‘It Ain’t Happening’ For St. Joe
TheStreet.com reports on the slowdown for one Florida homebuilder. “St. Joe operates mainly in northwest Florida, which had seen a boom in development. St. Joe hoped that demand would continue, as it sold homes away from the beach and even in the woods. To put it plainly, it ain’t happening, judging by recent events at a few St. Joe developments.”
“St. Joe was scheduled to release 12 condo units to the public last week in its Watersound Beach development. However, the sale was postponed, according to a St. Joe sales associate. The sales office does not yet have a date when the release will take place and was not given a reason for the delay.”
“It was due to a lack of demand, according to a real estate agent in the area, who requested anonymity, as he primarily sells St. Joe properties and is in litigation with the company.”
“Meanwhile, prices are plummeting in the development. The real estate agent is currently listing a lot for $465,000 that his client bought for over $800,000. He said he’ll be lucky to get $450,000 for it.”
“A look at the prices of lots for resale shows either some desperate or unrealistic sellers. For example, one lot is being offered at $1.3 million, while the one next to it (which appears slightly larger) sold for $660,000 in March, and we know prices haven’t doubled in the past three months. Next to that one, a larger lot is being offered at $1.285 million, while an adjacent and similarly sized property is listed at $595,000.”
“At Rivercamps, a 1,500-acre community in Bay County, Fla., with permits for up to 450 homes, sites have ranged from $84,000 to $849,000 and have averaged roughly $200,000. Assuming a 3,000-square-foot house, the cost to own is well over $1 million.”
“‘Rivercamps is a total joke,’ according to one hedge fund manager who is short St. Joe. The source, who requested anonymity, questions who is in the market to spend that kind of money and to be stuck in ‘a buggy pine forest on a bay,’ or at other St. Joe developments that are off the beach, when beach property is available in other parts of the country for roughly the same price or less.”
“He believes the company parlayed its success in the Gulf of Mexico to entice previously successful speculators to buy up lots in much less desirable locations.”
“Demand was certainly high at Rivercamps when the company had its initial release in October 2003. At that time, 314 buyers submitted offers for 23 lots, according to a company press release. The fervor was still there in February of last year when 281 buyers submitted offers for 37 home sites.”
“However, there are currently only three houses (including one that’s a model home) completed. ‘Nobody is building,’ according to the fund manager, who said he did not see a single new home under construction when he visited Rivercamps last month.”
“While you can be the only Porsche dealer in town, if people aren’t in the market for Porsches, it doesn’t matter that there’s no competition. That’s the situation St. Joe is in. Many properties are very costly and targeted toward the second-home buyer, most of whom are not buying in this environment (in fact, some are bailing out).”
“Meanwhile, prices are plummeting in the development. The real estate agent is currently listing a lot for $465,000 that his client bought for over $800,000. He said he’ll be lucky to get $450,000 for it.”
___________________________
OUCH!!!!!!!!!
But prices for land don’t go down. They’re not making any more of it you know. Except for Mars, I guess. But we won’t be colonizing that planet for another 200 years. So my guess is this land in NW Florida should be worth about … $1,000,000,000,000,000,000,000,000,000 assuming 20% appreciation each year, which is, of course, completely reasonable.
These people that say there is a shortage of land must be really dumb or poor.
I had to fly from So Cal to Oakland yesterday. Get in a plane and get some perspective. There is a ton of undeveloped land in CA.
> There is a ton of undeveloped land in CA.
Yea, but a bunch of it is locked up by the “I’ve got mine, but you getting yours would be damaging to the environment” politics of the state.
They make land in Hawaii- lava flows on the big Island!
Lot prices for that part of Florida is insane. I’m sure it is a nice area, but sounds like they are “shining the turd” and people fell for it.
David Liarreah should be given a public execution for all the blatant lies propogated by he and his minions….
At least a spanking!
ouchhh! Good for the buyer. There is always somebody that will win. People are fools when it comes to real estate. Hope that the prices go even further down and it bust the godamn banks and these S.O.B.’s from Fannie Mae.
NICE HAIRCUT
It was due to a lack of demand, according to a real estate agent in the area, who requested anonymity, as he primarily sells St. Joe properties and is in litigation with the company.”
“Meanwhile, prices are plummeting in the development. The real estate agent is currently listing a lot for $465,000 that his client bought for over $800,000. He said he’ll be lucky to get $450,000 for it.”
‘Demand was certainly high at Rivercamps in October 2003. At that time, 314 buyers submitted offers for 23 lots. The fervor was still there in February of last year when 281 buyers submitted offers for 37 home sites…However, there are currently only three houses (including one that’s a model home) completed. ‘Nobody is building,’..Rivercamps is a total joke,’ according to one hedge fund manager who is short St. Joe. The source, who requested anonymity, questions who is in the market to spend that kind of money and to be stuck in ‘a buggy pine forest on a bay’
This is a good example of psychology in a mania. It was a ‘buggy pine forest’ back in 2003, too. But when people are furiously bidding on the product, everyone looked past the obvious flaws.
The buyers didn’t care it was a bug infested pine forest ripe for a fire, they never planned on living there themselves.
Go a couple counties over to my neck of the woods in a little town known as Niceville Florida… Two years ago in a community named Swift Creek people were camping out overnight to get a lot in the soon to be released Phase 5… Fast forward to this year and the release of Phase 6, was announced online the release of 40ish lots…. 3 months later… only about 4 have sold…
This is not just a St. Joe thing in the Florida Panhandle… it stretches all over Florida in small towns and in large…
Florida Land boom of 2000’s is about to go bust!!!
I’ve was born and raised in Florida. Been here a LONG TIME.
Was a broker in the 80’s. Land in North Florida, compared for most of the previous 20-30 years with Georgia/Alabama/NC interior areas……..about $800-1000 per acre.
What makes a crappy lot worth 800,000??? PURE SPECULATION.
Ben, I think their contracts stipulated that people had to build houses within three years. Wonder what happened to those clauses?
OT, here is a great article on the Florida and San Diego condo market.
http://realestate.msn.com/buying/Articlenewhome.aspx?cp-documentid=386136
Peter,
It’s in the article. They ‘avoided’ a PR disaster!
Thanks Ben.
The Theory of Evolution is being proved yet once again….people are no different than the monkey with its hand in a fist hanging onto that marble and refusing to minimize its loss.
Monkey see monkey do.
I am short JOE
gimme the money!
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
I love it!!!!! I am framing that statement and hanging it on an office wall.
LOL!
I would’ve guessed that the quote would have gotten old by now. But ya know, it still makes me smile.
That never gets old.
It should be tattoed on that dudes forehead, his buddies should get him drunk and do it.
He deserves it.
Is Niceville near Smallville?
Funny name I know… but just thought I would give some first hand accounts from NW FL…
Niceville is actually North of Destin… Which if you don’t know where that is, it is on the coast between Panama City and Pensacola…
sounds like Hellville
Niceville its charms. Most of the area is a good 30′ above sea level, which means something these days with the tropical weather. It’s where most of the Eglin rocket scientists end up, so you’ve got an educated population, and a good public school system. Easy to get to the beach when you want to, but you don’t have to deal with Destin traffic on a regular basis. A couple nice planned communities that are small scale knock-offs of Columbia, MD or Mission Viejo.
Summer heat sucks, but then we usually get about 9-10 months of genuinely good weather every year.
(And we thought Swift Creek was overpriced from the beginning of Phase 1)
Niceville was built as a planned community for Eglin Air Force Base. Thats where all the researchers who build “bunker busters”, guided missiles and the famous “MOAB (mother of all bombs)” live along with Air Force personal who work on base. Eglin is the largest Air Force base in the World. If you look at it on the map of Florida its about the size of a large county in the state.
Well, that’s where the Air Force researchers “borrow” the technology developed by the Navy at China Lak and Point Mugu. And when the Air Force needs to really test their stuff they got to where? Ever since the AARAM and “rolling airframe” fiascos it ain’t Eglin.
Seriously, Eglin does great stuff just not everything and Niceville suffers under the same hubris every other base region experiences. What I’m saying is that Eglin may not protect the region from…. well lots of things. Ask Andrews, the one in Maine, Westover, etc.
That is correct, Air Force scales back at Eglin and transfers people to other bases Niceville suffers. As long as Eglin is ok then all those small cities, Niceville, Crestview, Ft Walton Beach, are fine. The Military is to the Florida Panhandle what GM and Ford are to Michigan.
Eglin’s down for about a 4-5K gain in personnel between 2008 and 2011 because it came out ahead in the latest round of BRAC. Which translates into an overall population gain of 12-15K or so in the Ft. Walton Beach when you add in dependents in a county of less than 200K people right now.
So right now, the prices are a lot more sticky downward in the areas close to base because people would rather hang on for another two years and see if they can get a higher price when the BRAC fairy appears rather than sell out right now. Anyone who bought in 2003 or earlier can rent the property out and pretty easily cover PITI on their mortgage in the mean time.
It’s an interesting contrast to the beach market second home free fall once you get to Destin and points east. Wonder if in a couple years we’re going to see some of those big new condo complexes in southern Walton County (which is actually the county to the east of Ft. Walton Beach) filled with enlisted guys complaining about the hour plus commute to base every day rather than being filled with vacationers.
As for the price differences at St. Joe developments, until this week, they were extremely strict about people who owned lots meeting the lot’s build out date, and you’d get hit with a $2500 fine every month past that date until the house had an actual certificate of occupancy. And the architectural review committee at a couple of their flagship developments was an utter nightmare to deal with so it took forever to get plans approved. Add in builder delays, and it took 18-24 months to build a home there.
So the close a lot got to build out date, the less it would be worth, and anything that had less than a year to go for build date would crash in value because you realistically couldn’t build on the lot and meet the deadline. The $500K lot probably has a year to go, while the $1 million lot has three years to go before there has to be a house on it.
Then this week, JOE suddenly gave the lot owners a two year extension to their build out times in an attempt to keep land prices from crashing entirely. Be interesting to see the fallout.
people who owned lots meeting the lot’s build out date, and you’d get hit with a $2500 fine every month past that date until the house had an actual certificate of occupancy.
I smell a class action suit. Sure, St. Joe can change the “rule” but.
As to BRAC and Eglin, the short answer and thus incomplete answer is no. Sorry, and I’m not being provincial or, I hope, biased. Eglin and Air Force are diverging. Their test range is constrained and crowded and they don’t got no place to hit stuff.
Bah you don’t need bombs or Al Quaida to destroy US real estate. You just need the FED and their buddies from the banks. A lot of debt is just the type of mass destruction weapon that is needed. Thanks to Easy Al and the gang bang bankers.
My sister and husband used to live in Navarre in one of those buggy pine forests near a bay. They bought a long time ago and sold before the bubble. You did not DARE go out at dusk without skin protection due to the bugs. It was beautiful country living back then but the heat and humidity were brutal!
Although I live overseas I grew up in Pensacola. Its all about the same in Northwest Florida whether you live in Pensacola, Niceville, Milton, Ft. Walton, Panama City, etc. Pine trees and the biggest flying cockroaches known to man. The only game in town is the US military and beach development. I can understand beach property prices being pushed up by out of state investors that have been priced out of the south Florida market. What I don’t understand is the increase in prices on the mainland i.e. non beach areas. Insane.
My sister lives in Orlando and some years back she told me that the local real estate spin on the giant cockroaches was to rename them “Palmetto bugs”. Like a three and half inch long flying Palmetto bug wouldn’t freak people out.
Just north of Whoville…
Boil that dustspeck!
OT:
Not a bad article discussing Silicon Valley RE, especially considering the source.
http://realtytimes.com/rtcpages/20060608_medianpriceeight.htm
There’s some data in it, too:
“For example, Silicon Valley’s median home price is only 6.8 percent higher than it was a year ago, but from May 2004 to May 2005, prices rose from $635,000 to $749,000, about 18 percent.”
Wait until INTEL makes their announcement next week. Should be 15,000 jobs going to INDIA!
do you have inside scoop on this?
June 15th!
OT Question? Is the bond market dropping in value, because the demand is up due to the tanking stock market? Is everyone throwing there money into bonds once they pull out of stocks? It seems to me like the bond market should be going up, due to the speculation that the fed is going to raise rates. Any clarification would be appreciated.
The nyse has lost 800 points in about 4 weeks. The RE bubble is talked about every day now on cnbc in one form or another. I think the markets and investors have no idea what to do. This is the worst place to be as there is not a clear direction of where things are going.
I know very little about economics, but the “rule” is that when interest rates go up, bond prices go down.
hello from germany,
to me it semms that the bondmarket is pricing in the recession
in late 06
Sellers are getting desparate in silicon valley. They employ all sorts of technique to push the property but, hey, buyers are smart, too!
This particular condo, Zip listing#40173514, was originally listed as #40163963.. was sitting there for a month; So, relisted with different front photo to make it look like new listing!
BW
“The real estate agent is currently listing a lot for $465,000 that his client bought for over $800,000. He said he’ll be lucky to get $450,000 for it.”
What’s amazing is the dot.com bubble popped only in the year 2000. It’s not like the last big bubble happened over a generation ago so folks didn’t have any exposure to this type of thing. Yet, here we see the same behavior because RE was different because they aren’t making any land, population is going up, etc. P.T. Barnum the circus man once said ‘There’s a sucker born every minute.’ This is proof of that.
It’s like the X-Files, “I WANT TO BELIEVE”
Naz 2000 vs. RE 2006: The “yellow” balloons are icky. They pop. The “red” balloons are nice. You can keep blowing and blowing and they only get bigger. They told me the yellow balloons could do that too but mine popped and I cried. I’m so glad they got red balloons now. Hey? You want one? I’ve got lots….
I don’t like balloons, they are scary and give me nightmares.
Sooo pretty. Fun. Cheap to manufacture, cheap to sell, cheap to own. Massive potential to grow. Buy many. Hey? You want one? I’ve got lots….
Here is where I turn serious for a moment. Real Estate investment returns always used to be made at the purchase. Distressed, unloved, ignored, divorce, estate, neglected, whatever. In the olden dayes we made money by repairing, loving, paying attention, etc. and getting paid for that with either rent or resale. I have no idea what happened these last 4-6 years when it reversed. I don’t care. I ain’t dun buyed nuthin’ fer years. I’m too stupid to do otherwise.
Here’s my thought for the day:
You have three choices:
1 A very nice balloon.
2 An inflated ballon with string and nice granite counterweight.
3 A burst balloon.
4 A burst balloon at the bottom of the lake.
Isn’t that 4 choices? =)
Actually no choices; you choose, you are screwed. Kudos for seeing the deliberate irony. If you like I can do my best Python Spanish Inquisition voice…
I want 99 luftballoons please.
almost a 50% haircut for that “client” dude. At the rate of dropping, might go below $400K, or even worse, no greater fool willing to buy it at ANY price. LOL
almost a 50% haircut for that “client” dude. At the rate of dropping, might go below $400K, or even worse, no greater fool willing to buy it at ANY price. LOL
That is a huge haircut. Let me repeat what I have said before, $450,000 is a lot of money! Cannot understand how people throw these numbers around like it is chicken feed. I do not get it!
Even though I speak German, I didn’t understand the true meaning of schadenfreude until I saw that blurb about the guy buying a lot in a swamp for 800k then having to list it for 465k. Boy, if a few more of these stories get out look for the mania to reverse in the other direction.
As for me, I refuse to buy until I can put down 20% and have payments on a 30 year fixed that make up only 25% of my monthly gross income. I have the kind of job and live in the kind of area where this is easily possible by saving for a couple years. Oh yeah, the cost of renting must be more than buying.
The question is, why didn’t everyone else also do this?
I can not answer your question, but, that is what I did in 1975 and it has worked.
“The question is, why didn’t everyone else also do this?” Because “real estate never goes down, it only goes up. The houses that cost 500K will cost 1.5 million in a couple of years. Better get in now, before oyu are priced out” Speculation is the answer, there was a feeding frenzy. Once all the bait is out of the water the sharks go somewhere else.
It’s funny the degree of emotional attachment to the bubble.
When I pointed out to some of these househeads last year that there was a bubble they became hotheads. They couldn’t just disagree but were angry to hear a different opinion.
Sounds like what happens in DC with Republicans and Democrats. Just a bunch of children.
Hmm…that is the first time I’ve read Eglins test range is constrained. Eglin sprawls into three counties and they have a LOT of land. Perhaps I am misinformed, where does the data lie that Eglin is constrained? There is some concern about development that abuts the base but the bombing ranges are a hell of a long ways from any development. Having said that, you could hear the MOAB when it went off and I regularly hear C-130 gunships practicing. You can’t live in the Navarre/Niceville/Ft Walton Beach area without hearing this. It doesn’t bother me in the least…the sound of freedom. I do NOT want to turn this into a political thread, my last comment was just a personal observation. The constrained aspect that Cote spoke of has me scratching my head though.
In regard to St Joe, I vacation at Cape San Blas once or twice each year and from day one their prices seemed completely outrageous. I agree, somebody is fixing to get a hair cut, and it won’t be a trim.
Regards,
FLreappraiser