Name:	MartiniMan -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 10:06:46 AM

I was in the market for a home with better water but I am now officially on the sidelines as I have no desire to buy in what is obviously a real estate bubble that will eventually burst and lots of people are going to get burned, especially if they finance a lot of the purchase.  Most mortgages have a requirement that you maintain a minimum loan to equity value.  So take the home I show below.  Around on year ago that home value was estimated at around $800K.  It is on the market for $1.6M right now.  If you bought it with 10% down and its value drops to a more reasonable $1M or less your lender is going to require you put in more equity. 

Nothing against the house.  It's very nice and I would probably consider it for $1M but not $1.6M.  I hope the person who buys it for that price pays cash and can wait 20 to 30 years to get it back to that value, otherwise they will be taking a huge bath if they have to sell when the bubble goes away.  And I say this knowing I could sell my current house for far more than it's worth.  But I am not going to be able to wait that long to get my money out of the new house.

Name:	CRD -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 10:41:09 AM

In your example, MM, the LTV ratio would be a whopping 1.44.  Either you would pay down the principal with XS cash, (if you took out a loan) OR, make substantial home improvements to increase the value to get that ratio down in the 0.8 range. Paying cash alleviates all of this, but I can think of a better use of 1.6 Mil than on real estate that is relatively overpriced because of the bubble.   Either way, those options would certainly contribute to new onset hypertension if this was a second home.  Am I correct?

Name:	GoneFishin -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 11:02:02 AM

You work hard, earn  a lot of money, and then are faced with a  decision to spend or not. It all depends on  what makes you happy.  More money in the bank  serves no purpouse unless you use it to enjoy life. Sadly, I no different than  you. I would not buy it and just continue to watch  my bank account grow. The turth  is you  will probably never miss the money. It is really a mind set of not allowing someone get the better of you. I am no different.

At some point, you will look back and wonder how much more money do I need? I suspect as interest rates increase the price of houses will come down. You will look back as the  price of your  place goes down....but that is life.

Name:	MrHodja -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 11:59:19 AM

I finally was able to talk with someone knowledgeable at Alabama Power abot the property close to ours in Parker Creek.  They are indeed going to sell that property, and in that conversation I asked about price and since that bit of land hasn't actually been listed yet he couldn't give me a price, but said that they recently sold two lots on Sandy Road or Sand Creek Road  (I forget the exact name) that listed for a half million apiece and sold in two days.  

By the way, the gent also told me that whoever bought the 200+ acres between Coosa 20 and Bywater Road also bought the remaining property between theirs and Bywater.  Hard to beilieve it is just for the personal use of their family.

Name:	wix -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 3:19:38 PM

A disturbing real estate movement is happening on our lake.  Lots are being reduced to as low as 50 ft of waterfront and being developed with large homes and sold for $700-800 K.  Problem developing is very obvious….lake is being overrun by boats and people ignorant  of boating and safety on the water.  Take a look at what has happened at Stillwaters, The Village, and others, and now even APC is developing micro-lots.  Best benefit of Lake Martin for decades has been the bulk of the property was owned by APC, and Russell, and they were very conservative with their development plans….no more.  The way things are going homes bought at todays high prices, won’t sell for that price 20 years from now…..but, will be worth much less.  We are ruining a very good thing.

Name:	MartiniMan -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 5:22:06 PM

That's exactly my thinking.  The old adage is you make money on real estate when you buy it.  I would add that you lose money on real estate when you sell it.  If you had $1.6M in cash and wanted to buy this house you better be able to lose up to a third of it or more if you have to sell after the bubble bursts.  There is no sound economic reason for a house to appreciate in value by 100% in one year.  That is a bubble.  That people are willing to pay these prices just goes to show you that a fool and his money are soon parted.  That a person would buy a house like this for $1.6M and finance it just goes to show you that a fool and bankruptcy soon come together.

And again, it's a very nice house and I might be willing to buy it for around $1M but not $1.6M.  And do I think they will get it?  Yes I do.  But I really hope the buyer has lots of cash and can hold onto it for decades so they don't lose their shirts.  As for me, I think I will wait for the bubble to burst and maybe I can pick one up for a more reasonable price as I have the cash in hand.

Name:	MartiniMan -	Reply
Subject:	Crazy high real estate prices
Date:	4/5/2022 5:29:18 PM

I generally agree with you.  But for me anyway, even if I paid cash for the house it would likely reduce my enjoyment of it knowing that it dropped in value by 50% not long after I bought it.  Not everyone thinks that way and more power to them but I think many people understand the difference between overpaying for a second home and overpaying for a primary residence that you plan to live in for the long haul. 

We considered selling our home in Marietta as it is now worth more than double what we paid for it.  But we have to live somewhere and my wife is not willing to move to the lake.  She has friends, our parish, her golfing associations, etc. and so we would just have to turn around and overpay for something else.  And rental rates are even worse in terms of a bubble so that's not a great option either.  Like I said, the smart money will sit on the sidelines right now and wait for better times.  In the meantime we are blessed with a very nice lakehouse that is paid for and only pay $1,400 per year in real estate taxes.  We can still enjoy the lake life very economically......except the two boats and jet ski.....hole...pour money into....make more holes....pour more money.  

Name:	Talullahhound -	Reply
Subject:	Crazy high real estate prices
Date:	4/6/2022 8:14:59 AM

The market is super-heated and there isn't enough inventory to meet the demand.  I'm of the opinion that you never lose money on waterfront property.  A lot of people who buy these properties don't intend to sell them - they will become properties that are passed on to their children.  Over time, I don't think you ever lose money on waterfront property.  The increase in interest rates may slow things down, but so many people pay cash.  

I do agree with Wix that the current trend of big houses on tiny lots will eventually ruin the lake.  As bad as the boat traffic is now, it will get worse.  In my opinion, Russell Lands has a long term strategy to develop every inch of the lake, and commercial properties, such as resorts will show up.  There is also a very active rental market, including Verbo and AirBnB properties for short term rentals.  

Name:	lucky67 -	Reply
Subject:	Crazy high real estate prices
Date:	4/6/2022 3:24:15 PM (updated 4/6/2022 3:29:10 PM)

MM please explain to me-- a lender for 45 years how a lender can require you to put in more equity if your value declines--once a loan is cast the only way to modify is a refinance; AND I think i can top all comments on this thread--4 doors from me was the only lot on my street that had never been built on--3 acres, 375 ft water--NO HOUSE--just sold in 1 day CASH -- ready ??? $1.65 mill ; cant wait to see this mansion --out of privacy, i will not mention buyers name--but welcome to the hood !!!!!!!!!!

Name:	Talullahhound -	Reply
Subject:	Crazy high real estate prices
Date:	4/6/2022 5:29:54 PM

Stands to realize that property that sells for $1.6 million will end up with a very expensive house on it.  When all is said and done, it will likely be close to $3M, but hey, it will increase the property values for the neighbors.

Name:	MrHodja -	Reply
Subject:	Crazy high real estate prices
Date:	4/6/2022 6:26:25 PM

But along with that multimillion dollar property will come a lush green lawn, whose fertilizer runoff will do nothing but make our beautifully clear water look like that in Lake Jordan.

Name:	Talullahhound -	Reply
Subject:	Crazy high real estate prices
Date:	4/6/2022 9:27:48 PM

Yes, there is that.  I don't fertilize or treat our lawn for that reason.  Yes, there are weeds, but I choose to live with them.  I wish my neighbors would stop using Tru Green on theirs.  I've mentioned the run off, but they still do it.  

Name:	wix -	Reply
Subject:	Crazy high real estate prices
Date:	4/6/2022 9:32:37 PM

Hope I’m wrong here, but you better get ready for 4 to 6 ugly part timers/weekenders with 12 boats/sea doos.  Keep us informed…..it’ll be interesting to see.  Couple of rules to remember….APC rules say 1 dock per 100 ft.  And, if you area was originally APC lease area, APC set each area up as a subdivision with rules against subdividing lots…..but the subdivisions would have to be organized by current owners and violators would have to be sued….that’s what I’ve been told.

Name:	Mack -	Reply
Subject:	Crazy high real estate prices
Date:	4/7/2022 6:12:58 PM

might be the only way to get Bywater paved.

Name:	BAJ -	Reply
Subject:	Crazy high real estate prices
Date:	4/8/2022 1:16:51 AM

There were some who were sounding this warning long, long ago. But we were laughed at, and in some cases, ostracized. (That can happen when you make the "wrong people' mad around here.)

Name:	lucky67 -	Reply
Subject:	Crazy high real estate prices
Date:	4/10/2022 9:49:24 AM (updated 4/10/2022 9:53:05 AM)

Mr H---fertilizer runoff ///--how about the new golf course & existing Willow Point ??? that will top any runoff from a single family home dont ya think ? they buy it by the truckload

Name:	MrHodja -	Reply
Subject:	Crazy high real estate prices
Date:	4/10/2022 12:22:27 PM

No argument there, certainly a valid observation.  Unfortunately I know of no rules/regulations/laws regarding such activities.  Maybe lobbying to limit such fertilizer use would be a constructive activity for the tree hugger community. 

Name:	Talullahhound -	Reply
Subject:	Crazy high real estate prices
Date:	4/11/2022 5:23:39 PM

I don't know, I don't think you have to be a bonifide tree hugger to not want to see fertilizer run off into the lake.  Back in the day, the run off from Willow Point probably didn't make as much of a difference because there weren't as many houses.  But now with 2 golf courses and all of the new houses it's going to become a problem.  There has been a number of articles about increase in algae  bloom in the lake. I don't understand the obsession with a super green lawn and a lot of the weeds are beneficial to the bees and wildlife.  

Name:	wix -	Reply
Subject:	Crazy high real estate prices
Date:	4/11/2022 9:18:15 PM

You also have to consider the fact that Lake Martin has treated sewage dumped in the Lake from Alexander City, Dadeville, and Camp Hill. While the sewage is treated to remove dangerous bacteria, there is still a huge amount of nitrates, etc., that are passed right into the lake.  Chemicals are more difficult to remove by treatment plants and many polluting chemicals are allowed by gubment to just pass on downstream.

Name:	boataholic -	Reply
Subject:	Crazy high real estate prices
Date:	4/22/2022 10:28:16 AM

I've seen some for sale that I'm pretty sure are asking double what the same house went for just a couple of years ago.  Another sign of a bubble is the marginal lot with the new house for a premium price.  The below is currently asking 819,000.  New house is nice and has all the current trends in decor but is only 3 BR and by itself isn't worth half what they are asking.  So in addition to making a good profit on the house, they are getting about $400,000 for this lot with a small waterfront and likely shallow water.    

Name:	wix -	Reply
Subject:	Crazy high real estate prices
Date:	4/25/2022 9:40:21 PM

Amazing to me that anyone would even want, much less pay stupid $$$ for such a house.  There is a "development" in Stillwaters that has 32 large houses jammed together in 50 to 60 ft lots.  Saw the commercial community dock just before the lake was full.  The end pier water depth was between 2' and 2 1/2' deep.....total and that is to hold 6 boats.  Takes some really stupid buyers.  Oh, the homes are 750K to 850K.....