Back from vacation--market looks very soft

So glad you're back with such upbeat info, Skier . . .

Just trying to report what I saw and nothing else and get others perspectives. Reality, not hype. I wish the facts were different. This forum appears to be for the discussion of real estate sales and development. That's all I am trying to discuss in a fair and honest way.

Other than the Dennis related threads and the restaurant reviews, I believe the last thread I started regarding a bubble was the most hotly debated and widely viewed thread on the website. The debate was informative on both sides, included some fun, and was civilized most of the time.

I look forward to hearing the opinion of others more in tune to the market than I am.

I checked the MLS system and only found 94 properties in Watercolor (I'm not sure where your numbers come from or if perhaps I searched wrong). I don't know how many units are in Watercolor, but I'd guess somewhere around 1k, so around 10% are up for sale. In comparison, my subdivision in the relatively flat Atlanta market currently has about 10% of the homes on the market (a sample of 700 homes).

I'd chalk it up to we are in the height of the selling season and plenty of people are fishing all across the country.

Things do seem quite skier

Philip,

I get the list of properties directly from Arvida sales (it only includes listings by Arvida and not other realtors) and it includes about 120 properties--land, condos and homes. The rest I got by going to Destin Properties website and counting those listed by other agents. Its at least 180. Not sure why the MLS you were looking at had so few of the total listings. In terms of total units, there will eventually be about 1k, but Arvida still has a lot of unsold lots in phase IV and many lots it still owns in Phase III. So, in terms of non-Arvida owned units, the inventory is in the range of 20-25%.

Philip,

I get the list of properties directly from Arvida sales (it only includes listings by Arvida and not other realtors) and it includes about 120 properties--land, condos and homes. The rest I got by going to Destin Properties website and counting those listed by other agents. Its at least 180. Not sure why the MLS you were looking at had so few of the total listings. In terms of total units, there will eventually be about 1k, but Arvida still has a lot of unsold lots in phase IV and many lots it still owns in Phase III. So, in terms of non-Arvida owned units, the inventory is in the range of 20-25%.

Hmm. Sounds like you have more accurate information then. Perhaps Arvida doesn't list each individual property in the system. In that case, then all I can say is 25% inventory is a rather daunting number, especially if you are a flipper and you need to unload. I'm interested to see more responses to this thread...

And the Arvida listings for Watersound exceed 40. There are MANY others listed by other agents/brokers.

That's a bit scary to me.

Welcome back. Why is it scary to you? I thought you weren't concerned about your own situation?

Other than the Dennis related threads and the restaurant reviews, I believe the last thread I started regarding a bubble was the most hotly debated and widely viewed thread on the website.

Bubbles, hurricanes, sharks, erosion, dune destruction, and cuisine are popular.

I am a homeowner (house not on the market nor are we in the market for a purchase) and certainly don't think of this board as a real estate guide. What we enjoy is hearing about the condition of the beaches, getting to "know" others who enjoy or live in South Walton County, and seeing the photos since we can't be there as often as we might like. We like the restaurant reviews and the occasional seafood recipe, too. The board has been especially helpful to us for opportunieis to identify and patronize local businesses, since we live elsewhere. Kurt's advertising and virtual tour of our home has offered great results in combination with our rental/management company. And I can't even say how important this board has been as we watch storms and try to assess their aftermath accurately or how our property fared.

What I have seen over the past few weeks is a number of postings from individuals who seem to have lowering real estate prices in the area as their objective. The claims are not based on credible evidence and it appears that several of those posting wish to create a panic situation so that property prices drop. Could it be there is some self interest involved here?

Well located real estate will always hold its value. Don't be fooled by this kind of unsubstantiated hype. And those waiting for prices to go down may be crying crocodile tears a year from now when a slight correction occurs and interest rates have gone up even more. The speculation in preconstruction condominiums will cool by virtue of its own dynamic. But this is a specific niche in the market there. Keep your eye on the ball.

I agree with you that the market has softened. It doesn't seem like it's a bad thing, though; these kinds of gains could not continue and eventually the investors were going to go away. Meanwhile, nearly every property owner in the area who bought a year or more ago is looking at significant paper gains and a staggering number are looking to cash in. So everyone put their house on the market at once (or it seems like it). Some may have had to, many were testing the market, some just thought some quick cash would be nice.

Those paper gains aren't real. It's not going to hold up in the short term. There are too many sellers and not enough buyers at those prices, especially given the multiple, nationally publicized warnings of a bubble. Most of the sales along 30-A are second homes or investment properties. People can wait a couple years for the second home; they want to see what the prices end up doing. As far as investment -- well, you can't usually cover costs with rental income, and if the prices aren't continuing to climb, where is the short-term investment?

So of course it is a buyers' market. And it needs to stabilize.

Only those who are pure investors and can't really afford their property are the ones who should be scared. It might take two or three years to weed all those people out of the market. Predictably, they will lower their prices to make their homes more attractive in a huge sea of listings so they can get out.

I'll admit it -- we are investors. But something funny happened while we were watching the prices rise. We fell in love with the area. Absolutely fell in love with it! We have a house (on the rental program) and also a lot 50 yards from a walkover in Seagrove. We are now emotionally attached and instead of thinking of selling either of them, we are dreaming of long-term involvement. Fun family gatherings, vacations in the summer and long weekends when we can. We are thinking of, eventually, building our own retirement home in Seagrove. SoWal has that kind of effect on people.

This devotion is a lot of work and for now means a negative cash flow. But that's OK. Because once we get out we know we won't be able to get back in.

That's the inherent value in the area -- it's a winning combination of the beaches, the emerald water, the small-town feel and most of all, the people. As long as it is not allowed to become another Destin (let's hope the county understands this) and we don't have a 20-year devastating cycle of hurricanes, I think we'll be OK in the long term. The baby boomers are not a myth and neither is the new airport. I am looking for prices to stay fairly stable for awhile but rents to go up. Those who absolutely have to sell now will have to lower their prices, but unless they just bought they should still walk away with some nice profits.

Another winning entry ftom TFT. :clap_1:

Kurt,

The scary part of the housing issue is not related simply to SoWal. I am more worried about the bigger housing market in the US and SoWal is just a small piece of the bigger picture. Rapid declines in housing prices would not be good for the economy. Personally, related to my own investment in Fla, I am not scared.

TFT,

Very well said.

Kurt,

The scary part of the housing issue is not related simply to SoWal. I am more worried about the bigger housing market in the US and SoWal is just a small piece of the bigger picture. Rapid declines in housing prices would not be good for the economy. Personally, related to my own investment in Fla, I am not scared.

TFT,

Very well said.

Don't forget to relax. At least when you visit us. ;-)

Another winning entry ftom TFT. :clap_1:

Agreed. We adore this place!

I agree with you that the market has softened. It doesn't seem like it's a bad thing, though; these kinds of gains could not continue and eventually the investors were going to go away. Meanwhile, nearly every property owner in the area who bought a year or more ago is looking at significant paper gains and a staggering number are looking to cash in. So everyone put their house on the market at once (or it seems like it). Some may have had to, many were testing the market, some just thought some quick cash would be nice.

Those paper gains aren't real. It's not going to hold up in the short term. There are too many sellers and not enough buyers at those prices, especially given the multiple, nationally publicized warnings of a bubble. Most of the sales along 30-A are second homes or investment properties. People can wait a couple years for the second home; they want to see what the prices end up doing. As far as investment -- well, you can't usually cover costs with rental income, and if the prices aren't continuing to climb, where is the short-term investment?

So of course it is a buyers' market. And it needs to stabilize.

Only those who are pure investors and can't really afford their property are the ones who should be scared. It might take two or three years to weed all those people out of the market. Predictably, they will lower their prices to make their homes more attractive in a huge sea of listings so they can get out.

I'll admit it -- we are investors. But something funny happened while we were watching the prices rise. We fell in love with the area. Absolutely fell in love with it! We have a house (on the rental program) and also a lot 50 yards from a walkover in Seagrove. We are now emotionally attached and instead of thinking of selling either of them, we are dreaming of long-term involvement. Fun family gatherings, vacations in the summer and long weekends when we can. We are thinking of, eventually, building our own retirement home in Seagrove. SoWal has that kind of effect on people.

This devotion is a lot of work and for now means a negative cash flow. But that's OK. Because once we get out we know we won't be able to get back in.

That's the inherent value in the area -- it's a winning combination of the beaches, the emerald water, the small-town feel and most of all, the people. As long as it is not allowed to become another Destin (let's hope the county understands this) and we don't have a 20-year devastating cycle of hurricanes, I think we'll be OK in the long term. The baby boomers are not a myth and neither is the new airport. I am looking for prices to stay fairly stable for awhile but rents to go up. Those who absolutely have to sell now will have to lower their prices, but unless they just bought they should still walk away with some nice profits.

TFT--very well said and quite balanced.

Skier--too much doom and gloom

An informative and timely thread. I appreciate the perspectives of both TFT and Skier. I love the one year doubling of my home's value (on paper ) as much as anyone, but that's clearly not sustainable. Skier's numbers don't suggest doom and gloom, just a sense of reality.

An informative and timely thread. I appreciate the perspectives of both TFT and Skier. I love the one year doubling of my home's value (on paper ) as much as anyone, but that's clearly not sustainable. Skier's numbers don't suggest doom and gloom, just a sense of reality.

Agreed - I don't think Skier's post is "doom and gloom" - simply putting out some numbers to ponder. Clearly, 20-25% of the properties on the market would not be considered "healthy". I don't consider the properties that I own pure investments (there are intrisic values outlined in TFT's post); however, being informed about the market we are in is quite useful information.

TFT - My sentiments exactly!

I know a family with 3 homes on the market--two investments and their current permanent home. Their permanent home is for sale at a ridiculous price and they know it. My friends hadn't intended to put their home on the market until their neighbors put their house up for sale at an even more ridiculous price.

I imagine that there is a lot of this going on. My friends are in no hurry to sell and they won't sell unless they get the ridiculous price they're asking. Their plan is to live in whichever of the three houses doesn't sell.

I know a family with 3 homes on the market--two investments and their current permanent home. Their permanent home is for sale at a ridiculous price and they know it. My friends hadn't intended to put their home on the market until their neighbors put their house up for sale at an even more ridiculous price.

I imagine that there is a lot of this going on. My friends are in no hurry to sell and they won't sell unless they get the ridiculous price they're asking. Their plan is to live in whichever of the three houses doesn't sell.

Not a bad "problem" to have

I know a family with 3 homes on the market--two investments and their current permanent home. Their permanent home is for sale at a ridiculous price and they know it. My friends hadn't intended to put their home on the market until their neighbors put their house up for sale at an even more ridiculous price.

I imagine that there is a lot of this going on. My friends are in no hurry to sell and they won't sell unless they get the ridiculous price they're asking. Their plan is to live in whichever of the three houses doesn't sell.

What's interesting is that this is quite irrational behavior. Buyers see the ridiculous price and are offended and back off, even if they were willing to pay market value. Other buyers see the "for sale" signs carpeting the landscape and back off. Still other buyers see that darn near every place in a development is up for sale and think, "well if this development sucks so bad that everyone is trying to unload their property I will back off". Still others see others backing off and back off.

The result is a severe constriction of demand due to attempted market manipulation, and escalating supply.

Interesting collective action problem.

For those of us that bought several years (or longer) ago and have no intention of selling, there is nothing really to worry about. Even if I chose to sell and had to reduce the price on my house by 25%-35% I would still have done quite well on my investment. The only people that have to worry about a "soft market" are those who bought recently expecting to make a quick buck. After those people have all been shaken out of the market I imagine things will stabillize again.

What's interesting is that this is quite irrational behavior. Buyers see the ridiculous price and are offended and back off, even if they were willing to pay market value. Other buyers see the "for sale" signs carpeting the landscape and back off. Still other buyers see that darn near every place in a development is up for sale and think, "well if this development sucks so bad that everyone is trying to unload their property I will back off". Still others see others backing off and back off.

The result is a severe constriction of demand due to attempted market manipulation, and escalating supply.

Interesting collective action problem.

Rosemary Beach has 43 homes on the market with only 4 homes pending. Your analysis is very good and describes the situation there exactly. Last year the demand at Rosemary was so high that homes would sell in days not months. Properties are just sitting now. Of course, I could think of many more things to do with my spare $7,000,000 than buy gulf front at Rosemary (no matter how great the house).

Maybe, for the "greater good," everyone needs to lower their prices a couple hundred thousand dollars!

Kurt,

The scary part of the housing issue is not related simply to SoWal. I am more worried about the bigger housing market in the US and SoWal is just a small piece of the bigger picture.

Agree with you skier. Announcement comes today that the yuan is no longer artificially tied to the dollar. The import of cheap Chinese goods has helped prop up our economy. A rise in the yuan value (which I guess is expected) will change that. I'm thinking that whatever the "reality" of our economy is will begin to dawn on us in the next couple of years, and there may be a large correction in many things. I expect taxes will go up, which means people with lots of cash flow may not have as much to invest in real estate. There are other positive factors that may come into play, especially for the SoWal area, but it is wise to be cautious.

Now is not the time to overextend (ie spend $800K on a house in Freeport with grass on the roof ) but from the quality of the discussions here, it doesn't sound like the people on this board have much to worry about!

I know a family with 3 homes on the market--two investments and their current permanent home. Their permanent home is for sale at a ridiculous price and they know it. My friends hadn't intended to put their home on the market until their neighbors put their house up for sale at an even more ridiculous price.

I imagine that there is a lot of this going on. My friends are in no hurry to sell and they won't sell unless they get the ridiculous price they're asking. Their plan is to live in whichever of the three houses doesn't sell.

That's been going on around here for a long time.