Auld Lang Syne roughly means ?times gone by? in Scottish, and in the real estate world, we are probably thankful that 2006 has gone by.
We find ourselves in 2007 in a much healthier market. The adjustments made for the properties that have to sell have, for the most part, taken place, and prices and more importantly property values, are stabilizing, both locally and nationally. We are in a buyer?s market, and because of the adjustments, there are some pretty tremendous deals out there.
In the cyclic progression of things, we?ve pretty much hit the bottom. There are those properties which must be sold, due to overinvestment, and these will be realized this year by the next wave of early investors.
Look for the market to hang out here for the fi rst two and a half quarters of this year, with the least expensive condos and homes moving fi rst
Then as the sales and attrition take place, watch for a movement into higher priced condos and homes.
Also watch for prices starting to rise again slightly toward the end of this year, with anticipation of higher pricing in the spring of 2008.
This anticipatory trend will probably go on for the next couple of years, if history is an indicator, with another crescendo again in three years or so.
How many times have you said that now famous expression, heard locally for years, ?I really wish I had bought something several years ago??
Well, guess what? Several years from now is coming.
This year and probably next will be the years to pick up something ?cheap? in comparison to the coming years. It has happened that way in 1998-99 and 2002-03, and according to history, and barring any economic or social long term disasters, it is very likely to happen again, especially here in this area with our anticipated growth.
Keep in mind that there is a considerable amount of inventory in new single family homes and homesites, so the progression in these segments may take a little while longer, but the pricing may also, in the short term, be good.
So, welcome to 2007. We look for this to be a very good year!
By David Clement, broker for Blue Mountain Beach Realty, Inc. He has been involved in the real estate market in this area for the last decade.
Replies
36
Beach Lover
My opinion is that your predictions and some of your numbers are off. 500% runup in 7 years is not correct (not even in 8-9 years in our case), at least of the properties I know about - oceanside of 30A in the Seacrest area. 300%+ is more like it and that was pretty much peak asking prices that I saw. It may be true in some cases.
I refinanced mid 2003 and have that appraisal. IMO, buyers would snap up anything in our area at those levels, probably before it got there. 2002 pricing is not even in a reasonable discussion, again IMO, as I believe the floor would be set a long time before we got there.
You are correct. There was no 500% runup.
This area was extremely undervalued compared to other coastal areas in the state. Some of which are not as nice. 2004 simply was an adjustment to become competitive with these other areas. 2005 is where we saw the inflation caused by speculators who saw the adjustment, didn't understand it, and assumed that it would continue indefinately. Or they thought that there would be a gradual slowdown of appreciation that would let them reduce prices of their inflated listings. This is typically what happens at the end of natural adjustment periods. But this time the appreciation stopped abruptly due to the storms. More accurately, the media over-exposure of the storms.
The good news is that a large percentage of Sowal investors can hold until the current market adjustment is over. Their listings are still over-priced and they are not motivated to sell.
2007 should see a relatively high volume of sales activity, but it will be the investors without holding power that will be dumping. A good time to buy for long term investment. After the "desperate" sellers have sold, buyers will have to deal with sellers that are not willing to take a loss on their investment. That is when the market should turn around with an eventual increase back to 2004 levels, which will be competitive with other resort areas. Hopefully this will take place in 2008 or 2009 with the Bay County Airport fueling the fire in 2009.
These are my opinions based on my observation of many markets throughout the state over many years.:clap_1:
SoWal Insider
You are correct. There was no 500% runup.
This area was extremely undervalued compared to other coastal areas in the state. Some of which are not as nice. 2004 simply was an adjustment to become competitive with these other areas. 2005 is where we saw the inflation caused by speculators who saw the adjustment, didn't understand it, and assumed that it would continue indefinately. Or they thought that there would be a gradual slowdown of appreciation that would let them reduce prices of their inflated listings. This is typically what happens at the end of natural adjustment periods. But this time the appreciation stopped abruptly due to the storms. More accurately, the media over-exposure of the storms.
The good news is that a large percentage of Sowal investors can hold until the current market adjustment is over. Their listings are still over-priced and they are not motivated to sell.
2007 should see a relatively high volume of sales activity, but it will be the investors without holding power that will be dumping. A good time to buy for long term investment. After the "desperate" sellers have sold, buyers will have to deal with sellers that are not willing to take a loss on their investment. That is when the market should turn around with an eventual increase back to 2004 levels, which will be competitive with other resort areas. Hopefully this will take place in 2008 or 2009 with the Bay County Airport fueling the fire in 2009.
These are my opinions based on my observation of many markets throughout the state over many years.:clap_1:
PalmBeach I agree with you wholeheartedly. I have said before and will say again that on our first trip to SoWal in 2003, I was astounded by the prices in SoWal compared to the other Florida markets. I agree that a large portion of the rapid appreciation was abolutely justified because the area was being "discovered." Once the prices began to approach those of the other more popular and (also) beautiful Florida resort areas, I became alarmed because truth be told, we don't have the the year-round amenities or airport yet.
Once the airport is in and development stablizes and services improve (which might be the biggest challenge), watch out. :shock: An accessible SoWal is going to be in demand by many visitors who would never have come before, and prices will rise accordingly.
The only caveat to recovery, other than the large amount of inventory, is whether the entire Florida coastal real estate market is overvalued by a large margin. If so it will be a long ride down for everybody. I'm not sure that's going to happen now ... the Legislature is obviously willing to make HUGE changes to the taxes and insurance laws to keep the state from an economic meltdown. Positive changes will only help SoWal.
Edited
Beach Lover
Not that we know anything about real estate but Smith Barney today went to an over weight in equities almost solely because the investment committee feels the real estate market has bottomed out nationally which will be good for the economy, of course every local market will differ greatly.
But every little bit helps.
But every little bit helps.
Beach Fanatic
Wouldn't a Super WalMart require approval by the county commission?
They can remove trees on any of their property because they are operating a tree farm
Beach Fanatic
They can remove trees on any of their property because they are operating a tree farm
Beach Lover
PalmBeach I agree with you wholeheartedly. I have said before and will say again that on our first trip to SoWal in 2003, I was astounded by the prices in SoWal compared to the other Florida markets. I agree that a large portion of the rapid appreciation was abolutely justified because the area was being "discovered." Once the prices began to approach those of the other more popular and (also) beautiful Florida resort areas, I became alarmed because truth be told, we don't have the the year-round amenities or airport yet.I agree with positive responders. I think it will stablize this year and into next year, depending of course on hurricanes.
Once the airport is in and development stablizes and services improve (which might be the biggest challenge), watch out. :shock: An accessible SoWal is going to be in demand by many visitors who would never have come before, and prices will rise accordingly.
The only caveat to recovery, other than the large amount of inventory, is whether the entire Florida coastal real estate market is overvalued by a large margin. If so it will be a long ride down for everybody. I'm not sure that's going to happen now ... the Legislature is obviously willing to make HUGE changes to the taxes and insurance laws to keep the state from an economic meltdown. Positive changes will only help SoWal.
In any case I am buying and think others will look back on this time and say I wish I had bought when I could afford......
Banned
Maybe for lots, but never for homes.
obviously creating a vista of suburbs, diminishing natural beauty and lack of infrastructure/recreational/cultural development will denigrate home prices. so it's important to consider those aspects particular to this area since we're a "luxury" beach market and competing on a national level. what happens in the "home buying" market is not that relevant to us.
Beach Fanatic
I was just looking at Feb. 2006 versus Feb. 2007 and we have almost doubled in sale in SOWAL!!!!! Also Feb. 2007 beat January 2007!
Edited
SoWal Insider
I was just looking at Feb. 2006 versus Feb. 2007 and we have almost doubled in sale in SOWAL!!!!! Also Feb. 2007 beat January 2007!
Numbers?
Closed or contracted?
Beach Fanatic
86 closed units. This does not include auctions or Commercial.
Beach Lover
My opinion is that your predictions and some of your numbers are off. 500% runup in 7 years is not correct (not even in 8-9 years in our case), at least of the properties I know about - oceanside of 30A in the Seacrest area. 300%+ is more like it and that was pretty much peak asking prices that I saw. It may be true in some cases.
I refinanced mid 2003 and have that appraisal. IMO, buyers would snap up anything in our area at those levels, probably before it got there. 2002 pricing is not even in a reasonable discussion, again IMO, as I believe the floor would be set a long time before we got there.
Another interesting 20/20 look in hindsight at those that predicted a huge downturn and those that couldn't see it coming.
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