Real Estate Supply

[Kurt]

I couldn't afford one even at 60% of what they sold for a year ago, but I have several thousand friends who would be interested. Please send or post details.

 

[Just_In_Thyme]

I'd also be interested in this info. We are looking for a good deal.

 

[Jellyfish]

The real estate supply continues to FAR outstrip demand and prices continue to fall because of this imbalance. If you look at sales data for the major developments along 30A (not for all of walton county) for the period August through November, you will find that sales of homes and lots are down by 20 to 60% in places like Rosemary, Watersound, Seaside, Watercolor, etc.

Prices on many lots and homes are well below the peak of late 2004 and early 2005. 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). Houses that sold for $X per square foot 12 to 18 months ago are sitting next to similar houses that are listed today at prices 10 to 25% less per square foot (and these aren't selling either).

Builders are lowering prices every week and lot owners are doing the same as build out dates quickly approach. The market has a way to go before it hits a trough and starts growing again. There will be some great buying opportunities over the next few years as distressed owners and builders do anything they can to sell homes and lots in a market that is flooded with overpriced inventory.

Real life example, this is what is going on in Las Vegas right now. I did have a home, still own a condo there for businesss ( I am there every couple of weeks), didnt by it as an investment, just was cheaper than 50 hotel nights a year and more convenient. You can still buy a decent 2br townhouse with a garage for $200K. Anyways, the market went nuts over last couple of years, mostly speculators. Market really pulled back this winter. At one point, there were over 50,000 listings (in a city with about 1.2m residents.... ), mostly investors trying to unload. Most publications expect Vegas prices to actually decrease 5-15% this year as the investors sell out and new home flippers go to closing. If you bought 4-5 year ago, you still have a nice run up in value, but now will pull back some. There is no way to tell, however I wonder how many "investors" (ie: short term flippers) there are in the SoWal market?

 

[Miss Kitty]

jellyfish...I have wondered the same....how many "investors" vs. homebuyers are there in SoWal. I was a homebuyer that just hoped my property did not decrease in value. I would be happy to "break even"....because I have enjoyed our place so much since purchasing in 2001.

 

[TooFarTampa]

I'd say quite a few, jellyfish. I personally know some. But I also know several people like us who were investors but now are in it for the long haul. Gonna take awhile for the others to shake out of the market. Rental market also needs to stabilize. Can't really raise rents (because the supply is increasing) but rents don't cover the escalating costs. I don't think these factors are going to change anytime soon. It will s-l-o-w-l-y get better. A few hurricane-free seasons would help.

 

[Jellyfish]

Not trying to compare the 2 markets, just pointing out that real estate, although a great long term investment, does move in cycles. It's like retirement savings---yes, stocks are better than bonds/fixed income over the long term, but if you need the money in a down cycle, you're not going to be happy.

Another interesting thing that happend in Las Vegas is that there were so many investment houses for rent that rents went down about 20%. Rents are still depressed today. Supply and demand, eventually, always takes control.

Personally, I think SoWal will continue to escalate, long term, because it is such a unique and beautiful place, and no matter how bad the economy gets, people will still vacation at the beach. Short term, would appear the level of speculation (not just in SoWal but just about everywhere) will take some time to shake out, which should put downward short term pressure on
values. If you're in there long term (like I hope to be) not to worry, just looking for a superior entry point.

 

[SHELLY]

Real life example, this is what is going on in Las Vegas

Interesting piece on speculation in Las Vegas

Speculate...and here's what you get, another day older and deeper in debt

 

[TooFarTampa]

Interesting piece on speculation in Las Vegas

Speculate...and here's what you get, another day older and deeper in debt

Interesting and scary read, SHELLY, but SoWal is no Las Vegas. Anyone who knows anything about the fundamentals of real estate should have thought twice before getting caught up in the craze. As a non-coastal town, it has literally twice the number of available area that a similar-sized coastal town would have. Think circle vs. half circle. Add in the beautiful vistas of SoWal and the high (and RARE) coastal elevations, and the markets look completely different from a long-term perspective. JMO.

 

[Jellyfish]

Not a good sign...beginning of the end IMO

http://www.reviewjournal.com/lvrj_home/2006/Jan-07-Sat-2006/business/5248008.html

Also, its a common misconception to assume there is pleny of land in LV.
Looks like open desert all around the city when you fly in, but actually 95% of the state is owned by various Fed and State agencies (DOD, DOE, NPS, etc). The BLM holds land auctions regularly, but the supply is far from plentiful due to this anomally.

 

[TooFarTampa]

Not a good sign...beginning of the end IMO

http://www.reviewjournal.com/lvrj_home/2006/Jan-07-Sat-2006/business/5248008.html

Also, its a common misconception to assume there is pleny of land in LV.
Looks like open desert all around the city when you fly in, but actually 95% of the state is owned by various Fed and State agencies (DOD, DOE, NPS, etc). The BLM holds land auctions regularly, but the supply is far from plentiful due to this anomally.

That's very interesting about the government-owned land. I stand corrected then. Thanks for the info.

I do agree that it is the beginning of the end (for now) of condo development. Too much too fast ... in Tampa we've had a huge number of condos built lately, plus a lot of apartment conversions to condos :roll:, and it looks like several of the latest announced communities are just not gonna happen. We're relatively secure here with single family homes, but there are signs of a slowdown. Houses are moving, supply seems to be in balance in most areas, but the price has to be appropriate.

Then again, the US population just hit 300 million, or is about to (can't remember which it is) so the building booms are far from over.