TREND Report - April 2006 - Walton County
- Thread starter Smiling JOe
- Start date
-
Trouble logging in? Send us a message with your username and/or email address for help.
welcome back- I think you were missed. But I think you knew that. Drop in over in the lounge later !
SHELLY'S back and there's gonna' be some trouble!!! 
Thank God your back Shelly, I feel the universe coming back into alignment and a little spice coming back into this Forum.
Well, I do concur with Mr Thornburg..prices will be flat for the next few years while the bubble diffuses. No worries. With the 150%+ jump in values a flat price is bearable.
Don't think trends think fundamentals..homes are a blue chip asset and the job rate is good, inventory is high so no new construction and building prices will fall as materials become more readly available.
Bottom line is that the RE binging will cease and things will be flat for a while..unit sales are returning to average levels portending midling appreciation rates.
Just my take.....
Don't think trends think fundamentals..homes are a blue chip asset and the job rate is good, inventory is high so no new construction and building prices will fall as materials become more readly available.
Bottom line is that the RE binging will cease and things will be flat for a while..unit sales are returning to average levels portending midling appreciation rates.
Just my take.....
Shelley, I watched the video in its entirety. Two points versus the professor's sweeping California/USA conclusions regarding any comparisons w/ SoWal. One, the relationship of rent value to mortgage rates is not a factor on many vacation home transactions. Two, relocation by retirement and migration from higher cost areas is driving value in SoWal for the long run. The opening of the PC airport 09-10 will accelerate both value enhancing factors. The professor was grinding a rather large axe, and I noticed he did not address the widely varying stats throughout California. As you know, I think, real estate is local. It was a thinly veiled hit piece on Realtors and Alan Greenspan.
Good video. Thanks for posting it.
I tend to agree with him that the correction is likely to consist more of a drop in sales with generally flat prices rather than a freefall. Although there may be an initial panic period (I think we are seeing some of that now).
I do believe there are some substantive differences between this and the Californian economies. That does not mean we are immune from the types of market forces he discusses, just that some of the fundamentals vary. We are after all a much smaller, and somewhat more homogenous, market than California overall.
For instance, much (if not all) of South Walton was relatively underdeveloped prior to the boom compared to other coastal areas, mainly due to the lack of any substantial economic base (beyond a limited tourism market). Some of our boom was "catch up". This provides a certain amount of strength, but not one that can be easily quantified. Unfortunately, it does not support a continuing of the trend once the market has "caught up".
Especially in the 30-A area, very little of the south Walton boom is truly residential, but is instead largely second homes--second homes that in many (perhaps most) cases are intended to be used for short-term rentals. This makes the economic fundamentals of the market here somewhat more akin to commercial real estate rather than residential housing, despite what the zoning may be. Overall, the commercial real estate market indicators are not bad.
Unfortunately, though, the fact that the market here is more of a commercial-like one has attracted a higher ratio of speculators to "home buyers" than usual. Speculators are more likely to dump quickly during a downturn than ride it out like a true homeowner would (after all, homeowners have to live somewhere so as long as their own financial picture is good, they care less about ROI on their home than a speculator does about ROI on an 'asset').
We do not have the labor base to help support demand in the lower end of the market that Dr. Thornburg mentioned. Of course, we also do not have a lower end in our market in the first place (see all the threads on "affordable housing"). This means we can expect to see construction costs stay high because of the labor shortage. High costs, increasing inventories, and a drop in demand are not a good combination.
Having said all that, I don't think we're in that bad of a shape. Prices are flattening and pulling back, but I don't anticipate a free-fall, because we do still have a tourism sector to provide rental income. Granted, rental income is not enough to offset all the costs of second home ownership in the first few years, but it offsets some of them...certainly more than if the property sits vacant. (So I would expect to see some of the neighborhoods that currently turn up their noses at rentals become a little more accepting.)
Additionally, in Walton county overall and surrounding areas, job creation continues and is increasing and the permanent population is increasing. Both of which fuel demand for secondary services and thus create further opportunities for entrepreneurs.
I think our overall economy has a bright long-term future. I also think we have some more pain ahead of us in the short-term.
I guess we're somewhere in between everything being rosy and the sky falling down.
I tend to agree with him that the correction is likely to consist more of a drop in sales with generally flat prices rather than a freefall. Although there may be an initial panic period (I think we are seeing some of that now).
I do believe there are some substantive differences between this and the Californian economies. That does not mean we are immune from the types of market forces he discusses, just that some of the fundamentals vary. We are after all a much smaller, and somewhat more homogenous, market than California overall.
For instance, much (if not all) of South Walton was relatively underdeveloped prior to the boom compared to other coastal areas, mainly due to the lack of any substantial economic base (beyond a limited tourism market). Some of our boom was "catch up". This provides a certain amount of strength, but not one that can be easily quantified. Unfortunately, it does not support a continuing of the trend once the market has "caught up".
Especially in the 30-A area, very little of the south Walton boom is truly residential, but is instead largely second homes--second homes that in many (perhaps most) cases are intended to be used for short-term rentals. This makes the economic fundamentals of the market here somewhat more akin to commercial real estate rather than residential housing, despite what the zoning may be. Overall, the commercial real estate market indicators are not bad.
Unfortunately, though, the fact that the market here is more of a commercial-like one has attracted a higher ratio of speculators to "home buyers" than usual. Speculators are more likely to dump quickly during a downturn than ride it out like a true homeowner would (after all, homeowners have to live somewhere so as long as their own financial picture is good, they care less about ROI on their home than a speculator does about ROI on an 'asset').
We do not have the labor base to help support demand in the lower end of the market that Dr. Thornburg mentioned. Of course, we also do not have a lower end in our market in the first place (see all the threads on "affordable housing"). This means we can expect to see construction costs stay high because of the labor shortage. High costs, increasing inventories, and a drop in demand are not a good combination.
Having said all that, I don't think we're in that bad of a shape. Prices are flattening and pulling back, but I don't anticipate a free-fall, because we do still have a tourism sector to provide rental income. Granted, rental income is not enough to offset all the costs of second home ownership in the first few years, but it offsets some of them...certainly more than if the property sits vacant. (So I would expect to see some of the neighborhoods that currently turn up their noses at rentals become a little more accepting.)
Additionally, in Walton county overall and surrounding areas, job creation continues and is increasing and the permanent population is increasing. Both of which fuel demand for secondary services and thus create further opportunities for entrepreneurs.
I think our overall economy has a bright long-term future. I also think we have some more pain ahead of us in the short-term.
I guess we're somewhere in between everything being rosy and the sky falling down.
Further to your point, attached is an article from Forbes regarding expected growth and Bay County. Also, below is a link regarding job growth in the panhandle. Take note of the area listed as No. 1 for smaller cities.
http://msn.careerbuilder.com/custom...-198149802-X8-2
http://msn.careerbuilder.com/custom...-198149802-X8-2
George said:
Thanks for the report George. I removed it because it was such a large file size for 3-1/2 pages. Feel free to post the text, summary, or link. kurt
Also - the link is not working for me.