Lakes Region Real Estate Correlation to Stock Market

[secondcurve]

How badly do folks feel the diving stock market will hurt the Lakes Region real estate market? I've heard many times that the area would be protected from a steep price decline due to the vast number of retirees that fancy the area for second homes. Clearly this trend has been strong. However, many likely buyers in the 50, 60 and 70 age groups are also the biggest holders of equities. Further, second homes have historically been one of the first things to go when times get tough.

My impression of the local real estate market is that it has been resilient this year, albeit very slow. It seems highly likely that the downward bias will accelerate in the coming months. I'd be curious to hear from any realtors on the board or folks who are actively in the market to buy or sell.

[Irish mist]

The Lakes Region real estate market is really starting to lose steam. There's a 51 lot sub-division in the Lakeport area near the Laconia country club that looks like it is going under. A new Brady-Sullivan condo complex on the Weirs has went from $180,000 to $125,000. Several other condo developments are now on hold......and my condo complex is down close to 20% since 2005.

IMO it's going to get worse for at least another year or two.
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[jetskier]

Originally Posted by Irish mist

The Lakes Region real estate market is really starting to lose steam. There's a 51 lot sub-division in the Lakeport area near the Laconia country club that looks like it is going under. A new Brady-Sullivan condo complex on the Weirs has went from $180,000 to $125,000. Several other condo developments are now on hold......and my condo complex is down close to 20% since 2005.

IMO it's going to get worse for at least another year or two.

We just sold our condo (we had bought a house last year) in September. We essentially got what we paid for it in 2001 and lost about 20% in capital improvements. It sold for about 30% off the market peak. Even at that, we are pleased that it sold. There is inventory everywhere and nothing is moving. I think that the first issue for the lake is that it is a seasonal market. At this point, nothing moves until the spring at the earliest. Second, folks are not retiring when they had hoped. I know retirees getting jobs in this economy to make ends meet. Finally, the credit market is horrific.

Strap in...it is going to be a bumpy ride. My prediction is that we see the bottom late in 2009. Even that is predicated upon some recovery in the credit and stock markets.

Jetskier

[Irish mist]

Originally Posted by jetskier

We just sold our condo (we had bought a house last year) in September. We essentially got what we paid for it in 2001 and lost about 20% in capital improvements. It sold for about 30% off the market peak. Even at that, we are pleased that it sold. There is inventory everywhere and nothing is moving. I think that the first issue for the lake is that it is a seasonal market. At this point, nothing moves until the spring at the earliest. Second, folks are not retiring when they had hoped. I know retirees getting jobs in this economy to make ends meet. Finally, the credit market is horrific.

Strap in...it is going to be a bumpy ride. My prediction is that we see the bottom late in 2009. Even that is predicated upon some recovery in the credit and stock markets.

Jetskier

Recovery of the housing market in late 2009 is possible, but I suspect the following spring is more likely. And even then......I think the market moves sideways for at least another year or two before prices start moving up in central NH. Congrats on selling your condo
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[RLW]

There must be some kind of a magnetic up on Alton Mountain as they continue to build and sell just about everything that has been built. Heath has 4 real cheap 4 season modular homes up there that are not moving, but they are on unmaintained association roads on steep hills and bad locations. There are also many large colonial homes that are moving.

[Irish mist]

Originally Posted by RLW

There must be some kind of a magnetic up on Alton Mountain as they continue to build and sell just about everything that has been built. Heath has 4 real cheap 4 season modular homes up there that are not moving, but they are on unmaintained association roads on steep hills and bad locations. There are also many large colonial homes that are moving.

Things have changed in the real estate market up here over the years. Until recently the boom/bust cycles were terrible. In the 1980s the bust cycles were deep in this area.....now they are not as bad. The retirement home surge has helped make real estate more stable in central NH.
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[dpg]

Originally Posted by Irish mist

The Lakes Region real estate market is really starting to lose steam. There's a 51 lot sub-division in the Lakeport area near the Laconia country club that looks like it is going under. A new Brady-Sullivan condo complex on the Weirs has went from $180,000 to $125,000. Several other condo developments are now on hold......and my condo complex is down close to 20% since 2005.

IMO it's going to get worse for at least another year or two.

Down to 125,000?? Sounds like a good investment if your able to sit it out awhile.

[jetskier]

Originally Posted by dpg

Down to 125,000?? Sounds like a good investment if your able to sit it out awhile.

The issue is that real estate requires ongoing investment. If you buy this property you will have to pay for:

• Taxes
• Condo Fees
• Utilities
• Insurance

That could easily run $10k per year. If you carry this for a couple of years the basis would likely be about $150k...sell it at $180k with a real estate commission and closing costs, you are running about $165k. So, you made 9%over two years with risk (presuming that the market comes back and this all plays out). Put the money in a CD and you will do about the same without the risk. So, this would have to come down to well below $100k before a speculator would want to invest.

Jetskier

[Resident 2B]

Originally Posted by jetskier

The issue is that real estate requires ongoing investment. If you buy this property you will have to pay for:

• Taxes
• Condo Fees
• Utilities
• Insurance

That could easily run $10k per year. If you carry this for a couple of years the basis would likely be about $150k...sell it at $180k with a real estate commission and closing costs, you are running about $165k. So, you made 9%over two years with risk (presuming that the market comes back and this all plays out). Put the money in a CD and you will do about the same without the risk. So, this would have to come down to well below $100k before a speculator would want to invest.

Jetskier

However, you do not get any enjoyment out of money in the bank, only interest. With lakes region property, you get the ability to own part of the best place on Earth. There is huge hidden value in that, in my opinion.

That said, it is a lot less expensive to enjoy the lake when the values are going up than when the values are dropping like they have the past three years.

I believe good buying times are ahead and we will be looking to sell what we have so that we can buy something much better in the next year or so.

Timing is the big question. You need to make the deals near the bottom which is still in the future.

R2B

[SAMIAM]

Wow....9% on a CD?......where?

[jrc]

Yahoo 9% CD would be great right now. The last time I saw that Jimmy was President.

I'm not buying condo's for investment but if you did buy one, you could rent it out to cover the ongoing costs. I've thought about it, but condos seem to be very fast to fall and slow to rise.

Now if I had the money to get some depressed lakefront property and there was depressed lakefront property, that would be more appealling.

[dpg]

No, 9% over a couple years which is do-able.

[Waterbaby]

Originally Posted by SAMIAM

Wow....9% on a CD?......where?

And what's the minimum deposit? Has to be really up there to get that rate!

[fatlazyless]

Here's a medical real estate trust that pays better than 9%; MPW.....check it out....what do you think? Check out the five day chart with it falling from about 11 to about 7....hey, it now pays a 12.1% dividend at its' current price.

Does the Meredith Village Savings offer any 12% returns?

Hot tip -buy mpw today at $7.50, and spend all winter living in a tent on the luxurious waterfront lawn of an unoccupied Meredith mcmansion. Gotta love watching those winter sunrises across the ice. !