Build versus Buy

[AtTheBeach]

Bobby, could you tell us how the market is changing? Have you seen a lot of activity and contracts at a higher price point recently? I'm curious because I've been watching the market and haven't seen any amazing opportunities lately. I am also not willing to pay the higher prices so I've pretty much tabled my plans on buying in SoWal for now~

 

[Bobby J]

Bobby, could you tell us how the market is changing? Have you seen a lot of activity and contracts at a higher price point recently? I'm curious because I've been watching the market and haven't seen any amazing opportunities lately. I am also not willing to pay the higher prices so I've pretty much tabled my plans on buying in SoWal for now~

It seems to be improving in sales. I guess that could be good for some and bad for others. To randomly answer your question I briefly looked at Watercolor where 48 homes have sold, pended or gone contingent since 06/01/2009. This can be somewhat misleading as I did not take a deep look at the contingents to see how long they have truly been contingent. But.... we can get a feel for the market this way. Currently there are 100 homes on the market in Watercolor and my bet is many agents that work those markets are beginning to feel low on good priced inventory. I work all of 30A and recently begun more marketing to attract more listings. 3 months ago, I was beginning to put listings off as I was very overloaded. When I speak of a change in the market, I am speaking of changes we are seeing in our own business. Most of the agents in our office are also experiencing an increase in sales.
I feel the reason you are not seeing many great opportunities is they have been gobbled up over the summer. I have many buyers like you that I can not find a product for. Several may be reading this and know exactly what I am talking about. I am not saying your perfect price point property will not pop up but I feel confident you will not have long to act on it. I have advised many buyers to begin to look at some of these great vacant land opportunities because many of the great buys on homes are gone.
So... with 100 homes available in Watercolor and realistically 50-60 of those may be legitimate inventory and 34 actual real sales since 06/01/2009, one may have missed the great buy in Watercolor at this point.

As far as other areas go, I still see lots of good opportunity but I also see the homes that are A plus leave the market fast leaving many buyers saying they are going to wait for now. I would recommend finding an agent you like tell them your thoughts and get on an automated list so you see your perfect price point home as it hits the market. Of course this is all ever changing and very local in nature so you may be fine by waiting but the current trend shows you may not be. I say Build!!!!!!

 

[AtTheBeach]

Thanks Bobby for explaining the thought process. We did tour a couple of ?great buys? recently and one of them went almost immediately after receiving several offers. It wasn?t a property that we were comfortable with.

We've considered land to either build or not, and may be a decent place to park some $ for awhile. And less carrying costs.

I chuckled that you used Watercolor in your example. We really don?t get the attraction there but it sure is popular. Maybe we are missing something but we?d rather be closer to the beach~

 

[Kurt]

We have been taught to think that if something sounds too good to be true it isn't. But sometimes it is, or at least good enough.

The trap of a buyer's market: buyers think they are in total control and have all the time on their side.

 

[Tom Curlin]

Once again I appreciate the helpful feedback.

I think the banks are setting the agenda for the most part in this market. Granted, the discontinuation of mark to market accounting has given them some breathing room to unwind their distressed residential loans in an orderly manner. However, most of them are seeing a rising tide of faltering commerial loans as well, as commercial lags residential. So I think they have to decide where they want to take the hit for each property, on the balance sheet or the cash flow statement.

I personally believe most banks will be more motivated to take the cash on the residential side of the business going forward since they have taken much of the hit on the balance sheet for this business already, prior to the discontinuance of mark to market. And I think they will use that cash to maintain their regulatory capital while writing down lots of commercial loans.

In my view this is why the number of foreclosure notices is way up this year versus last in RB, and my hunch is that is true throughout 30A. The banks are coming to collect their cash. Personally I think it is in everyone's best interest that they price below replacement cost to move their inventory. Transaction volumes recover faster, inventory clears faster, and the bottom in comps is of shorter duration.

Plus the banks have cash to cushion the commerical loan book degradation and pay off TARP faster. But, of course, none of them are calling me for advice...

 

[Bobby J]

Thanks Bobby for explaining the thought process. We did tour a couple of ?great buys? recently and one of them went almost immediately after receiving several offers. It wasn?t a property that we were comfortable with.

We've considered land to either build or not, and may be a decent place to park some $ for awhile. And less carrying costs.

I chuckled that you used Watercolor in your example. We really don?t get the attraction there but it sure is popular. Maybe we are missing something but we?d rather be closer to the beach~

I used Watercolor because I thought this thread was about Watercolor. What area do you like and what is your price range? I can do a similar analysis.

 

[AtTheBeach]

Your use of Watercolor was very appropriate. It makes me wonder if I'm missing something since it is so desirable but I really don't get the draw. Maybe we should spend some time renting there to appreciate it. We hear it is wonderful and our friends love it.

How about homes and land in Watersound?

We really like the west end of 30-A and have spent most of our time looking there. A diamond in the rough is what we are thinking.

 

[30ashopper]

Nobody should worry about having missed out on all those "good deals" because they've all been "gobbled up". There will be plenty more coming down the Sowal Vacation Market Foreclosure Pipe.

 

[Bobby J]

Nobody should worry about having missed out on all those "good deals" because they've all been "gobbled up". There will be plenty more coming down the Sowal Vacation Market Foreclosure Pipe.

Its a good thing because I am feeling a little low on good selling inventory.

 

[Tom Curlin]

Excellent chart. Do you have a way to track the lis pen stock, or total inventory, which would be all of the properties for which a lis pen has been issued and there is no subsequent sales event or deed transfer? In my view the distressed inventory will peak ahead of a bottom in valuations.