Need to dump your property?

[Bob]

I own property there and in many other areas. I understand all the costs involved as well as anyone and better than many. You have mistaken me for a cheerleader for high prices. The prices are to high by half or more, I was pointing out how awful the returns are and in turn why the prices will never hold.

I think perhaps you are fortunate to have a low cost basis presence in SoWal. Duplicating that investment may prove frustratingly elusive. I hope you find the right property.

 

[Pirate]

I think perhaps you are fortunate to have a low cost basis presence in SoWal. Duplicating that investment may prove frustratingly elusive. I hope you find the right property.

I am fortunate. Do you think the prices will hold where they are Bob? I am a patient man.

 

[BlueMtnBeachVagrant]

All good points. The market looks very different now than 3-20 years ago. Deals have come and gone. If you bought at some points along the way you could make properties cash flow with a mortgage on rental within a few years of purchase, I have done it.

Fortunately for us, our property of 4 years now falls into this class. We are self-managed however.

High end owner occupied homes definitely have a totally different dynamic. I understand you feel the market will be driven by full time residents/second homes and I simply disagree. At best it may be 50/50 some day IMO. Only time will tell.

To what absolute degree this aspect of the market will be sustained by "owners" vs. pure investors is of course unknown. But it will have more of an influence over time.

All this made me think about our home in Atlanta. I know what it's value is. When I consider the 120 x monthly rent "rule" we were playing with earlier, I know that the rent I can realistically get for my personal home is probably just a little more than half the amount based on the formula. Does that make my home over-priced? Apparently not based on comps.

Again, I think we're basically in agreement...the absolute amounts and time frame are just a guess on anyone's part.

If I wasn't crazy about the area I sure wouldn't waste so much time yapping about it.

Ditto.

 

[Bob]

I am fortunate. Do you think the prices will hold where they are Bob? I am a patient man.

There are so many variables, that I'm hesitant to guess. Surely on raw land, I would guess prices should continue to soften for '07 because of the amount of inventory. Because every homeowner's basis is so different, I think there will also be some deals coming up in condos and sf's. Taxes and insurance will motivate some to exit too. Barring bad weather next year, and with continued low long term rates, you've got to think 3-5 years out, the market will shift back in favor of sellers. Beach renourishment is slated soon, and hopefully[with the comensurate dealys/litigation] the PC airport will come online as well. I'm guessing you may have 12-36 months of opportunity to grab a deal. Whether or not the subject property is self sustaining is another story.

 

[Pirate]

There are so many variables, that I'm hesitant to guess. Surely on raw land, I would guess prices should continue to soften for '07 because of the amount of inventory. Because every homeowner's basis is so different, I think there will also be some deals coming up in condos and sf's. Taxes and insurance will motivate some to exit too. Barring bad weather next year, and with continued low long term rates, you've got to think 3-5 years out, the market will shift back in favor of sellers. Beach renourishment is slated soon, and hopefully[with the comensurate dealys/litigation] the PC airport will come online as well. I'm guessing you may have 12-36 months of opportunity to grab a deal. Whether or not the subject property is self sustaining is another story.

Well said. My opinion is prices will fall back in line where historical averages of appreciation would put them which is down as much as 50 percent from the peak. This may take a year or two. After that I agree that it will be back to normal or slightly better appreciation (barring a brutal recession) until the next group of lemmings comes to the beach.

 

[Bob]

Well said. My opinion is prices will fall back in line where historical averages of appreciation would put them which is down as much as 50 percent from the peak. This may take a year or two. After that I agree that it will be back to normal or slightly better appreciation (barring a brutal recession) until the next group of lemmings comes to the beach.

"QUE THE LEMMINGS".....now!

 

[Jellyfish]

I think a key question is how many properties were built as investments to sell with no intention of living/vacationing there. If you can separate the volume into true buyers vs investors building to resell, that would be instructive. I was in Starbucks the other day and noticed a guy sharing the table with me that was on the phone, quite animated, for quite a while. Turns out, he has about 10 houses going up from Destin down to San Blas, even had a couple in Orlando area. He had a separate file for each one, bursting with papers. Each one was a spec he was hoping to resell prior to closing. In a word, he is screwed and he knows it. Told me he is just trying to get out with his skin at this point. He was not a prof builder, had a day job, which is lucky for him. You never want to be the last guy in....

 

[Ohio Girl]

Is it just me, but I think it's kind of funny when everyone says that we'll never see prices go back down to the levels prior to 2004. That was only 2 years ago; it's not that long ago!

 

[SHELLY]

Is it just me, but I think it's kind of funny when everyone says that we'll never see prices go back down to the levels prior to 2004. That was only 2 years ago; it's not that long ago!

For some folks who've bought into pre-construction in 2004 and want to get out from under their "investment" with their deposit or credit score in tact -- it's a very real possibility. In fact, its what SJ's clients are banking on.

 

[spinDrAtl]

It is interesting to read various articles in newspapers, etc. where they are debating the 'Is this a bust' question. Most that I have read involve talking to a few 'investors' who may be sitting on 3 or more pre-construction contracts and are basically saying 'it will come back, I'm just going to sit tight'. A bit optimistic, I think, for those with day jobs who are going to be looking at 3 additional mortgages IF they close on the properties and don't just walk from their earnest money. I have yet to see one where the 'investor' says anything like 'I earn a million dollars a year in my regular job so I can afford to wait it out'.