the road. Do the developers care whether you sell your condo or if the market is flooded?....In a word.....nope.
     
  2. SHELLY

    SHELLY SoWal Insider

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    NEW YORK TIMES
    March 4, 2006
    Hoping for Best in Home Sales, 2 Sides Sit Tight
    By VIKAS BAJAJ and DAVID LEONHARDT

    Along much of the East and West Coasts, home buyers and home sellers are engaged in a stare-down.

    Many buyers, having heard that the real estate market is a bubble in danger of popping, are refusing to offer the asking price on a house, convinced that it will soon drop. But many sellers are not blinking either, thinking that offers will improve when the weather does and biding their time until then.

    As a result, the housing market is now in a deeply confusing state, with average prices still rising even though homes are taking much longer to sell and the number on the market has soared. Sometime soon ? probably in the spring, the peak sales season ? one side or the other will have to capitulate, many economists and industry executives predict.

    "In my opinion, the jury on housing is still out," said Antonio B. Mon, the chief executive of Technical Olympic USA, a home builder. "The period from now until May will tell the tale."

    Many real estate agents argue that the current slowdown is merely a pause, pointing out that interest rates remain low and that Americans still seem convinced that houses are a great investment. Buyers, on the other hand, are hoping that the rising number of unsold homes is a signal that a slump is coming. It was an early sign of the last housing slump, in the early 1990's.

    Nationwide, the number of existing homes for sale jumped 36 percent between January 2005 and January of this year, the National Association of Realtors reported Tuesday.

    In Manhattan, 42 percent more co-ops and condominiums were available for sale at the end of last month than was the case a year ago, according to Miller Samuel, an appraisal company in New York. More Manhattan apartments were on the market in late February than at any point in at least five years.

    For now, though, average selling prices have continued to rise, even in the markets that had already experienced the biggest leaps in prices and the increases continued even in the final months of last year. Prices rose 40 percent in the Phoenix area during 2005, according to the federal government. In Manhattan, the median price of an apartment was $760,000 at the end of last year, up from $605,000 at the end of 2004.

    The latest statistics on house prices appear to be dominated by sellers who, for one reason or another, quickly received good offers. That has kept average prices rising. Builders of new homes have also offered bonuses to buyers, like enclosed sunrooms or top-of-the-line appliances. So the builders have been able to continue selling homes without cutting the list prices.

    But many houses in the Northeast, Florida and California are, in fact, selling for less than they would have six months ago. In parts of the Northeast, the drop has been about 5 percent, estimated Robert I. Toll, chief executive of Toll Brothers, the biggest luxury home builder in the country. Other sellers have cut their price and still not found a buyer.

    In Buxton, Me., a suburb of Portland, Geof and Cheri Toner put their three-bedroom Cape Cod-style house on the market for $379,900 late last year, shortly before moving to Raleigh, N.C., for Mr. Toner's job. They have received only one offer ? for $350,000, which they rejected ? and recently reduced the price to $374,900.

    Mr. Toner said he assumed that more buyers would look at the property as the weather warmed up. In the spring, they would not have to wonder whether snow covered up flaws in the lawn or the roof. He expects that the eventual buyer will be a transplant from elsewhere in New England who is willing to pay significantly more than $350,000.

    "We're not panicking over it," said Mr. Toner, 48, the regional sales manager of a video equipment maker. "It's just a matter of sitting it out and seeing what happens."

    Many real estate agents argue that people like the Toners are doing the right thing and that the market will not slump as it did a decade ago. The job market is now improving. The interest rate on a 30-year fixed rate mortgage remains just 5.79 percent, according to Bankrate.com. And the number of homes on the market remains far lower than in the early 1990's, relative to sales volumes, despite the recent increases.

    The current slowdown is simply a transition, the agents say, from a scorching hot housing market to a normal, healthy one. "All we are seeing is a pregnant pause," said Richard A. Smith, chief executive of Cendant's real estate division, which owns Coldwell Banker and Century 21, "a disconnect between sellers and buyers."

    But many buyers say they have a sense that the long boom has finally come to an end.

    In the San Jose, Calif., area, where the average house price increased 21 percent last year, Sathish Pottavathini, a programmer at eBay, said he was taking his time with the search for a new home and trying to find a good deal.

    "I don't want to rush into things especially in this kind of situation," Mr. Pottavathini, who is 32, said, "where you hear about a slowing down everywhere."

    He and his wife, Madhuri, spend $1,200 a month renting an 800-square-foot two-bedroom apartment, where they live with their 21/2-year-old daughter, Siri. They would like to find a three-bedroom town house with a two-car garage for less than $500,000.

    Although he does not expect prices to fall significantly, he does not think they will rise either and hopes he can find a bargain ? a goal that seemed all but impossible in Northern California in the last few years. Now, Mr. Pottavathini said, "If I wait, I might get a better place."

    Buyers who showed similar patience in the early 1990's were rewarded. From the summer of 1989 to the summer of 1990, the number of homes for sale rose about 10 percent, according to the Realtors association.

    At first, many sellers refused to accept lower offers, thinking that they would get their asking price or close to it. But they eventually had to unload their houses, and in the Northeast and California that often meant reducing the price. In the Los Angeles area, the median sale price of existing houses fell 22 percent from 1992 to 1996, before taking inflation into account.

    If a similar slowdown were to happen again, Mr. Toner said he would consider changing his mind and his asking price. "At some point, if this were to become protracted, I would consider lowering the price to attract a buyer," he said.

    Mr. Pottavathini, meanwhile, is giving his San Jose search four months. After that, he plans to take a break and wait until his daughter is a bit older and his wife returns to work. With more money coming in, they might be able to pay more.

    If they still have not succeeded, they would then consider leaving Northern California ? which he called "the best place in the world" ? and returning to their native India.

    "If the condos become $600,000, it doesn't make any sense to live here," he said. "Imagine owning a house and paying your whole life for that house. I would rather move back to India."
     
  3. dsilvar

    dsilvar Beach Fanatic

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    Shelly, my dear girl...I know developers worship their margin of profit..no surprise there!
    However you say "..They will keep building new condos as long as they can sell them out. Once they unload their stock in one building, they're done with it..."
    But, by definition there is NO market for condos anymore!! Preconstruction or otherwise..especially preconstruction!! The condo flippers are feeling the flames of financial hell licking at their heels and the resellers are not "willing" to reduce their prices.

    If there is no market then no more condo building! period.

    Lets not forget the very healthy real estate price differentials between the Florida coasts or even up and down the gulf coast. Tampa, Sarasota and Naples are higher than we are in SoWal.
    I have a lot in Gulf cove down in Port Charlotte that is up 400%..not any place you want to live (as yet, anyway). The prices for lots and condos there are almost on par with SoWal and they had a hurricane go right thru.
    I know there is a saddening disconnect between the acquisition of the Almighty dollar and human kindness..but market mechanics will deal with the good the bad and the ugly with an even hand.
     
  4. Cork On the Ocean

    Cork On the Ocean directionally challenged

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    It seems that it gets down to the old adage - People that see the glass half full and those that see it half empty and I really don't think the inherent nature of the person can change. I see a pattern of personalitites and it's quite clear that none of us have a crystal ball and there's equal opinions on both sides which are mere predictions. I see the glass half full - always have in everything.

    My question is to Galtsgulch and is related to the prices that he/she is gauging the "high mark" from.

    "if you calculate from the highwater mark of asking prices, which occurred roughly 12 months ago.. I would submit that valuations in SoWal have only fallen 10% from that peak so far, and have a good 15% or more to go."

    My question is how in the world can someone calculate the highwater mark as asking price? This is a hope, a dream, sometimes akin to hitting the lottery. Asking price is not fact or reality in any sense. I don't know of any appraiser or financial expert that bases value (not valuation) on asking price. When the IRS taxes you, it's not based on asking price :eek: . When the bank lends you money, it's not based on asking price. :floor:

    IMHO, people who continue to gauge the market on asking price are just looking for a way to turn things into a negative. The only reality is sold prices and conjecture about people's dream price is just that. Meaningful value assessment must be based on reality and the reality here is that the average value has gone up, not down, so even in a period when the number of sales have dramatically dropped, the average price is going up. Wait another year and see what it is. In the absence of some catastrophe, there will be no "mass carnage", only people missing the boat. I think that those predicting mass carnage are either dreaming or hoping that they could afford to buy something or believe they have in some way "lost money" (even though they paid peanuts in many cases) because they didn't sell it when they should have.

    One of the most important things that anyone ever told me was from a very wealthy man who made his money in real estate and that was "If you're afraid to sign your name, you'll never make the first dime". I think fear stops more people from realizing success than anything else. I would truly be interested in knowing how many people that are negative towards the market have a net worth over $5 million. Highly successful people don't look at the glass as half empty, they base decisions on facts not speculation and they are flexible adapting to their environment.

    If an investor is smart, there's always a way to make money in real estate. In a market where housing prices have gotten astronomical and the number of buyers have dropped, it makes sense to me that owning and renting affordable housing is prime. In our area, jobs are increasing, the population is growing and the price of housing has become so expensive that the working class can't afford it so they have to rent. Throw in increasing mortgage rates (with which I don't see a big problem yet but think are inevitable) and voila! As a small investor, I'm going to DSF's that are still under $400K and put them on long term rentals. If I had a lump of money to park and didn't want the hassel, there are some great land prices and I'd sit on land. If I were a large investor, I'd be looking at buying apartment complexes or developing affordable housing. Glass empty people won't be buying, glass full people will.
     
  5. SHELLY

    SHELLY SoWal Insider

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    Why the World's Best Real Estate Investor is Cashing Out
     
  6. beclareesq

    beclareesq Beach Comber

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    Cork,
    It is admirable that you are so loyal to SOWAL, but you are stretching common sense if you are arguing that now is a time to buy, at current asking prices. The only reason to be positive about the market is if you believe, like I do, that prices are going to fall 20-30% and there will then be buying opportunities. The area is great, unique and the longterm looks bright. There is no reason to sell for fear of a crash but otherwise, those who need to sell are going to find it rough sledding.

    The proof is in the pudding as they say.. if the current asking prices were attractive to buyers then properties would be selling. They are not and it's not because people are too scared to write the check.
     
  7. goofer

    goofer Beach Fanatic

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    Cork, the time to buy any asset is when even you ( the generic you ) are so scared that your hands are shaking with fear. Or in the case of real estate, when you want to puke all your holdings because you think we are going into a deflationary period like the 30's. That is not going to happen. But i think this late fall will be the great opportunity. ARM's payments going higher, hurricanes again, and the speculators hitting the panic button. They will squeal no mas......that will be the bottom.
     
  8. tylerT

    tylerT Beach Lover

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    There are a lot of folks on here that are scared of reality - but positive spin or attacking the messenger doesn't change the facts which are that there is an absolute glut of both single family homes and residential land on the market in South Walton. All realtors are worried and sales have fallen dramatically. It will take years for the local market to absorb everything that's for sale. An airport might help years down the road, but for right now and at least several, several months and possible a few years to come, there's little money or return to be made here.

    You can't spin the facts, and if you say differently, you're trying to change them by a positive attitude or boosterism that is becoming almost pathetic. I know and am close friends with several reputable realtors who have seen their commissions plummet - decline by triple digits over the same time last year.

    Many of you folks are no longer credible because the truth is becoming obvious, but you refuse to change your tune. Well, wee, wee , wee - forget what you see and trust us to tell you what's really happening.
     
  9. Smiling JOe

    Smiling JOe SoWal Expert

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    Not true, maybe many are worried, but not all.

    Only at today's rate of sale. That too can change.

    Only if you don't know what you are doing.
     
  10. Paula

    Paula Beach Fanatic

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    The best tunes to sing are not "sky is falling" or "everything's rosy" -- overstatements and simplistic thinking of any kind are the kiss of death for smart decisions. Most people on this board (I'd say all people on this board) are wise enough to know the market is changing, as all markets do. Most people also know that some people will lose money (that's nothing new), some people will make money (that's nothing new), some people will try to time the market and buy when they can get the lowest price, some people will buy when they can get a good-enough-price, most people know not to put all their eggs in one basket, etc., etc., etc.

    I think what surprises (and seems to bother) some people on this board is that many people can love a place and feel good regardless of what the market is doing.
     
  11. iwishiwasthere

    iwishiwasthere Beach Fanatic

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    I think what surprises (and seems to bother) some people on this board is that many people can love a place and feel good regardless of what the market is doing.
    __________________
    Paula


    :clap_1: Well said.
     
  12. Cork On the Ocean

    Cork On the Ocean directionally challenged

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    Get the popcorn out Joe. :lol:

    Tyler, There's no intent to attack anyone as you are doing. First point was that using list prices is not the indicia that value is based on. Do you disagree with that point?

    The article that Shelly linked was interesting and certainly a consideration but it relates to the overall market in the US and one investor moving his holdings to casinos which are still real estate holdings. I never said that the market is booming in the US and wouldn't because frankly I don't know that much about every market in the US.

    A quick search on the same magazine produced other articles related specifically to the Florida market and more specifically the Florida Panhandle.

    http://money.cnn.com/magazines/fortune/fortune_archive/2005/10/17/8358067/index.htm


    All realtors are worried and sales have fallen dramatically. I know and am close friends with several reputable realtors who have seen their commissions plummet - decline by triple digits over the same time last year.

    No Tyler, you don't know. Not all realtors are worried. Being reputable doesn't equate to success in today's world. Many reputable realtors believe that they can be sucessful using yesterday's approaches. The fact is that the internet has forever changed their profession beyond their ability to comprehend. The last couple of years when they were making triple digits, customers were basically flopping into their laps. Now they have to work harder. The average realtor's lack of technological acumen severely impacts their ability to be successful today. While 86% of realtors have websites, only 12% of them get 25% or more of their business from it. The average realtor is at the mercy of a bevy of webmasters, software distibutors, marketing services and even the search engines promising an effective internet presence and it's just not that easy. The cost of internet promotion will become cost prohibited for many realtors as the online competition gets stiffer and with the number of sales as low as they are, they are going to continue to have a very difficult time.

    right now and at least several, several months and possible a few years to come, there's little money or return to be made here.

    If you expect to make money in several months, that's why people are in trouble. If you read my post carefully, you will note that I sited the ability to be flexible and adapt to the environment as an important factor to success in investing. Regarding South Walton, I have maintained on many threads that many people can no longer afford 30A and despite many peoples' hope that it will become affordable again, I think those days are gone forever. When you say there's little money to be made "here", if you are speaking of the Beaches of South Walton, I would tend to agree with you. If you read my post in the manner in which it was intended, you will also note that I said that I'm looking towards affordable housing on longterm rentals - that's not 30A.

    Today I was working with a client who purchased about 9 acres in Callaway slightly over a year ago for $495K which is surrounded by 5000 acres owned by JOE . There have been 11 sales in the last year along a 3-5 mile stretch that comp it out at about $1.1-$1.2 million. We're also looking into whether he'd be wiser to put in streets and parcel it out into the 15 units/acre allowed and sell them for $100K-200K each depending on the amenities he'd put in. That's $13 -27 million dollars less expenses on a $495K investment just about a year ago. Open minded and flexible people are making money in this market. They didn't get stars in their eyes about Watercolor or Alys beach. They make sound business decisions based on what they saw, not what they were told.

    You can't spin the facts,

    There are no spins here. Only people that have their minds made up. Maybe they own, maybe they don't even own here. You're assaulting me and telling me to forget what I see and trust someone that I don't even know, that apparently isn't making money (perhaps losing it), or possibly hasn't even invested in this market?

    Tony Robbins, (a very positive person) and mentor to many successful people says that if you continue to do the same things you've been doing, expect to get the same results. And yes, Paula, isn't it great to feel good. :lol:
     
  13. Smiling JOe

    Smiling JOe SoWal Expert

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    :popcorn:Never to early for some popcorn.
     
  14. Paula

    Paula Beach Fanatic

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    Make it chocolate truffles and I'm in...
     
  15. dsilvar

    dsilvar Beach Fanatic

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    The problem is that there are too many prognosticators on this board!!
    You can spin things any way you want, or buy casinos instead of residential real estate, or cry chicken all day long, but the fact is NONE of you really know what the market will be like tomorrow or next year. You can guess, but guessing requires you to consider so many variables that no human mind can crunch them all and make real sense.
    Shelly is a prime example of this. Her ability to collect skewed variables that make sense to her, crunch them and spit out an opinion is flawed.
    Show me a prediction model that uses ALL the market variables..positive and negative...the fact that the baby boomer crowd is just starting to retire en masse, geographic market price differential, the long history of real estate returns, and all of Shelly's negative variables, and those of Cork's and you will then begin to come close to some kind of prediction of what the real estate market will do in SoWal..just my humble opinion.
    Market mechanics are what they are..a giant wave we are all riding. Its your skill that will keep you on top of that wave all the way in or if you don?t know what you are doing, its WIPE OUT time.
    Me..my Florida investments are all paid for..carrying costs are a small gamble.
     
  16. Just_In_Thyme

    Just_In_Thyme Beach Lover

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    Today the St. Louis Fed President, William Poole said there is no housing bubble and the market should remain strong in 2006.

    Poole said it's nearly impossible to forecast a price bubble.
    "Indeed, given that bubbles always burst - if there is no burst there was no bubble - clear advance evidence of a bubble can never exist," Pool said. "If the evidence was clear, then everyone would know about the bubble and forthcoming burst, but then the buying that created the bubble would never occur in the first place," Poole said.
    "So if you have an academic interest in house prices, I recommend that you wait a few years. If you have a direct financial interest, I can't help much - you're on your own," he said.
    Poole said he did expect "some slowing in the growth of average home price nationally."
    But Poole dismissed fears of a nationwide housing bubble.

    You can go to www.marketwatch.com for more
     
  17. OnMackBayou

    OnMackBayou Beach Lover

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    I have several homes here in South Walton. One was bought last summer in a neighborhood of 50 homes, at the end of the great run up in appreciation, so people say. Several months ago a home with the same floor plan sold for $100,000.00 more than I paid. Another home with a slightly smaller floor plan just went on the market for $200,000.00 more than I paid 8 months ago, (which represents about a 45% jump from what I paid), and I believe there was an offer made within several % of the asking price.

    I realize this information is only anecdotal, but it is what is happening to some people besides me, such as all of my neighbors who are seeing their values continue to soar.

    Personally, I feel bad for someone trying to buy here now. So many people love this area, but are probably confused and unsure about what is going to happen. When people look for real estate, even when there is a huge amount of inventory, they usually find only one or two properties they really, really want. When the emotions kick in and you're ready to make an offer, do you low ball it? That would be the temptation now I guess. Problem is you may be lowballing someone who isn't motivated to sell low. Then what do you do? Wait? How long?

    To anyone wanting to buy because you love the area, good luck. Maybe waiting is the answer. Maybe not.
     
  18. goofer

    goofer Beach Fanatic

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    real estate investing is more of a science than an art, when compared to stock market investing. it is easier to compare relative value in real estate as opposed to relative value in stocks, imo. with stocks so much of the equation is is tied to human emotion. i realize many of you will say the same about real estate but i think because of the issue of liquidity, it is much easier to be emotional about stocks than a hard asset like real estate which is illiquid. when one sees prices of stocks dancing around EVERY DAY, it is easier to get caught up in the emotions of the moment ( example is tech bubble of 2000 ) in real estate investing one needs patience, composure, and perspective. if one does there homework and keeps their wits about them, they will invariably find a home or a lot that makes economic sense. there is ALWAYS a motivated seller in the marketplace and a patch of ground that gets overlooked.
     
  19. Cork On the Ocean

    Cork On the Ocean directionally challenged

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    Thanks Thyme. While I'm inherently suspicious of anything that comes from government on some things (comes from my past life of being in it :sosad: ) the argument makes good sense regarding the ability to predict a bubble. Rita (I think) posted a grim reaper smiley on another thread and I'm thinking about just posting that when we see all the negative conjecture about the market. :lol:
     
  20. Buckhead Rick

    Buckhead Rick Beach Lover

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    one question about interest rates (besides the fact that they can only go one of two ways, and they are still impossible to predict.)
    What effect will they have on real estate ARMS and R/E prices if the FED stops pushing them up after the next meeting or two as Citigroup is now predicting and feels the FED may well start REDUCING rates in the fall? Could this cause buyers to blink?
     

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