Reading threads a few years back you see very few people with the courage to voice pessimistic views of the real estate outlook in South Walton. They received scathing responses. Today these people look like oracles. I applaud the dissidents who through careful analysis of the market, not hope or any other irrationality, knew it was and still is falling substantially.
Real estate as an asset class doesn?t turn around in 1-2 years as so many people on these boards purport. Cycles typically run 8-10 years or more. For the next 2 years you will see prices decline as much as 50% off current levels, then flat or gains of 1-3% over the next decade (factoring inflation you will have net losses).
Look at the current institutional community. The last 10 years saw a very large runup of investment allocated to R.E., today you can?t find a CIO who isn?t quickly reducing exposure to R.E. and reallocating into different asset class such as fixed income, private equity or traditionals.
You ask, what does the institutional community have to do with me Joe Citizen? If you study the market over long periods, let?s say 30 years, the residential market trails the institutions by 12 ? 18 months and follows the trend line quite remarkably.
Analyzing macroeconomic factors such as defaults in subprimes and now Alt-a?s looming, plus microeconomic factors such as higher insurance, taxes, etc?you see significant losses and erosion of value in real estate over the next 5 to 10 years. Bernanke will try to stave off the hemorrhaging real estate market with adjustments to the money supply but the bubble will burst and burst louder than tech in 2000.
We have had a second home in 30-a since the early 80?s and have heard varying degree?s of commentary on the market but nothing like the current optimistic dogma being spewed today. The reason I posted is to address those giving investment advice to home owners like ?hold on? and ?weather the storm.? You are doing a great disservice to the average home owner (Unless they are prepared to hold on for 10 years).
For those of you that disagree, let?s revisit this post at the end of ?07, ?08 and ?09. The data will speak for itself.
Replies
234Beach Lover
Great post... totally agree...
Seems the Treasury Secretary has a different view though 🙂
I really do wonder what signs he is looking at...
- skyrocketing inventory
- tightening mortgage market
- foreclosures increasing
- property insurance increasing
- taxes increasing
- salaries not increasing
- debt loads becoming harder to carry with increase in rates
- RE related jobs in the crapper (many do not get included in gov't unemployment figures conveniantly enough... ie agents, illegal construction workers, independant brokers, etc...)
Yea overall I guess everything looks peachy... its all up from here!!!
--------
Paulson says U.S. housing sector 'at or near bottom'
http:///
By Greg Robb
Last Update: 1:01 PM ET Apr 20, 2007
WASHINGTON (MarketWatch) -- Treasury Secretary Henry Paulson delivered an upbeat assessment of the economy, saying growth was healthy and the housing market was nearing a turnaround. "All the signs I look at" show "the housing market is at or near the bottom," Paulson said in a speech to a business group in New York. The U.S. economy is "very healthy" and "robust," Paulson said.
Seems the Treasury Secretary has a different view though 🙂
I really do wonder what signs he is looking at...
- skyrocketing inventory
- tightening mortgage market
- foreclosures increasing
- property insurance increasing
- taxes increasing
- salaries not increasing
- debt loads becoming harder to carry with increase in rates
- RE related jobs in the crapper (many do not get included in gov't unemployment figures conveniantly enough... ie agents, illegal construction workers, independant brokers, etc...)
Yea overall I guess everything looks peachy... its all up from here!!!
--------
Paulson says U.S. housing sector 'at or near bottom'
http:///
By Greg Robb
Last Update: 1:01 PM ET Apr 20, 2007
WASHINGTON (MarketWatch) -- Treasury Secretary Henry Paulson delivered an upbeat assessment of the economy, saying growth was healthy and the housing market was nearing a turnaround. "All the signs I look at" show "the housing market is at or near the bottom," Paulson said in a speech to a business group in New York. The U.S. economy is "very healthy" and "robust," Paulson said.
Beach Fanatic
Basically we are in a depreciating market. There is really no other way to look at it. Yes, we have beautiful beaches and pretty people but the simple economic fact of more product then demand brings prices down. Until we have a 4 month period where sales pass new inventory we are going to stay here. The bottom line is people do not see the perception of value unless the price comes to a point of value. Just because you paid $500,000 does not mean in today's market it will sale for that. We have to start looking at R.E. as a commodity. It is not a product. Products are sold by the sellers establishing price. R.E is not a product! It is a commodity! It is the buyer that establishes value. There is no relationship to advertising that you will find in a product....The difference is this commodity has emotion attached. People feel that I am not spending enough money to sell their listing, or I need more open house. Then when It finally sells, I sold it too cheap. If they could just remove some emotion they will sell. I am afraid the above comments are correct. If you are being advised to hold and wait one must be prepared to ride this cycle out. This is not a quick fix. If you can not wait, your price better have "wow" factor. If you have not sold within 45 days you are too high. The buyer pool never changes. They are all over the place. Price your home 1/2 of what you have on it today and see how many buyers show up! The problem is the public does not have the same perception of value they had two years ago. The Storms, taxes, and insurance helped change the perception. The way to sell your property is to create a drama price. Give the public the value and it will sell. It is not because your agent failed to advertise your home this week... If priced with a "WoW" the buyer will find it in a good or bad market.
Edited
Beach Lover
you don't know the mkt is going down for the next 2 yrs just like the people who think its going up don't know. its just people's opionion. and i work in commercial RE dev: institutional and priv eq money for cmcl real estate has never been more abundant.
just state your opinion and don't say that other people's stating theirs is a diservice.
that being said my opinion is that residential real estate prices will continue to moderate slightly in the near term...a "plunge" is very very unlikely even in second home mkts...demographics, earnings power, and favorable tax treatment are the sources for my opinion.
just state your opinion and don't say that other people's stating theirs is a diservice.
that being said my opinion is that residential real estate prices will continue to moderate slightly in the near term...a "plunge" is very very unlikely even in second home mkts...demographics, earnings power, and favorable tax treatment are the sources for my opinion.
Beach Fanatic
My favorite is "But the new international airport is going to open up direct flights to London and Paris and all the Europeans are going to come charging here to buy."
BA isn't going to start offering regular service into the Panhandle anytime soon, kids. And the only reason you'll ever see KLM on a Panana City ticket is because it's the same old code sharing with NWA's flights to Memphis.
The new airport will be an improvement, and there will be more flights, but what you'll end up with is something close to Pensacola- a couple more nonstop flights to Texas every day, and if you're lucky a daily flight to Chicago. Not Orlando part deux.
BA isn't going to start offering regular service into the Panhandle anytime soon, kids. And the only reason you'll ever see KLM on a Panana City ticket is because it's the same old code sharing with NWA's flights to Memphis.
The new airport will be an improvement, and there will be more flights, but what you'll end up with is something close to Pensacola- a couple more nonstop flights to Texas every day, and if you're lucky a daily flight to Chicago. Not Orlando part deux.
Beach Fanatic
you don't know the mkt is going down for the next 2 yrs just like the people who think its going up don't know. its just people's opionion. and i work in commercial RE dev: institutional and priv eq money for cmcl real estate has never been more abundant.
just state your opinion and don't say that other people's stating theirs is a diservice.
that being said my opinion is that residential real estate prices will continue to moderate slightly in the near term...a "plunge" is very very unlikely even in second home mkts...demographics, earnings power, and favorable tax treatment are the sources for my opinion.
None of us know for sure about anything other then what is doing today. We can simply look at the "New" inventory and compare to solds/pendings. The new inventory on a daily basis is unbelievable. So simple economics tells us we are in a depreciating market. When the above trend changes so will the market. This trend needs to last roughly 4 months to change the market. Low inventory=appreciating market.
Edited
Beach Lover
None of us know for sure about anything other then what is doing today. We can simply look at the "New" inventory and compare to solds/pendings. The new inventory on a daily basis is unbelievable. So simple economics tells us we are in a depreciating market. When the above trend changes so will the market. This trend needs to last roughly 4 months to change the market. Low inventory=appreciating market.
BobbyJ,
Just wanted to say that I (and probably others) appreciate your honest comments especially from someone in the biz like yourself...
Also would like to recomend a really helpful online tool to follow what is going on in the Destin market... I know most on here would like to see something similar for the SoWal market 🙂
But anyway this website allows the common man info from the MLS that includes new listings, price changes, pendings, closings, etc... It is a great tool to see what is going on day to day and month to month in the Destin market... Check it out...
www.thewiredagent.com
Great info shared on the Destin Market Pulse link...
Beach Fanatic
Thanks Destin... BTW, keep in mind people are selling once they put the price where the public finds the value. I have a full pending drawer!:clap_1:
Beach Lover
BobbyJ,
Just wanted to say that I (and probably others) appreciate your honest comments especially from someone in the biz like yourself...
Also would like to recomend a really helpful online tool to follow what is going on in the Destin market... I know most on here would like to see something similar for the SoWal market 🙂
But anyway this website allows the common man info from the MLS that includes new listings, price changes, pendings, closings, etc... It is a great tool to see what is going on day to day and month to month in the Destin market... Check it out...
www.thewiredagent.com
Great info shared on the Destin Market Pulse link...
This man knows things! Thanks for the kind words destinsm. One of my listings today just became the lowest priced Destin 1br condo at a WOW price of $118,000! 923sf, balcony overlooks lake and pool and there is even a partial Bay view from the balcony. Vacant and super clean.
Beach Lover
Thanks Destin... BTW, keep in mind people are selling once they put the price where the public finds the value. I have a full pending drawer!:clap_1:
I dont doubt they are... but I will wait and let a few others reset those comps downward a bit first... 😀
Beach Lover
For those of you that disagree, let?s revisit this post at the end of ?07, ?08 and ?09. The data will speak for itself.
Yes, let's do that. Let's see if you're the new Oracle of SoWal.
Beach Lover
The law of supply demonstrates the quantities that will be sold at a certain price. The supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.
This is my simple theory on why we have such a glut in properties for sale right now. About a year or more ago, anyone that had a glimmer that they might be selling in the next five years threw their property on the market hoping to get in why the market was white hot. And it surely was. Not many of these folks HAD to sell. That is why prices didn't drop like rocks. It doesn't cost sellers much to have their properties for sale. In fact, there might be a strange cachet to be able to say to their investulator friends at home, "Oh, yes, I have my house listed at a million five, too, but if it doesn't sell, that's okay, we love to go there ourselves, whenever we can get away!"
Then of course, you can throw in the demand curve. With the excited specuvestors tapped out, the remaining market is a bit more thoughtful about their purchases. With all of the supply in this market, does it not give them a lot more time to find the right property and then wait around for that property to get to the "right" price? But of course, the problem is that it is hard to determine the right price given this peculiar buyer-seller dynamic. This equilibrium will be set on a property-by-property basis, just as it should. I love capitalism. :wub: Seriously.
This is my simple theory on why we have such a glut in properties for sale right now. About a year or more ago, anyone that had a glimmer that they might be selling in the next five years threw their property on the market hoping to get in why the market was white hot. And it surely was. Not many of these folks HAD to sell. That is why prices didn't drop like rocks. It doesn't cost sellers much to have their properties for sale. In fact, there might be a strange cachet to be able to say to their investulator friends at home, "Oh, yes, I have my house listed at a million five, too, but if it doesn't sell, that's okay, we love to go there ourselves, whenever we can get away!"
Then of course, you can throw in the demand curve. With the excited specuvestors tapped out, the remaining market is a bit more thoughtful about their purchases. With all of the supply in this market, does it not give them a lot more time to find the right property and then wait around for that property to get to the "right" price? But of course, the problem is that it is hard to determine the right price given this peculiar buyer-seller dynamic. This equilibrium will be set on a property-by-property basis, just as it should. I love capitalism. :wub: Seriously.
Beach Fanatic
Reading threads a few years back you see very few people with the courage to voice pessimistic views of the real estate outlook in South Walton. They received scathing responses. Today these people look like oracles. I applaud the dissidents who through careful analysis of the market, not hope or any other irrationality, knew it was and still is falling substantially.
Real estate as an asset class doesn?t turn around in 1-2 years as so many people on these boards purport. Cycles typically run 8-10 years or more. For the next 2 years you will see prices decline as much as 50% off current levels, then flat or gains of 1-3% over the next decade (factoring inflation you will have net losses).
Look at the current institutional community. The last 10 years saw a very large runup of investment allocated to R.E., today you can?t find a CIO who isn?t quickly reducing exposure to R.E. and reallocating into different asset class such as fixed income, private equity or traditionals.
You ask, what does the institutional community have to do with me Joe Citizen? If you study the market over long periods, let?s say 30 years, the residential market trails the institutions by 12 ? 18 months and follows the trend line quite remarkably.
Analyzing macroeconomic factors such as defaults in subprimes and now Alt-a?s looming, plus microeconomic factors such as higher insurance, taxes, etc?you see significant losses and erosion of value in real estate over the next 5 to 10 years. Bernanke will try to stave off the hemorrhaging real estate market with adjustments to the money supply but the bubble will burst and burst louder than tech in 2000.
We have had a second home in 30-a since the early 80?s and have heard varying degree?s of commentary on the market but nothing like the current optimistic dogma being spewed today. The reason I posted is to address those giving investment advice to home owners like ?hold on? and ?weather the storm.? You are doing a great disservice to the average home owner (Unless they are prepared to hold on for 10 years).
For those of you that disagree, let?s revisit this post at the end of ?07, ?08 and ?09. The data will speak for itself.
So you are saying to tell the home owners to sell in a market you say is dead and will remain so for the next ten years? Hmmm lets do revisit this post. I wrote 10 million in Contracts this week. Maybe your a referring to markets like Detroit? But as you know this is not an area for the "average" home owner. Never will be. This is a resort area and will always be one.
Beach Comber
Congrats Baby Blue!!!!!
:clap_1:
What great news for you...and the rest of us who like 1/2 full glasses from time to time...or is it rose-colored glasses? Either way, sounds like you had an awesome week and I pray that your streak will continue on! Keep us posted. 😀
:clap_1:
What great news for you...and the rest of us who like 1/2 full glasses from time to time...or is it rose-colored glasses? Either way, sounds like you had an awesome week and I pray that your streak will continue on! Keep us posted. 😀
Beach Lover
For those of you that disagree, let?s revisit this post at the end of ?07, ?08 and ?09. The data will speak for itself.
The problem is, when people are wrong on internet message boards, they tend to disappear or change their username.
That being said, everyone is Massachusetts knows that people who live in Cambridge are always right.
Beach Fanatic
Let?s see now; rapidly increasing inventory, major uncertainty over insurance and taxes, seemingly unprecedented pessimism from some normally optimistic Realtors. Sounds like capitulation to me. Maybe it?s time to break out the checkbook.
Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.:(
Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.:(
Banned
:shark: There are some who think real estate is a risky business. But people who buy in this area are here for the swimming.
:banging:
:banging:
Beach Fanatic
Let?s see now; rapidly increasing inventory, major uncertainty over insurance and taxes, seemingly unprecedented pessimism from some normally optimistic Realtors. Sounds like capitulation to me. Maybe it?s time to break out the checkbook.
Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.:(
You will have a great summer in Sowal! I have never been more optimistic about what it is going to take to buy/sell in SoWal! Optimism and pessimism are all about perception. My buyers feel pretty optimistic about the market! My above comments pertain to folks that have to sell today. Take the emotion out and ask if you would buy your home for what you are asking. I am actually trying to be helpful. The buyer pool never left. The perception of value left! We need to help folks see the value by getting some of this inventory that is not selling off the market.
SoWal Insider
The buyer pool never left. The perception of value left! We need to help folks see the value by getting some of this inventory that is not selling off the market.
And how do you propose to get the "inventory that is not selling" off the market?
"Value" is a very subjective term. What is the "value" of a Florida beach property to someone who "values" the Arizona desert or the Tennessee mountains?
The perception of "value" that caused the RE boom was mainly the "value of "FA$T ka-ching," something that is understood by most everyone with a speculative streak.
Now that the speculative RE market has pretty much run its course, we're back to folks who "value" Florida beach property--which, because of the massive run-up in price and carrying costs, may not be near as many (or because of the over-building, seem near as many) as before...as we go through a reversion to the mean.
.
Edited
SoWal Insider
Actually, I was feeling pretty good until I read this thread. The weather has been beautiful at the beach, the canals north of Grayton are finally being dredged, I just finished building a great dock for my bay boat, and I was looking forward to a really great summer in SoWal.:(
Doesn't make sense....were you planning on selling your house this summer?
.
Checking your forum account
Please wait while we verify your forum account.