NPR story on house prices

[Mango]

That's Principal Rooney, if you don't mind.

The turn will be all psychological, IMO. When people who have the ability to buy 'feel' that its safe to do so, some will start making a move. Then when others see prices starting to rebound, those who have been sitting on the sidelines will make their move in order not to be left behind on pricing. It won't be the mad rush of the speculators, but once the 'early adopters' (for lack a better term) get off the fence, others will slowly follow.

I think psychology is just a small portion of a possible rebound. There are too many other factors like insurance and taxes that may keep people from living there on a full time basis, ie; baby boomers nearing retirement.
From an investment standpoint, the current rental rates do not debt service any property there with the increases in the above and some did not before. The medium income level of the families that have the ability to drive in within a reasonable time, can not afford higher rates.
The only way that is possible is to make the area more accessible to major metropolitan cities, which is why I am thinking airport. Even then, we need to see an upswing in other parts of the whole economic pie.
Heck, I don't even know if Social Security will be available to me 25 years from now that

 

[Mango]

That's Principal Rooney, if you don't mind.

The turn will be all psychological, IMO. When people who have the ability to buy 'feel' that its safe to do so, some will start making a move. Then when others see prices starting to rebound, those who have been sitting on the sidelines will make their move in order not to be left behind on pricing. It won't be the mad rush of the speculators, but once the 'early adopters' (for lack a better term) get off the fence, others will slowly follow.

I think psychology is just a small portion of a possible rebound. There are too many other factors like insurance and taxes that may keep people from living there on a full time basis, ie; baby boomers nearing retirement.
From an investment standpoint, the current rental rates do not debt service any property there with the increases in the above and some did not before. The medium income level of the families that have the ability to drive in within a reasonable time, can not afford higher rates.
The only way that is possible is to make the area more accessible to major metropolitan cities, which is why I am thinking airport. Even then, we need to see an upswing in other parts of the whole economic pie.
Heck, I don't even know if Social Security will be available to me 25 years from now that I've been paying big bucks into for all my career.

 

[BlueMtnBeachVagrant]

I think psychology is just a small portion of a possible rebound. There are too many other factors like insurance and taxes that may keep people from living there on a full time basis, ie; baby boomers nearing retirement.

Bzzzzzzzzzt!!!!! WRONG (imho ) Psychology is EVERYTHING! Psychology is what helps each of us to rationalize whatever expenditures we are about to make. Whether a $3 cup of coffee, a high priced pair of Nikes, a Lamborghini, a dive trip to Australia, a home on the beach, a 35 foot sailboat, whatever.

All the other incidentals (insurance, taxes, risks, etc.) are just that.

Another note..."possible rebound" should be changed to "probable rebound".

From an investment standpoint, the current rental rates do not debt service any property there with the increases in the above and some did not before. The medium income level of the families that have the ability to drive in within a reasonable time, can not afford higher rates.

Today's buyers are not looking for a beach property to be pay for itself. I will admit that rate of valuation increases are exceeding rentals.

I'm speaking mainly from the viewpoint of gulf front and 1st and 2nd tier properties with easy beach access. These properties are likely to be purchased by those not needing rental income to justify their desire to own beach property as a 1st or 2nd home.

Heck, I don't even know if Social Security will be available to me 25 years from now that I've been paying big bucks into for all my career.

"Big bucks" into Social Security? Honestly, if a person considers the dollars one pays into social security to be "big bucks", then maybe I can see where you're coming from regarding today's beach property valuations.;-)

The South Walton area is very unique for many reasons as we all know. I've stood on my soap box and preached that there are a lot of rich people out there close to retirement. The two go hand in hand. If you were to wipe out the negativity associated with the hurricanes, I think one could see hidden value today.

 

[spinDrAtl]

Exactly, Blue Mtn Beach Vagrant. It's very similar to those who buy a Hummer. Most do not even give a 2nd thought to the price of gas. If that is what they have decided to purchase, they feel the price is right, and they have the means, the price of gas is just noise.

Psychology factors into almost every purchase as you say. It is the main reason you play with chips in Vegas instead of cash - chips are less like real money. Does anyone think the amateur daytraders who lost so much money would have walked into a brokerage and written checks for all their purchases? Nope, point and click, easy as pie. Less thinking, more herd behavior.

Those who have the $$$ will buy when it feels right to them. Why do you think we keep hearing on this board about big money waiting on the sidelines to pounce?

Others who may be stretching to get in and must account for every expense associated with purchasing to make sure they can afford it will be the followers once things have turned. There is nothing wrong with that, however.

 

[Mango]

"Big bucks" into Social Security? Honestly, if a person considers the dollars one pays into social security to be "big bucks", then maybe I can see where you're coming from regarding today's beach property valuations.;-)

Vagrant:
Tell me when you write a check to the government for $250,000 in one year for taxes if you dont consider that big bucks. I do.
So while I am paying for someone possibly like yourself to be retired, I have the right to wonder where that money may be 25 years from now when I retire. This has nothing to do with thread and the price of tea in China.
BTW- Self employed people pay double in Social Security taxes.
I was simply using that analogy as part of an answer to a question that simply can not be answered right now which Shelly presented IMO which was about guessing when the trough was in SoWal.

 

[Mango]

Exactly, Blue Mtn Beach Vagrant. It's very similar to those who buy a Hummer. Most do not even give a 2nd thought to the price of gas. If that is what they have decided to purchase, they feel the price is right, and they have the means, the price of gas is just noise.

Psychology factors into almost every purchase as you say. It is the main reason you play with chips in Vegas instead of cash - chips are less like real money. Does anyone think the amateur daytraders who lost so much money would have walked into a brokerage and written checks for all their purchases? Nope, point and click, easy as pie. Less thinking, more herd behavior.

Those who have the $$$ will buy when it feels right to them. Why do you think we keep hearing on this board about big money waiting on the sidelines to pounce?

Others who may be stretching to get in and must account for every expense associated with purchasing to make sure they can afford it will be the followers once things have turned. There is nothing wrong with that, however.

Oh poo poo.;-) You and I both know from writing loans that the people who purchase items feel good items are the ones up their eyeballs in debt. :shock: The people who have the money have it because they make informed purchases.

 

[BlueMtnBeachVagrant]

Vagrant:
Tell me when you write a check to the government for $250,000 in one year for taxes if you dont consider that big bucks. I do. So while I am paying for someone possibly like yourself to be retired, I have the right to wonder where that money may be 25 years from now when I retire.
I was simply using that analogy as part of an answer to a question that simply can not be answered right now.

First, I've always said that when a person "complains" about how much money they paid Uncle Sam in one year, well, it's just another form of bragging. I hope I'm not exchanging ideas with a person of such character.

Second, YOU said, "Heck, I don't even know if Social Security will be available to me 25 years from now that I've been paying big bucks into for all my career. "

I replied, "Big bucks" into Social Security? Honestly, if a person considers the dollars one pays into social security to be "big bucks", then maybe I can see where you're coming from regarding today's beach property valuations. ;-) " DID YOU NOTICE THE WINKIE?

NOW YOU said, "Tell me when you write a check to the government for $250,000 in one year for taxes if you dont consider that big bucks. I do."

So we've gone from paying into Social Security to paying federal income tax.

My response to your S.S. thing was more to show that property values in So. Wal. are not even in the same universe as S.S. payouts.

Then you appear to criticize my observation by implying that you're possibly paying for my retirement? You don't just brag, you seem to be down right arrogant!:nono1:

BTW, you said you paid a quarter million in taxes in one year and you have 25 years before you retire? Does that mean you'll never make a discretionary purchase? Did you forget that's what we were discussing?

 

[Mango]

First, ] I hope I'm not exchanging ideas with a person of such character.

Most Board members would call me a charachter.:funn:

Second, YOU said, "Heck, I don't even know if Social Security will be available to me 25 years from now that I've been paying big bucks into for all my career. "

I replied, "Big bucks" into Social Security? Honestly, if a person considers the dollars one pays into social security to be "big bucks", then maybe I can see where you're coming from regarding today's beach property valuations. ;-) " DID YOU NOTICE THE WINKIE?

This appeared to be an obnoxious statement whether you used your winkie or not. :nono1:

Does that mean you'll never make a discretionary purchase? Did you forget that's what we were discussing?

Yes, I am going to buy my nephew a TMX Elmo at Xmas.

This thread was about housing peak and troughs, not discretionary purchases. You appear to not completely read someone's post in it's entirety, and break each comment down into little micro pieces so my reply matched yours.

 

[BlueMtnBeachVagrant]

...This thread was about housing peak and troughs, not discretionary purchases.

You're correct. You're the one that brought up "psychology" on THIS THREAD. I made a "discretionary spending is based on psychology" observation...also that the amount one receives from Social Security is not a significant factor in one's ability to afford property in South Walton. I was somewhat kidding because, yes, property values are relatively high and like you, I believe we all wonder how much social security we'll get down the road. Your comment about your $250,000 tax bill came out of left field (why can't you acknowledge that?).

You appear to not completely read someone's post in it's entirety, and break each comment down into little micro pieces so my reply matched yours.

I read your post in its entirety. If I chopped your post into "micro-pieces", well, perhaps it just helps me keep my thought pattern in line. If you take offense to my chopping, then by all means, this will be the last response to you that is "chopped" up. I won't even use anymore winkies since you don't appreciate them coming from me.

BTW my first reply to your post was chopped into 3 pieces to be exact:
1. Psychology (which you brought up)
2. Debt service vs. investment (which you brought up)
3. "Big bucks" into Social Security (which you brought up)

I thought each of these were distinct and deserved their own space. But what was I thinking?

You never did address your $250,000 tax bill comment and what that has to do with Social Security payments...just some cutesie comment about buying a TMX Elmo. The subject of this thread is RE peaks and troughs. Remember?;-)

Oops should have used -->

 

[spinDrAtl]

Oh poo poo.;-) You and I both know from writing loans that the people who purchase items feel good items are the ones up their eyeballs in debt. :shock: The people who have the money have it because they make informed purchases.

I agree with this statement in principle. My Hummer analogy was just to equate the additional costs to the purchase of the main item and how that will not, IMO, be a consideration for that very class of buyer, the people who have the money or the smart investors who will jump back into this market when their 'feel' for the market tells them it's the right time.

I see it every day - people with not one but two $600-700 a month car payments financed over 72 months who are slowly descending towards bankruptcy. It truly is those folks who may be making a feel good purchase or in many cases 'keeping up with the Jones's' by getting a 2nd home or jumping into the investulator pool who need to scrutinize every cost associated with the property purchase.