Misguidance on Real Estate plunge

[PTWizard]

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.

Yes, let's do that. Let's see if you're the new Oracle of SoWal.

 

[NewUrbanGirl]

The law of supply demonstrates the quantities that will be sold at a certain price. The supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.

This is my simple theory on why we have such a glut in properties for sale right now. About a year or more ago, anyone that had a glimmer that they might be selling in the next five years threw their property on the market hoping to get in why the market was white hot. And it surely was. Not many of these folks HAD to sell. That is why prices didn't drop like rocks. It doesn't cost sellers much to have their properties for sale. In fact, there might be a strange cachet to be able to say to their investulator friends at home, "Oh, yes, I have my house listed at a million five, too, but if it doesn't sell, that's okay, we love to go there ourselves, whenever we can get away!"

Then of course, you can throw in the demand curve. With the excited specuvestors tapped out, the remaining market is a bit more thoughtful about their purchases. With all of the supply in this market, does it not give them a lot more time to find the right property and then wait around for that property to get to the "right" price? But of course, the problem is that it is hard to determine the right price given this peculiar buyer-seller dynamic. This equilibrium will be set on a property-by-property basis, just as it should. I love capitalism. Seriously.

 

[Babyblue]

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.

So you are saying to tell the home owners to sell in a market you say is dead and will remain so for the next ten years? Hmmm lets do revisit this post. I wrote 10 million in Contracts this week. Maybe your a referring to markets like Detroit? But as you know this is not an area for the "average" home owner. Never will be. This is a resort area and will always be one.

 

[nmosley]

Congrats Baby Blue!!!!!
:clap_1:

What great news for you...and the rest of us who like 1/2 full glasses from time to time...or is it rose-colored glasses? Either way, sounds like you had an awesome week and I pray that your streak will continue on! Keep us posted.

 

[iqueequeg]

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.

The problem is, when people are wrong on internet message boards, they tend to disappear or change their username.

That being said, everyone is Massachusetts knows that people who live in Cambridge are always right.

 

[Sandcastle]

Let?s see now; rapidly increasing inventory, major uncertainty over insurance and taxes, seemingly unprecedented pessimism from some normally optimistic Realtors. Sounds like capitulation to me. Maybe it?s time to break out the checkbook.

Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.

 

[2bfabian]

There are some who think real estate is a risky business. But people who buy in this area are here for the swimming.

 

[Bobby J]

Let?s see now; rapidly increasing inventory, major uncertainty over insurance and taxes, seemingly unprecedented pessimism from some normally optimistic Realtors. Sounds like capitulation to me. Maybe it?s time to break out the checkbook.

Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.

You will have a great summer in Sowal! I have never been more optimistic about what it is going to take to buy/sell in SoWal! Optimism and pessimism are all about perception. My buyers feel pretty optimistic about the market! My above comments pertain to folks that have to sell today. Take the emotion out and ask if you would buy your home for what you are asking. I am actually trying to be helpful. The buyer pool never left. The perception of value left! We need to help folks see the value by getting some of this inventory that is not selling off the market.

 

[SHELLY]

The buyer pool never left. The perception of value left! We need to help folks see the value by getting some of this inventory that is not selling off the market.

And how do you propose to get the "inventory that is not selling" off the market?

"Value" is a very subjective term. What is the "value" of a Florida beach property to someone who "values" the Arizona desert or the Tennessee mountains?

The perception of "value" that caused the RE boom was mainly the "value of "FA$T ka-ching," something that is understood by most everyone with a speculative streak.

Now that the speculative RE market has pretty much run its course, we're back to folks who "value" Florida beach property--which, because of the massive run-up in price and carrying costs, may not be near as many (or because of the over-building, seem near as many) as before...as we go through a reversion to the mean.


.

 

[SHELLY]

Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.

Doesn't make sense....were you planning on selling your house this summer?


.