Real Estate Supply

[Kurt]

Did you not believe that there are many, many lots out there listed well below market highs? Again, any of your friends can find a good realtor that will show them many more properties than I listed above at prices far, far below market highs.

You said the following:

Asking prices for lots that sold for X a year or so ago are sitting right next door to lots on the market today that are listed for 60% of X (and they aren't selling at these drastically reduced prices).

Post a lot that has an asking price 40% lower than the one next door sold for 12 months ago and I believe there are thousands of people on this board who would buy it. Assuming that the lots are truly comparable and the sale was at market value. A lot that has 4 months left before the required build out date instead of 16 months is not comparable.

 

[SHELLY]

I agree, Donna, about the lack of advertising outside SoWal. The area is nicely advertised (even has articles written about it) in Southern Living and Coastal Living. But I don't see anything about it advertised to people in the midwest, even though we'd be a prime target for rentals and buyers. People from Michigan, for example, are so grateful for 60 degree weather in the winter -- even 50 degree weather -- sometimes 40 degree weather... I think we could get a lot of winter rentals from retirees from the midwest if we advertised more.

Funny you should mention this. I thought it would be a good idea for a group of rental owners to get a little "cartel" together (10-12 homes or condos) and settle on an affordable (think lower-middle class) 3-month winter rate, then market it as a package to an up-north retirement village. If it works out, it could be a win-win situation: the owners would have their places rented out for a solid block of time during off-season and the "gang" from the retirement community would still be able to hang out together.

As this market becomes glutted with vacation rentals, the owners are going to have to think "outside the box" if they (at least) want to break even.

 

[Kurt]

The reason St Joe didn't advertise in the past was they didn't need to advertise. There were no end to the number of investors in the immediate area. All JOE had to do was fire out a fax to a couple Realtors about their property-du-jour and thousands would come flocking--LOC in hand--to glom around the jumbo shrimp bowl and sign contracts.

JOE had a near-zero advertising budget in those heady days of the real estate boom. Things have changed--expect to see more advertisements farther afield.

I understand your point but St. Joe has spent a lot of advertising money in recent years, probably in the millions per year. They have also benefited from tons of free publicity.

 

[monty]

You said the following:



Post a lot that has an asking price 40% lower than the one next door sold for 12 months ago and I believe there are thousands of people on this board who would buy it. Assuming that the lots are truly comparable and the sale was at market value. A lot that has 4 months left before the required build out date instead of 16 months is not comparable.

Many of these lots for sale at well below market highs have been on the market for quite some time and haven't moved. More are hitting the market every day. If people really want to buy, there are lots of properties out there to be had at prices way below market highs. In addition, many of the sellers would likely entertain offers below asking price which would make the deal even better.

Your point about the build out date is right on target--I agree completely. Prices will continue to fall as build out dates quickly approach.

Your point about "the lot being truly comparable and the sale was at market" is strange. Are you implying that all the frenzied buying at high prices was not done at market prices? The market is the amount a willing buyer will pay a willing seller. I would say that most of the properties sold is this market were sold at market prices. Finally, the lots in my post were all comparable to each other in terms of size and location. However, I agree again that there are no perfect comps. The primary point of the post is that prices are falling and they are likely to continue to fall. The deals will continue to get better until supply and demand even out.

 

[monty]

The reason St Joe didn't advertise in the past was they didn't need to advertise. There were no end to the number of investors in the immediate area. All JOE had to do was fire out a fax to a couple Realtors about their property-du-jour and thousands would come flocking--LOC in hand--to glom around the jumbo shrimp bowl and sign contracts.

JOE had a near-zero advertising budget in those heady days of the real estate boom. Things have changed--expect to see more advertisements farther afield.

Joe has been buying big ads in the Wall Street Journal, Womens mags, etc. for the first time in many years in an attempt to revive the market.

 

[Kurt]

Many of these lots for sale at well below market highs have been on the market for quite some time and haven't moved. More are hitting the market every day. If people really want to buy, there are lots of properties out there to be had at prices way below market highs. In addition, many of the sellers would likely entertain offers below asking price which would make the deal even better.

Your point about the build out date is right on target--I agree completely. Prices will continue to fall as build out dates quickly approach.

Your point about "the lot being truly comparable and the sale was at market" is strange. Are you implying that all the frenzied buying at high prices was not done at market prices? The market is the amount a willing buyer will pay a willing seller. I would say that most of the properties sold is this market were sold at market prices. Finally, the lots in my post were all comparable to each other in terms of size and location. However, I agree again that there are no perfect comps. The primary point of the post is that prices are falling and they are likely to continue to fall. The deals will continue to get better until supply and demand even out.

Why didn't you just say that in the first place? It took you a long way round to state a reasonable point that most everyone here would agree with. No reason to post examples that you don't have all the details for.

Many lots on the market have build out times left that make it impossible to buy now and meet requirements. I was told the one in WS you mentioned is one of them. So what does that make it worth? I don't know but you can't use it to prove your point.

I understand market value. I'm not implying that most properties were not sold for market value. You pointed out specific selling prices and you can't be certain they were at market value unless you have full knowledge of the transaction.

 

[Paula]

Joe has been buying big ads in the Wall Street Journal, Womens mags, etc. for the first time in many years in an attempt to revive the market.

I would think that they're buying these ads (and I'm glad they are) not to revive the market, but to build the market since this area is unknown to many non-southern markets. I think that much of the market plan was in place before the hurricanes and current market changes. I would think that JOE has both a short (e.g., respond to hurricanes and market changes) and long-term plan and the marketing is as much (perhaps more) of the long-term plan. Short-term changes in market condition shouldn't have a big effect on a company's strategy (unless, of course, the company is already in trouble and I don't have that sense with JOE at this time).

 

[Miss Kitty]

I have two questions. If I were to buy a lot with a short build out time, say 6 months, I am guaranteeing myself to pay penalties since no one can build that quickly, right? Second question...what are the typical $$ penalties for not building "on time"?

 

[Smiling JOe]

I have two questions. If I were to buy a lot with a short build out time, say 6 months, I am guaranteeing myself to pay penalties since no one can build that quickly, right? Second question...what are the typical $$ penalties for not building "on time"?

I think we are somewhat misusing the term buildout time on this board. We are really talking about construction start times.

I don't think that there is a "typical" penalty for not beginning construction by the start time. It will vary from one development to the other. I believe The Village of Blue Mtn has a penalty of $1,000 per month for not commencing before the start date.

 

[Miss Kitty]

I think we are somewhat misusing the term buildout time on this board. We are really talking about construction start times.

I don't think that there is a "typical" penalty for not beginning construction by the start time. It will vary from one development to the other. I believe The Village of Blue Mtn has a penalty of $1,000 per month for not commencing before the start date.

Thanks! I have learned on this forum that buildout time means commencement of construction, but I have also read that it takes time to get plans drawn up and approved. I'm wondering how much leeway developers would give to the new buyer.