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Opinions requested regarding SoWal real estate pricing...

Beach DadBeach Comber
11,915 views
:roll: I'm living out my lifelong dream of relocating my family here from Tx June 1st and am working through the pros and cons of the current market conditions. I'd love to hear from some of you regarding an objective view of pricing. I'll admit my mindset has become very jaded due to a number of factors. Side note: If you live in Rosemary Beach, don't even bother reading further, you are either retired, independently wealthy, or mortgaged out the wazoo and this lengthy post will bore you.

I'll preface this by saying I don't think I've ever seen so many real estate agents in one particular locale than I've seen here. And with all due respect, I don't expect any one of them to voice anything but optimism about how pricing and demand is right on the verge of taking off. (I'm very skeptical due to the fact that I read that there are over 11,000 listings right now along the Emerald Coast - supply is considerably higher than demand.)

I want someone to tell me what they would tell their son, friend, or business aquaintance they would do, if they were in my shoes. Not try to sell me on the area, just talk honestly about how to get the best value for my housing dollar.

That being said, I think that I am a great prospect for a home purchase. My income is above average, my credit excellent, and my job allows me to live anywhere along the Panhandle. My preference is to live as close to water as possible (and know that waterfront is out of the question). I don't want to have to drive across the causeway or Mid-bay bridge to get to the beach. Bluewater Bay is nice, but not my cup of tea.

However, it now seems that every mudhole with a trailer in this area has been listed at $300K. And I've been coming down here for 40+ years and I've never seen that kind of seller optimism. The number of homes in the $300K to $400K range is disappointing. And my view is that if I'm going to spend $500K for a 3 bedroom 2+ bath home here, I'll definitely build what I want, not buy a 70's home that somebody is trying to flip for a big profit because their agent has convinced them they can get it.

Am I the only guy in the grit eating world that thinks that a price correction is still yet to come? I understand that there is a lot of money coming into this area, but with homeowner's coverage and property taxes rising, I've got to believe that there are a number of folks in Atlanta, Bham, Memphis, etc, who have overextended themselves. If your taxes and insurance are $700/month, that can seriously impact your monthly mortgage note (escrow).

Am I nuts in my thinking? Is this California? I hope this area has not become unaffordable for the average family fortunate enough to live in this incredibly beautiful area. I'm seriously considering renting for a year to watch and wait. I'd love to hear what you would do if you were in my shoes. Thanks for allowing me to type this novel.

Replies

66
Here4Good avatar
Here4GoodBeach Fanatic
#27
I think if I had to make my decision today, I would rent for a year as close to the beach or Pt. Washington as possible, and think seriously about building in your area. However, I am meeting tomorrow with a good friend who is a realtor in the area that I trust and respect. The intention of my post was to make myself think about all angles before outlining my search goals.

Funny thing, my brother in law is an architect here (McWhorter Architects... got to give him a cheap plug). We used a plan he designed for the HGTV Dream Home in Rosemary Beach and built in New Braunfels, TX in the hill country. My home sits on an acre of land and I have it listed for $335K, hoping it will sell. What a difference in markets huh?

Well, coming from Texas, at least you are used to high real estate taxes! Your home in Texas sounds dreamy.....is it on the market yet? Any links you can post? Maybe someone will want to trade!
destinsmBeach Lover
#29
I think this is it: MLS 451173 on emeraldcoasthomesonline.
http://www.emeraldcoasthomesonline.com/(xfkxtm45hnzn5a2ykcfg1p55)/propertyDetails.aspx?mls=451173

Seems to me that would list for more like $850k to $900k when comparing to the second link.

I was just looking for a quick neighborhood comparison for rental and home purchase... It can be done for almost every neighborhood in Okaloosa, and Walton county and the same results would be found...

I apologize for not getting an exact match, but I thought same neighborhood, all new construction and roughly same size would have been enough to make my point...
Camp Creek Kid avatar
Camp Creek KidChristini Zambini
#30
Beach Dad, I think building is a great idea, especially since you are related to a great architect. Lot prices in certain areas are very competitive and construction costs have gone down considerably from the last 2 years. Materials costs are way, way down and you will be able to find a local builder who will give you a fair deal because they have to be competitive now that the market has slowed.

IMO, Point Washington is the place for you to look because it is centrally located in SoWal. You kids can walk to Bay Elementary (great, small school) and it is near Seaside Middle and the South Walton High School. Also, Point Washington is near Helen McCall Park where the football and baseball fields are located.
Here4Good avatar
Here4GoodBeach Fanatic
#31
Here is a link to my home in New Braunfels....

http://realtor.com/FindHome/HomeLis...20&y=12&sid=07B515BD199BC&snumxlid=1072323449

If you look closely, you can see my big screen TV calling out my name during tonight's football game. I miss it terribly. Almost as much as my wife and kids. 🙂

Looks like another break for you - you are not used to having a garage. :funn:
Every shack in the county has granite countertops, but garages are hard to find!
Beach DadBeach ComberAuthor
#32
Well, coming from Texas, at least you are used to high real estate taxes! Your home in Texas sounds dreamy.....is it on the market yet? Any links you can post? Maybe someone will want to trade!

I tried to post a link to my home in New Braunfels but I didn't succeed. Let me try again... (this site must be childproof and kept me out)

http://realtor.com/FindHome/HomeLis...20&y=12&sid=07B515BD199BC&snumxlid=1072323449

Click on the virtual tour and you will see why we are really going to miss this home. And not only do I have a beautiful wife and two kids, I am also married to a 60" big screen TV that no doubt misses me terribly. 🙂

Side note: Check out the built in bunk beds upstairs - the boys sleep there when we have guests. It frees up their rooms and I don't have to have a forth bedroom sitting idle. I give my Brother in law an A+ for that creativity.

You are right about the taxes. My property taxes are right at $4K per year. My homeowner's coverage with Nationwide is only about $1100 per year - no hurricanes in the hill country thankfully.
fisherBeach Fanatic
#33
I am really tired of hearing this line of crap...

If you buy, you are building equity...

If you rent, you are throwing money away...


Lets actually look at this simplistic mainstream idea a bit deeper...

Lets assume as you have stated that the market will stagnate for a few years and I am looking to buy or rent next week...

Well if I looked to buy a home in South Walton and say as example I picked Village of Blue Mountain I would be looking to pay anywhere from $700k to $1.5M depending on the size....

Well if I meander on over to the rental department I can magically rent a home over 2,000 sq ft for $2,000/month in the same neighborhood... And this comparable size home in this neighborhood would be going for about $1.25 million...

So say I bought it at $1.25 million and I even put down 20%(doubtful to have $250,000 cash on hand for a down payment... but I am giving the benefit of doubt in this argument toward the buying side... I also won't even use this downpayment against you as far as the opportunity you have wasted by putting $250k into the house rather than letting it grow in a mutual fund or even a high yield savings) my mortgage with insurance taxes and interest would be no cheaper than $7000/month... This is assuming annual taxes at $7500/year and Annual Insurance at $2500/year... pretty low assumptions...

So knowing that very little of your PITI payment each month for your mortgage actually goes to Principal for the first 5 years of the loan... why would I want to spend $5000/month more to live in the same type of home...

Assuming you even had $7,000/month to spend on a mortgage would you not rather pay $2,000 per month to rent and save the difference ($5,000/month in even a high yield savings account???)

In this scenario with house prices stagnate and the difference from price to rent in five years that person could have saved and grown his savings to close to $350k in a simple high yield savings account with absolutely no risk... or he could fork over $7,000 per month and hope and pray everynight that his house appreciates like it was 2005 all over again...

I also left out maintenance costs, HOA dues, and maybe some other small things to again give the benefit of my math to the buyer.... But in the end, in my opinion you would be crazy not to rent for a few years and see how this thing shakes out...


You are absolutely correct, but you will have a hard time getting many people that ignore logic, reason and facts to understand your post.
fisherBeach Fanatic
#34
I don't agree ... I don't think all areas in SoWal are the same and there is a bottom in sight to the price reductions.
Second, if you buy a house and the price falls after you buy, you are not building equity, you are losing equity [/quote]

True - but if you buy wisely, you won't be buying a house that falls in price. And if you do, and you've bought for the long term, history has told us things swing up again. Just like stocks - up and down, up and down.[/QUOTE]

Again, please be specific. I'm sure there are lots of people on this board that are looking for one of these sure fire investment opportunities that you refer to.

Hyperbole and tired old sayings won't get you very far in a market like the one we are currently experiencing.
Indigo JillBeach Fanatic
#35
Second, if you buy a house and the price falls after you buy, you are not building equity, you are losing equity

True - but if you buy wisely, you won't be buying a house that falls in price. And if you do, and you've bought for the long term, history has told us things swing up again. Just like stocks - up and down, up and down.

Again, please be specific. I'm sure there are lots of people on this board that are looking for one of these sure fire investment opportunities that you refer to.

Hyperbole and tired old sayings won't get you very far in a market like the one we are currently experiencing



Specific examples?? It depends on what you are looking for, what your price range is, your investment goals, etc. etc. etc. Ready to buy? Do your homework, find a good Realtor and proceed.

Hyperbole and tired old sayings :lol: Funny, I could say the same thing to you, fisher! We just aren't on the same page.

Edited

full timeBeach Fanatic
#36
"... you will have a hard time getting many people that ignore logic, reason and facts to understand your post."

Apparently not. You seem to have "understood" it just fine. Using the Village of Blue Mountain Beach makes the exercise pointless and patently stupid from the outset.
destinsmBeach Lover
#37
"... you will have a hard time getting many people that ignore logic, reason and facts to understand your post."

Apparently not. You seem to have "understood" it just fine. Using the Village of Blue Mountain Beach makes the exercise pointless and patently stupid from the outset.


Like I had said in an early post, pick any neighborhood you would like.... 99% of the time you will come up with the same outcome I have shown..

The ONLY reason I used Village of Blue Mountain is because it was the first rental I saw when searching in the SoWal area for an example to be used to make my point...

Same can be shown in Camp Creek, Rosemary, on and on... just name your neighborhood...
Rather B PaddlinBeach Lover
#38
Destinsm,

You gave one hypethetical example. There are a lot of values out there. It just takes time, effort, and hard work to turn lemons into lemonade. Oh yes and a good realestate broker, which I am not.

How about a real life example. A gulf view house (much larger than your example) was purchased 3 months ago in Santa Rosa Beach for less than $900K. It will generate $70k to $75k a year in rents. Humm that works.

Renting as opposed to buying is definitely easier, but necessarily a correct decision.
fisherBeach Fanatic
#39
Destinsm,

You gave one hypethetical example. There are a lot of values out there. It just takes time, effort, and hard work to turn lemons into lemonade. Oh yes and a good realestate broker, which I am not.

How about a real life example. A gulf view house (much larger than your example) was purchased 3 months ago in Santa Rosa Beach for less than $900K. It will generate $70k to $75k a year in rents. Humm that works.

Renting as opposed to buying is definitely easier, but necessarily a correct decision.

I assume you are quoting gross rent. After deducting 33% or so percent for the rental agent. You are netting out $50k or so. Next deduct property taxes, utilities, maintenance, insurance, etc. You might be left with somewhere in the neighborhood of $20k to 30k. A return of 3% or less. CD's are running around 5% right now. So, you need appreciation of 2% per year to breakeven. That kind of appreciation ain't happening--in fact properties are depreciating right now. Bottom line--renting is a better option from a financial perspective right now.
Rather B PaddlinBeach Lover
#40
Yes, gross rent. NO Rental Agency = 0%. You do not need a rental agency. It much easier and more painless without a rental agency. Sorry to the advertisers. Also, most rental agencies charge much less than 33%, more like 20%-25%. Lastly, you have to take in the effect of the paper depreciation losses on your taxable income. I believe you could gain a taxable benefit of up to $25k per year.

Talk to a good realestate broker and enlist a good CPA, before you decide buying is not feasible for your situation. Good luck with your decision.

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