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Rutger

Beach Crab
Apr 20, 2007
1
0
Cambridge, MA
Reading threads a few years back you see very few people with the courage to voice pessimistic views of the real estate outlook in South Walton. They received scathing responses. Today these people look like oracles. I applaud the dissidents who through careful analysis of the market, not hope or any other irrationality, knew it was and still is falling substantially.

Real estate as an asset class doesn?t turn around in 1-2 years as so many people on these boards purport. Cycles typically run 8-10 years or more. For the next 2 years you will see prices decline as much as 50% off current levels, then flat or gains of 1-3% over the next decade (factoring inflation you will have net losses).

Look at the current institutional community. The last 10 years saw a very large runup of investment allocated to R.E., today you can?t find a CIO who isn?t quickly reducing exposure to R.E. and reallocating into different asset class such as fixed income, private equity or traditionals.

You ask, what does the institutional community have to do with me Joe Citizen? If you study the market over long periods, let?s say 30 years, the residential market trails the institutions by 12 ? 18 months and follows the trend line quite remarkably.

Analyzing macroeconomic factors such as defaults in subprimes and now Alt-a?s looming, plus microeconomic factors such as higher insurance, taxes, etc?you see significant losses and erosion of value in real estate over the next 5 to 10 years. Bernanke will try to stave off the hemorrhaging real estate market with adjustments to the money supply but the bubble will burst and burst louder than tech in 2000.

We have had a second home in 30-a since the early 80?s and have heard varying degree?s of commentary on the market but nothing like the current optimistic dogma being spewed today. The reason I posted is to address those giving investment advice to home owners like ?hold on? and ?weather the storm.? You are doing a great disservice to the average home owner (Unless they are prepared to hold on for 10 years).

For those of you that disagree, let?s revisit this post at the end of ?07, ?08 and ?09. The data will speak for itself.
 

destinsm

Beach Lover
May 23, 2006
92
1
Great post... totally agree...

Seems the Treasury Secretary has a different view though :)
I really do wonder what signs he is looking at...
- skyrocketing inventory
- tightening mortgage market
- foreclosures increasing
- property insurance increasing
- taxes increasing
- salaries not increasing
- debt loads becoming harder to carry with increase in rates
- RE related jobs in the crapper (many do not get included in gov't unemployment figures conveniantly enough... ie agents, illegal construction workers, independant brokers, etc...)

Yea overall I guess everything looks peachy... its all up from here!!!
--------

Paulson says U.S. housing sector 'at or near bottom'




http:///
By Greg Robb

Last Update: 1:01 PM ET Apr 20, 2007





WASHINGTON (MarketWatch) -- Treasury Secretary Henry Paulson delivered an upbeat assessment of the economy, saying growth was healthy and the housing market was nearing a turnaround. "All the signs I look at" show "the housing market is at or near the bottom," Paulson said in a speech to a business group in New York. The U.S. economy is "very healthy" and "robust," Paulson said.
 

Bobby J

Beach Fanatic
Apr 18, 2005
4,043
599
Blue Mountain beach
www.lifeonshore.com
Basically we are in a depreciating market. There is really no other way to look at it. Yes, we have beautiful beaches and pretty people but the simple economic fact of more product then demand brings prices down. Until we have a 4 month period where sales pass new inventory we are going to stay here. The bottom line is people do not see the perception of value unless the price comes to a point of value. Just because you paid $500,000 does not mean in today's market it will sale for that. We have to start looking at R.E. as a commodity. It is not a product. Products are sold by the sellers establishing price. R.E is not a product! It is a commodity! It is the buyer that establishes value. There is no relationship to advertising that you will find in a product....The difference is this commodity has emotion attached. People feel that I am not spending enough money to sell their listing, or I need more open house. Then when It finally sells, I sold it too cheap. If they could just remove some emotion they will sell. I am afraid the above comments are correct. If you are being advised to hold and wait one must be prepared to ride this cycle out. This is not a quick fix. If you can not wait, your price better have "wow" factor. If you have not sold within 45 days you are too high. The buyer pool never changes. They are all over the place. Price your home 1/2 of what you have on it today and see how many buyers show up! The problem is the public does not have the same perception of value they had two years ago. The Storms, taxes, and insurance helped change the perception. The way to sell your property is to create a drama price. Give the public the value and it will sell. It is not because your agent failed to advertise your home this week... If priced with a "WoW" the buyer will find it in a good or bad market.
 
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egrp

Beach Lover
Sep 22, 2005
122
3
you don't know the mkt is going down for the next 2 yrs just like the people who think its going up don't know. its just people's opionion. and i work in commercial RE dev: institutional and priv eq money for cmcl real estate has never been more abundant.

just state your opinion and don't say that other people's stating theirs is a diservice.

that being said my opinion is that residential real estate prices will continue to moderate slightly in the near term...a "plunge" is very very unlikely even in second home mkts...demographics, earnings power, and favorable tax treatment are the sources for my opinion.
 

beachmouse

Beach Fanatic
Dec 5, 2004
3,505
741
Bluewater Bay, FL
My favorite is "But the new international airport is going to open up direct flights to London and Paris and all the Europeans are going to come charging here to buy."

BA isn't going to start offering regular service into the Panhandle anytime soon, kids. And the only reason you'll ever see KLM on a Panana City ticket is because it's the same old code sharing with NWA's flights to Memphis.

The new airport will be an improvement, and there will be more flights, but what you'll end up with is something close to Pensacola- a couple more nonstop flights to Texas every day, and if you're lucky a daily flight to Chicago. Not Orlando part deux.
 

Bobby J

Beach Fanatic
Apr 18, 2005
4,043
599
Blue Mountain beach
www.lifeonshore.com
you don't know the mkt is going down for the next 2 yrs just like the people who think its going up don't know. its just people's opionion. and i work in commercial RE dev: institutional and priv eq money for cmcl real estate has never been more abundant.

just state your opinion and don't say that other people's stating theirs is a diservice.

that being said my opinion is that residential real estate prices will continue to moderate slightly in the near term...a "plunge" is very very unlikely even in second home mkts...demographics, earnings power, and favorable tax treatment are the sources for my opinion.


None of us know for sure about anything other then what is doing today. We can simply look at the "New" inventory and compare to solds/pendings. The new inventory on a daily basis is unbelievable. So simple economics tells us we are in a depreciating market. When the above trend changes so will the market. This trend needs to last roughly 4 months to change the market. Low inventory=appreciating market.
 
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destinsm

Beach Lover
May 23, 2006
92
1
None of us know for sure about anything other then what is doing today. We can simply look at the "New" inventory and compare to solds/pendings. The new inventory on a daily basis is unbelievable. So simple economics tells us we are in a depreciating market. When the above trend changes so will the market. This trend needs to last roughly 4 months to change the market. Low inventory=appreciating market.


BobbyJ,

Just wanted to say that I (and probably others) appreciate your honest comments especially from someone in the biz like yourself...

Also would like to recomend a really helpful online tool to follow what is going on in the Destin market... I know most on here would like to see something similar for the SoWal market :)

But anyway this website allows the common man info from the MLS that includes new listings, price changes, pendings, closings, etc... It is a great tool to see what is going on day to day and month to month in the Destin market... Check it out...

www.thewiredagent.com
Great info shared on the Destin Market Pulse link...
 

Joe Mammy

Beach Lover
Mar 26, 2007
140
40
BobbyJ,

Just wanted to say that I (and probably others) appreciate your honest comments especially from someone in the biz like yourself...

Also would like to recomend a really helpful online tool to follow what is going on in the Destin market... I know most on here would like to see something similar for the SoWal market :)

But anyway this website allows the common man info from the MLS that includes new listings, price changes, pendings, closings, etc... It is a great tool to see what is going on day to day and month to month in the Destin market... Check it out...

www.thewiredagent.com
Great info shared on the Destin Market Pulse link...

This man knows things! Thanks for the kind words destinsm. One of my listings today just became the lowest priced Destin 1br condo at a WOW price of $118,000! 923sf, balcony overlooks lake and pool and there is even a partial Bay view from the balcony. Vacant and super clean.
 

destinsm

Beach Lover
May 23, 2006
92
1
Thanks Destin... BTW, keep in mind people are selling once they put the price where the public finds the value. I have a full pending drawer!:clap_1:

I dont doubt they are... but I will wait and let a few others reset those comps downward a bit first... :D
 
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