Are prices falling-and example from watersound

[REschmuck]

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?

 

[Travel2Much]

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!

 

[Smiling JOe]

... 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.

 

[Kurt]

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.

 

[Joe Complete]

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.

 

[SHELLY]

>>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."

 

[Bob]

>>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".

 

[SHELLY]

>>I speak for the "millionaires"<<

As does Warren Buffet.

 

[Farmer]

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?

 

[pat3797]

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!