Are prices falling-and example from watersound

I don't know if it is evidence of a bubble (I have always felt the analogies of real estate to tech stocks are a bit flawed) or just plain common sense setting in with the buy/flippers who trade on predictions of future appreciation. At that price point, there are few buyers and lots of options on 30A so the competition is tough.

Doing the rough math, say you buy at 1.7 million. You put 200K down and finance it with an interest only loan at 1.5 million. Assessments at Watersound are about 10k/year. If I estimate interest payments (at 7%) and out of pocket costs and a reasonable 10% lost opportunity cost of the 200k in sunk equity, I am coming up with about $135k in yearly expenses. At that rate, the property would have to appreciate 8% a year just to break even. (I assume away costs of buying and costs of selling again, including the selling commission).

Course, reliable rentals and tax benefits would change these rough numbers (and, I am bad at math and thought that out on the fly). For me, that's a pretty risky move with every magazine plastering stories about bubbles on the front cover. Course,if I wanted to live in Watersound the economics would be different. Maybe they do this a different way, too.

I won't bet on the bubble/no bubble debate, but I will bet that lots of people are going to be discovering that real estate is a highly illiquid investment. Whooops!

... Two have been listed at over $2.2 million and the other one is listed at $1.775 million. Similar resales over at the Crossings have gone for $2 to 2.4 Million. The low priced condo hasn't sold in over 3 weeks even though it looks like a bargain.... The condos in Watersound were so hot last year, you couldn't touch them and now the guy can't sell one "under market".

any thoughts?

Yes, my thoughts are that there are not too many average Joes, or above-average Joes who are willing and able to fork over $1.7 M for anything, even if it is a good deal.

Just wanted to get the opinion of the group. Lots of arguing about bubbles or no bubbles lately. i've been lurking.

I was down in Fla. last week and went to look at some condos in Watersound after following the resale price list for several weeks. There are 3 "resales" of Compass Point II condos on the market. They are all teh exact same floorplan with similar views. Two have been listed at over $2.2 million and the other one is listed at $1.775 million. Similar resales over at the Crossings have gone for $2 to 2.4 Million. The low priced condo hasn't sold in over 3 weeks even though it looks like a bargain.

According to a realtor, the closings on these condos will occur over the next few weeks and the lower priced condo is priced to sell because the owners of the contract to purchase don't want to close. BUT, it ain't selling. Maybe it sold after I chatted with the realtor, don't know. The condos in Watersound were so hot last year, you couldn't touch them and now the guy can't sell one "under market".

any thoughts?

If you like it, make an offer. It doesn't get much better than WaterSound.

Yes, my thoughts are that there are not too many average Joes, or above-average Joes who are willing and able to fork over $1.7 M for anything, even if it is a good deal.

You got me thinking, just how many people in this country are millionaires? A quick search on Google revealed these numbers from Spectrem Group's "Affluent Market Insights 2005" report.

• In the U.S.A. there are 7.5 Million households with $1million or more in assets.
• There are 740,000 people with more than $5million.

What is interesting is your primary residence is always excluded in determining millionaire status so when you include that the numbers would likely be much higher.

Seems to me the pool of qualified buyers is sizable. How many of them are interested in buying a piece of paradise on 30-A remains to be seen.

>>Seems to me the pool of qualified buyers is sizable. How many of them are interested in buying a piece of paradise on 30-A remains to be seen.<<

Many of those new "millionaires" got that way through hard work and living within their means (i.e., not blowing their money on frivolous purchases). Most of them are intelligent enough to know a good deal when they see one. They will surely recognized throwing a couple of million into an OVERPRICED condo or home whose price was run up on pure speculation is not prudent. "If" any of them decide to buy property in the 30A area, they will wait and pick them up at reduced, reasonable prices--the new millionaires did not accumulate their wealth by buying things at the top of the market. Instead of chasing money, these people work within their means, use their head and let the money work for them. They've got savvy....they've got money.....and they've got time to wait it out. And if they "miss" their opportunity to live at "THAT" beach, they won't fret, because their lives are defined by so many other things than merely "living in "THE" right place."

>>Seems to me the pool of qualified buyers is sizable. How many of them are interested in buying a piece of paradise on 30-A remains to be seen.<<

Many of those new "millionaires" got that way through hard work and living within their means (i.e., not blowing their money on frivolous purchases). Most of them are intelligent enough to know a good deal when they see one. They will surely recognized throwing a couple of million into an OVERPRICED condo or home whose price was run up on pure speculation is not prudent. "If" any of them decide to buy property in the 30A area, they will wait and pick them up at reduced, reasonable prices--the new millionaires did not accumulate their wealth by buying things at the top of the market. Instead of chasing money, these people work within their means, use their head and let the money work for them. They've got savvy....they've got money.....and they've got time to wait it out. And if they "miss" their opportunity to live at "THAT" beach, they won't fret, because their lives are defined by so many other things than merely "living in "THE" right place."

I am the Lorax and I speak for the "millionaires".

>>I speak for the "millionaires"<<

As does Warren Buffet.

I don't think the watersound market is soft. I think the units you are talking about at compass point II are the 1st & 2nd floor combo units. I believe they sold for around $1.3 a year ago. Now they have to close on the units or flip them and make $500k in less than a year. Sounds like a good investement for them. I would like to make that type of return. :clap_1:

Have you seen a 4th floor unit in Compass Point II for sale?

I have been following Watersound as well as Watercolor. On May 2, 2005 I printed out all available lots at Watersound. I went back this week and pulled the MLS listings on the ones still active. Approximately 30% of these lots were reduced. Some as little as $50k from 1275 to 1225 but some (if not many) dropped by a third. ie - $1.8 to $1.2 and also saw a couple go from $1.2- $1.3 down under $950k

Just my two cents worth!

I don't get overly excited about real estate but I like to be in nice places. St. Joe will do a lot of great developments in years to come, but I can't imagine any that will be in a better location or have greater beauty than WaterSound.

I think time will prove that it will be the crown jewel, the ultimate in Florida, and among the most well-known and loved destinations in the nation, if not the world.

I do not own property there, but I would if I could. But then again, I also like deserts and swamps.

I don't own property at WC or WS, am not a Real Estate expert, but I know based on what I have seen that St Joe does plan and build a quality product. As far as the lowering of the prices presented in this thread, it appears to be a normal supply and demand adjustment going on here. If these are St Joe original sales (not resales) that are being reduced, I suggest that it is just too much inventory or determined by the folks at St Joe's to be days on the market too long. My guess it that they may want to move them at a lower price. St Joe having developed large communities has inventory and guidelines on when to lower prices to move or sell that inventory. It seems to be (like some real estate) an adjusting model of supply/demand and lowering the price to try and find what the market will bare (sp?).

Additionally, the original prices may have been set too high and now they are just adjusting them to incent sales.

Although I do think this happens in other areas of SoWal, IMO this is a St Joe effort and equation to "move" the inventory in a big development/community.

I do not think this action should be the primary data point to assuming that this means SoWal real estate is loosing any value. This may be one of the first times that St Joe has done this and that may be interesting/important as far as a trend is concerned or not?

This is my observation, opinion, assumption, and rationalization based on the date in this thread. I am realistically bullish on the continued value of this beautiful area we all love. As many people say, there is a limited supply of this beautiful area and He aint' making anymore of it..........

Anyone know anyone at St Joe to verify this or get the scoop (if they will tell you)?

I have been keeping very close tabs on WS because, I am embarassed to admit, I would like to buy either there or one place else someday since I think it is groovy and I am a Graham Gund groupie, depending on a few variables, one being of course being able afford the darn place.

It seems the St. Joe offerings go well, and at a good price--900s & above. There was one closing in March I think. Think this over, if you want to buy a lot there, your best bet is to buy directly from St. Joe, get the three year build-out, and all of the intangibles from buying from Joe.

Some of what goes on seems to be the usual Walton County nonsense. Say, I bought a lot last year for $850,000. I might immediately go around & list it for $1.7 million, figuring that 100% overnight profit is my fair due. Then, I might drop it to $1.1 million seeing if there are any takers. The, my neighbor might list their lot for $1.4 and I might raise mine to $1.45. Yada Yada Yada...

I look around in WS a lot since I dig it and what perplexes me is the lack of home building going on there. Quiet quiet quiet. Must be a reason for that I am not aware of. One variable I am waiting on is the build-out.

Sales of lots in WS West started last week. Prices in 600-700 range. Nothing really special though on my subjective view.

My previous post regarding the numerous lots being reduced at Watersound was by no means a knock on the area. I too believe WS is incredible and will be looked back on as a great buy if one would purchase land there at a "reasonable" price.

However, many of the redcutions may be related to lots which have upcoming build requirements. Thus, if one is interested, it may be prudent to be ready to build and make offers on lots the previous owners have no intention on building on.

I say this as a person who intends to buy along 30A for a long term 2nd residences that my kids can come and visit me in in 10-15 years!
:laughing1

...However, many of the redcutions may be related to lots which have upcoming build requirements. Thus, if one is interested, it may be prudent to be ready to build and make offers on lots the previous owners have no intention on building on....

My view exactly, too, and I am keeping close eye on that. The sheer volume of properties on the market, coupled with the lack of building, leads me to suspect that many of the initial buyers had no genuine intention of building and/or owning there, and are in for a nasty surprise left with a lot on which you will be required to build a really expensive house/condo in a flat market with higher interest rates. That three year build-out will be interesting, I see it as kicking in from Dec. 2005 to early 2007, judging from the sales records, and if there are good deals there I figure that might be when, if you are an "end-user" (to use the post-modern flipper term).

Or, it could take off because it is truly a great property, although incredibly expensive. Now, to use the beach club apparently you are going to have to be a "member". One more added cost, concocted by the busy elves in St. Joe's workshop.

I've been following the board for a while. Interested in RE at 30-A, didn't own anything yet.

The positive, or upside for 30-A is that it's still not yet well known to national or global investors. Downside is these are MADE town, like a golf-course development. Similar design would go to another place from ground zero.

If these resort towns were ocean-front, with restricted future development around. That would make them unique, and sky would be the limit.

I have been following Watersound as well as Watercolor. On May 2, 2005 I printed out all available lots at Watersound. I went back this week and pulled the MLS listings on the ones still active. Approximately 30% of these lots were reduced. Some as little as $50k from 1275 to 1225 but some (if not many) dropped by a third. ie - $1.8 to $1.2 and also saw a couple go from $1.2- $1.3 down under $950k

Just my two cents worth!

Curious...are the lots in the post above, resales or sales directly by Joe? If resales, I buy into the build out issue if direct then 3 yr build out timeline has not started yet.

Anyone know if these are resales or new sales direct?

I haven't put eyeballs on paper but the word I've heard about WS is that at the end of a buildout period with no building happening, the developer can buy back the lots at original sales price.

Find out that price and buildout deadline, 60 days prior, make your offer.

Curious...are the lots in the post above, resales or sales directly by Joe? If resales, I buy into the build out issue if direct then 3 yr build out timeline has not started yet.

Anyone know if these are resales or new sales direct?

My understanding (which can be very wrong, in ample past experience) is that most, if not nearly all, of the listings at WS are third party. Even if St. Joe lists it through their land sales arm, it is not necessarily a St. Joe-owned property. You can check that by comparing county records to the lot, although with WS it is a pain b/c records do it by lot and listings are often by address. Condos under contract (i.e., never sold) are not of course in the land records. Reviewing Joe's annual report, it appears that some of the condos at Compass Point are third party, and Joe is holding some back to sell themselves later this year, I think.

The dynamic at WC is slightly different.

I currently have a lot in WS and the new properties that are being released are at WaterSound West which is on the the other side of the state park. I would call WaterSound West ..."WatersSound Lite." These priced in the upper 600's to the 700's. I think the last release in WS they had in the 900's. There are a couple of lots on resale right now that are below 900 but these may have only 1 year left before you start building.

To reply to Travel2Much quoted below:


"Or, it could take off because it is truly a great property, although incredibly expensive. Now, to use the beach club apparently you are going to have to be a "member". One more added cost, concocted by the busy elves in St. Joe's workshop"


As far as the Beach Club, this will be an addition to the existing pool areas that they have. I haven't heard anything final on this yet other than you would have to pay into it.

I have used both pools with my family and can say that both are incredible. I was down the 4th of July (before Dennis) and we loved the new pool in WaterSound Beaches. It is just on the other side of the dunes and is just a perfect spot.

I find it very interesting that most of the discussions regarding falling prices are centered around "list prices". If you are not comparing last year's sales prices to this year's sales prices you are wasting your time. The fact that "list prices" are falling has nothing to do with property values. Values are determined by actual sales not "list price". The lowering of a "list price" in no way decreaes the value of the property. (It was obviously never worth the original list price). Show me a drop in sales prices on a per square foot basis of like properties from last year to this year and then we can talk about falling prices. :nono1:

I find it very interesting that most of the discussions regarding falling prices are centered around "list prices". If you are not comparing last year's sales prices to this year's sales prices you are wasting your time. The fact that "list prices" are falling has nothing to do with property values. Values are determined by actual sales not "list price". The lowering of a "list price" in no way decreaes the value of the property. (It was obviously never worth the original list price). Show me a drop in sales prices on a per square foot basis of like properties from last year to this year and then we can talk about falling prices. :nono1:

:clap_1:
I just have not had time to say it, but was thinking it earlier today. Falling prices from original, often overpriced list, does not indicate a falling market, nor does it make the list of which Skier informed us in WaterSound at $695K a great deal just because the neighboring lots are overpriced.

:clap_1:
I just have not had time to say it, but was thinking it earlier today. Falling prices from original, often overpriced list, does not indicate a falling market, nor does it make the list of which Skier informed us in WaterSound at $695K a great deal just because the neighboring lots are overpriced.

Joe,

Here are the most recent and very similar sales of lots on Salt Box Lane where this lot is located (per walton county records).

Lot 8--Oct 2004--$780k
Lot 63 (passages area)--Sept 2004--$899k
Lot 11--July 2004--$810k
Lot 2--July 2004--$690k

Just thought I would clear up the fact that this price is CLEARLY below the most recent market prices paid. Might be a great deal or the start of a trend. Too early to tell for sure. But, you know my opinion.

...Falling prices from original, often overpriced list, does not indicate a falling market...

My view, too. But, an interesting fact about lots with a contractual duty to build out (with only selected builders and with heavy building covenants) is that the lot is going to decrease in true value as the buildout date approaches, right? The value of a lot on which I have to build in three years is higher than one on which I have to build in three months, it would seem, for most folk. So, it would seem the market value should noticably decline as build out approaches, unless demand from true end users is so high as to offset that. I have never seen that be the case in any of the St. Joe properties.

I think Kurt is right. If St. Joe has a buy back right for original cost, if I am the only bidder on the day before the buildout date, and willing and able to start building the next day, my rational bid for the value of the lot is original price plus one dollar.

My view, too. But, an interesting fact about lots with a contractual duty to build out (with only selected builders and with heavy building covenants) is that the lot is going to decrease in true value as the buildout date approaches, right? The value of a lot on which I have to build in three years is higher than one on which I have to build in three months, it would seem, for most folk. So, it would seem the market value should noticably decline as build out approaches, unless demand from true end users is so high as to offset that. I have never seen that be the case in any of the St. Joe properties.

I think Kurt is right. If St. Joe has a buy back right for original cost, if I am the only bidder on the day before the buildout date, and willing and able to start building the next day, my rational bid for the value of the lot is original price plus one dollar.

I believe that this is the strategy many people hope to use. It shows the drawbacks, for investment purposes, of buying a lot with build out times. Unfortunately, it won't work without the new buyer having to pay significant fines for missing the build out. Those buying lots now that have build outs coming next summer will be lucky to get things going by then. Architecture itself could take up to 1 year and then the plans have to be approved by the Architectural Committee before a permit can be pulled. That is assuming you've got a builder ready to go, which is very difficult. Also, once construction is started, you've got only one year to complete the project so you better make sure you've got a builder who is on the ball. Many builders around here are taking anywhere from 9 to 24 months to build a house.

If a seller had some good house plans to go with a decently priced lot, that lot would be more attractive to a potential buyer.

Several people have told me that St. Joe is the reason Watersound has taken so long to get going. St. Joe is concentrating all its efforts on Watercolor. There are few amenities completed at Watersound and, frankly, not a whole lot to do right now. Many people are turned off by the isolation of Watersound and choose Watercolor over Watersound for that reason.

I believe that this is the strategy many people hope to use. It shows the drawbacks, for investment purposes, of buying a lot with build out times. Unfortunately, it won't work without the new buyer having to pay significant fines for missing the build out. Those buying lots now that have build outs coming next summer will be lucky to get things going by then. Architecture itself could take up to 1 year and then the plans have to be approved by the Architectural Committee before a permit can be pulled. That is assuming you've got a builder ready to go, which is very difficult. Also, once construction is started, you've got only one year to complete the project so you better make sure you've got a builder who is on the ball. Many builders around here are taking anywhere from 9 to 24 months to build a house.

If a seller had some good house plans to go with a decently priced lot, that lot would be more attractive to a potential buyer.....

Yeah, I was assuming away a whole lot with the building the next day scenario. Just wanted to do the bare math, first. The build-out devaluation could be even more pronounced, in my view, because of Joe's restrictions and requirements. Not like you can just throw a mobile home on the lot.