Occupancy and Layoffs...

[flyforfun]

You are correct. Not being in the real estate business I forget about all those doc stamps that were paid every time a property was flipped. That was a substantial amount of dough. So you have two unusual events occurring simultaneously. To say government became addicted is an understatement. If my memory is working the BCC raised the budget 57% in 2004 alone. At the same time reducing the millage rate which the local homesteaded property owners, voters, saw. It was a politicians dream scenario. Problem now is each one of these projects comes with a fixed cost that must be paid. And with revenue falling, capital monies are being shifted to pay these recurring costs. Rather than looking at reigning these in, they are putting off capital purchases such as vehicles and equipment. This will catch up to us next year and the year after. Maybe then we will be able to sit down and take a serious look at cost of government and the priorities that we wish to fund. Otherwise, the easy way may become the norm and significant millage rate increases passed to offset these costs. I believe the school district's attempt at passage of a small millage rate increase this year, when it was shown that it was not needed, and when it was the first such increase in 11 years, was nothing more than testing the waters to see just what sort of reaction the public would make.

Property Taxes are way, way, way to high to bring out of state investors back into this market and they are going down way to slow. This has contributed significantly to the market recovery by making the "carrying cost" prohibitive for most. The only people I have meet who see Sowals property taxes a bargain are from the east coast or big cities. Until the local politico's grasps this problem, its going to be slow and long recovery.

 

[TooFarTampa]

Property Taxes are way, way, way to high to bring out of state investors back into this market and they are going down way to slow. This has contributed significantly to the market recovery by making the "carrying cost" prohibitive for most. The only people I have meet who see Sowals property taxes a bargain are from the east coast or big cities. Until the local politico's grasps this problem, its going to be slow and long recovery.

I wouldn't call them a "bargain" but if you want to be in Florida, it's a good deal. While thumbing through our Florida atlas yesterday (killing time on the road), I noted that the vast majority of the most desirable waterfront property is on incorporated land. I would like to hear others' opinions on the tax burden.

 

[beachmouse]

My parents live in the mid-sized metro Midwest, and feel like property taxes are a bargain down here. I suspect it's that property taxes have traditionally been low in the Southeast because of a lower demand for municipal services, and it's the large Southeastern crowd that finds them to be high compared to like Alabama. (Which definitely provides lower state/local service levels than Florida from what I've seen of it)

 

[30ashopper]

We've weathered the '80s and '90s as far as downturns in RE and the economy. I was very busy raising children, but Mr. K is a Corporate/RE attorney, and we relied on him solely for our income (no trust funds or oil wells, dammit). Times got tough for many, but I don't remember throwing in the towel, at all...well, except for all those RE guys living beyond their means. ;-)

Question...what in your mind is different about this time around and why do you think America will not bounce back, eventually? I am thinking it must be that housing, jobs and gas prices are bigger in your face hits than super high interest rates and S/L messes. Those of you that know me, know that my glass has a leak...so, this reeks of optimism on my part!!!

Well, housing is trashed for a while. There's nothing we can do about that. It'll be a weight on the economy for quite some time to come, so I'm not predicting a super economic boom any time soon. But there are other fundamentals - inflation, the value of the dollar, and the cost of oil that I think will improve in the next six months. Some data points -

- personal savings is shooting through the roof, we do learn from our mistakes.

- inflation is caused by increases in the money supply, but the money supply is shrinking. People are spending less and saving more, and that money isn't getting borrowed back out because the banks are trying to improve liquidity. the banks are hording cash, and tightening credit. we don't have home equity to blow anymore either. this is anti-inflationary.

- the price of oil was a both a bubble and the result of the value of the dollar, and that has come to an end. The dollar is rising, (because the money supply is contracting), we are using less (a long term trend that doesn't flip/flop quickly) and it turns out europe is in far worse economic shape than we are. I'd be willing to bet oil will be less than 100/barrel by years end, adding additional downward pressure on non-core inflation.

On the flip side, we are spending less, our net worth is shrinking thanks to housing, and we can't or won't get loans to expand our businesses. I don't see a major economic melt down, but I don't see a major expansion either. I guess for a while I would predict we'll tread sideways.

 

[Miss Kitty]

Thanks, 30Ashopper!

 

[dgsevier]

Rentals at our house held steady. However, the clients changed. For instance, those who normally took an expensive cruise came to SOWAL and other less beautiful beaches. Those who normally came to SOWAL maybe came for a shorter time, or vacationed closer to home. Those who usually took a vaction closeer to home simply took a "Stay-cation" and BBQed some ribs.

 

[30ashopper]

^^ interesting perspective. (hmm, why can't you do "thanks" in the lounge?)

 

[scooterbug44]

That is similar to what I am hearing from people in the ski industry - they had to rethink their marketing, vacation packages, season passes etc. to be correct for their changing demographics/spending habits. More day skiers, less destination skiers, a change in food/beverage sales and service purchases.

There's that one group that doesn't care and continues as they always have, but most people are pinching pennies as they spend their vacation dollars.

 

[30ashopper]

Here is a great article that talks about what's going on, and how much farther we have to go until this is over.

In spite of all those problems, Americans are beginning to reduce their debt exposure - as seen in the savings rate, which rose from 0.3pc to 2.6pc in the last three months, the third steepest quarterly increase since the Second World War.

?I think that?s pretty big news,? he smiles. ?This is going to be a painful but necessary surgery so that we can get out of the hospital and embark on the next bull market of economic expansion.?

But before the US economy can truly begin to expand again, Rosenberg believes the savings rate must rise to pre-bubble levels of 8pc, that the US housing stocks must fall to below eight months? supply, and that the household interest coverage ratio must fall from 14pc to 10.5pc.

?It?s important to note what sort of surgery that is going to require. We will probably have to eliminate $2 trillion of household debt to get there,? he predicts, saying this will happen either through debt being written off, as major financial institutions continue to do, or for consumers themselves to shrink their own ?balance sheets?.

?American households own more than $4 trillion of consumer durable goods. So something tells me that is going to be a venue for shrinking the household side of the balance sheet.

?We?re talking about the silverware, the old antique couch in the basement, unwanted or expensive art,? he goes on. ?This is the future, the future is frugality.?

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/09/ccprof109.xml&page=1

Basically, Americans are cutting back, but they need to cut back much further before the economy will turn around. How that will play into things like the rental market I'm not sure, but I find the idea that rental clientel is shifting through different demographics fascinating. I'd be willing to bet next year rental rates will have to decline to support our new found frugalty.

 

[Matt J]

For our 3 places, this was an interesting rental year.

It started very slow and when it finally picket up the rentals came in bunches.

As it has turned out, this will probably be our best overall rental year.

Somehow, I think higher gas prices and economic uncertainty improved rentals, but caused people to wait longer to arrange them (just in case things got better.)

If you pile a family onto a plane and fly somewhere for vacation it is pretty expensive. Hotels are high, eating all 3 meals a day is expensive, drinks in bars cost a lot, etc..

OTOH, several families can get together and rent a house. That lowers the cost a lot. The only transport cost is gas and while gas was more expensive this year, it probably didn't increase the cost of a typical round trip drive to Sowal by more than $100-$150. And with a house, you don't have to eat out every meal or pay bar prices for libations.

All-in-all, I suspect that a bad economy actual helps rentals by hurting the competition.

It hurts a lot more than just the competition. If that trend continues then all we will have here will be houses/condos, Publix, and liquor stores. There are already 2 restaurants for sale on 30A and I doubt anyone can remember when that amount or more were. Unfortunately if people continue this trend restaurants will close and then the people who go out for one night on the town will stop coming because there are no restaurants.

Let me be clear that I am not bashing you in any way, just pointing out what happens when the visitors don't leave the rentals.