Smokies "hiney showing" thread

[Collin H.]

 We have officially entered the "Hiney Showing" phase in the Smokies.  That is, homes being offered for less than what was paid for them very recently.  It's all a part of the boom/bust real estate cycle in resort areas.  The inevitable end to "But this time it's different" chants. 

I'll be posting these as I see them.  

Here's the first. No further bookings in April or May. It was purchased for $2.4 million in 2022.  Asking $2.25 million today, and offering $20K in "buyer credits".

3385 Birds Creek Rd, Sevierville, TN 37876 | MLS #1256702 | Zillow

[John Carbone]

Quote from @Collin H.:

Someone paid $1.2 million for this in 2022.  A most grievous error.

Unable to sell on MLS, now going to auction with no reserve. It might bring $750K, which would still be too much.

4525 Hooper Hwy, Cosby, TN 37722 | MLS #1258689 | Zillow

 Update….the no reserve auction completed and the property sold for $505k. After commissions and everything these people took a 700-800k loss in under two years. 

my guess is this was bought for 1.2 mil as a 1031 exchange “to save taxes” these people got in over their heads and needed to liquidate for quick cash to cover debt on another investment. Pretty soon these will be happening with bank owned properties again, and expect the same 50-70 percent haircuts to a bidder as that is the actual true market value right now. 

all price appreciation since 2020 has been wiped out of this market, it’s just going to take some time to work its way through the system. Logically this makes sense too, revenues are starting to reflect 2019 rental numbers and cost to borrow is higher than 2019 as well. 

Hopefully the people who bought in 2020-2023 get wiped out and liquidated quickly and builders can go bankrupt and then we can get the market back to normalcy quickly. The faster stuff like this happens the better off for the long term and less new supply will come to market. 

[Henry Lazerow]

In Chicago STR demand is flat since 2022. I may switch mine to LTR as our LTR rates have gone up 10-15% per a year since 2021 and are now close to the same net profit as airbnb. Home prices are 11% up yoy even with high rates and common to see multiple offers. Our LTR vacancy is under 3%.

[Mike Anderson]

Quote from @V.G Jason:

My agent refutes all of our fear mongering. She states there's still multiple offers and its a sellers market. That my thinking is still wrong and when I am ready to change my mind, she is here. She also believes that it still hasn't peaked. 

Even though, I know that's very well not true at all. Can you imagine the average Joe peeking into the markets and hearing this? This just creates FOMO. 

 How does she refute the factual data that we can all look at and consider? Whenever i've pressed with actual data they look at me confused then spin the conversation to "inventory is low" which is actually rising too. It's just crazy. 

[V.G Jason]

Quote from @Mike Anderson:

Quote from @V.G Jason:

My agent refutes all of our fear mongering. She states there's still multiple offers and its a sellers market. That my thinking is still wrong and when I am ready to change my mind, she is here. She also believes that it still hasn't peaked. 

Even though, I know that's very well not true at all. Can you imagine the average Joe peeking into the markets and hearing this? This just creates FOMO. 

 How does she refute the factual data that we can all look at and consider? Whenever i've pressed with actual data they look at me confused then spin the conversation to "inventory is low" which is actually rising too. It's just crazy. 

 To your point and Collins point, I don't trust them they don't make my investment thesis. But to the one's that say agents are responsible, have a fiduciary responsibility to buyers I just laugh and revert back to this. They don't know what they're saying, and that includes 99% on this board too.

[Collin H.]

Screen shot from today. Over 1,100 active listings in Sevier County.

[Collin H.]

140 active listings in the town of Gatlinburg. Not long ago, there were practically no listings within a couple of miles of downtown.

[John Carbone]

Quote from @Collin H.:

Screen shot from today. Over 1,100 active listings in Sevier County.

Realtor.com shows over 2000 active listings in sevier county (excluding under contract)

[Chris Watson]

  I went and pulled historical new listing data and avg days on market.  We see about an extra 72 homes hit the market in March 2024 over March 2023. Not insignificant but not a major shift. Is the sky falling maybe in the future, but not yet. Data does not support it.

I have always seen close 1k+ on market the seven years I have been in the market. I do agree we are homes are starting to pile up on market but I contend it has more to due with 1) interest rates, 2) concerns on ROI (partly due to reason 1 & 3 and partly due to most not having pre-Covid experience in the market) and 3) the fear pumping going on (right or wrong).

[Kyle Smith]

Quote from @John Carbone:

Quote from @Ken Boone:

Quote from @John Carbone:

also the pool cabin pumpers during Covid did exceptionally well when kids were doing school from home and there was a lot of demand year round for pools in off peak times…now those pool cabins sit empty because kids are in school and people aren’t willing to pay a premium to stay so the place sits unoccupied. All of this was very predictable, but unfortunately only a few here were able to see this 2-4 years ago. A memorable reply I recall  from a pumper here back then was “I wont let you rain on my parade” … well now it’s a tsunami coming inland and it doesn’t care about your feelings. 

Well I for one bought pool cabins for times like this and I am so glad I did.  Are things down - yes.  Did I have to lower ADR - yes.  But my 2 bedroom pool cabins are doing way better than my 3 bedroom cabin on the mountain ridge with absolutely amazing views.   

The pool is the top amenity - not the view that gets preached so much.  So in times like this I am so glad I have pool cabins. But because I bought right and didn’t fall into the frenzy and pay through the roof for my pool cabins I’m still doing well and making money.  Not 2021-2022 money but more like 2019 money. 

So buying the pool cabin was not a bad thing at all. In fact it’s probably one of the smartest things I did.   But buying them at 2021-2023 prices would have been very tough.  

 What is your occupancy like for May on the pool cabins?

My pool cabin for May is 87% but I had to heavily discount some nights.  

[Ken Boone]

Quote from @Kyle Smith:

 What is your occupancy like for May on the pool cabins?

My pool cabin for May is 87% but I had to heavily discount some nights.  

Killing it man!

[Raj Sat]

Quote from @V.G Jason:

Quote from @Mike Anderson:

Quote from @V.G Jason:

My agent refutes all of our fear mongering. She states there's still multiple offers and its a sellers market. That my thinking is still wrong and when I am ready to change my mind, she is here. She also believes that it still hasn't peaked. 

Even though, I know that's very well not true at all. Can you imagine the average Joe peeking into the markets and hearing this? This just creates FOMO. 

 How does she refute the factual data that we can all look at and consider? Whenever i've pressed with actual data they look at me confused then spin the conversation to "inventory is low" which is actually rising too. It's just crazy. 

 To your point and Collins point, I don't trust them they don't make my investment thesis. But to the one's that say agents are responsible, have a fiduciary responsibility to buyers I just laugh and revert back to this. They don't know what they're saying, and that includes 99% on this board too.

 Closed property in Sevierville last month, never trust anyone in this business we need to do our DD before making decisions. Agents have little or no interest  to find out things without you asking for right questions. Within 1 month in listing we already have 30k in bookings. still there are deals. searched for a year before signing to this property.

[Leora Merrell]

Quote from @Raj Sat:

Quote from @V.G Jason:

Quote from @Mike Anderson:

Quote from @V.G Jason:

My agent refutes all of our fear mongering. She states there's still multiple offers and its a sellers market. That my thinking is still wrong and when I am ready to change my mind, she is here. She also believes that it still hasn't peaked. 

Even though, I know that's very well not true at all. Can you imagine the average Joe peeking into the markets and hearing this? This just creates FOMO. 

 How does she refute the factual data that we can all look at and consider? Whenever i've pressed with actual data they look at me confused then spin the conversation to "inventory is low" which is actually rising too. It's just crazy. 

 To your point and Collins point, I don't trust them they don't make my investment thesis. But to the one's that say agents are responsible, have a fiduciary responsibility to buyers I just laugh and revert back to this. They don't know what they're saying, and that includes 99% on this board too.

 Closed property in Sevierville last month, never trust anyone in this business we need to do our DD before making decisions. Agents have little or no interest  to find out things without you asking for right questions. Within 1 month in listing we already have 30k in bookings. still there are deals. searched for a year before signing to this property.

Glad to hear you didn’t rush into anything and took your time without just trusting an agent. Many listings will still work with excellent returns. We bought our 6th there in late 2022 (peak-ish time) and it’s been awesome. But we took our time and based our purchase off data only. Many realtors in that county are a disaster. So happy it’s working out for you!

[Raj Sat]

Quote from @Leora Merrell:

Quote from @Raj Sat:

Quote from @V.G Jason:

Quote from @Mike Anderson:

Quote from @V.G Jason:

My agent refutes all of our fear mongering. She states there's still multiple offers and its a sellers market. That my thinking is still wrong and when I am ready to change my mind, she is here. She also believes that it still hasn't peaked. 

Even though, I know that's very well not true at all. Can you imagine the average Joe peeking into the markets and hearing this? This just creates FOMO. 

 How does she refute the factual data that we can all look at and consider? Whenever i've pressed with actual data they look at me confused then spin the conversation to "inventory is low" which is actually rising too. It's just crazy. 

 To your point and Collins point, I don't trust them they don't make my investment thesis. But to the one's that say agents are responsible, have a fiduciary responsibility to buyers I just laugh and revert back to this. They don't know what they're saying, and that includes 99% on this board too.

 Closed property in Sevierville last month, never trust anyone in this business we need to do our DD before making decisions. Agents have little or no interest  to find out things without you asking for right questions. Within 1 month in listing we already have 30k in bookings. still there are deals. searched for a year before signing to this property.

Glad to hear you didn’t rush into anything and took your time without just trusting an agent. Many listings will still work with excellent returns. We bought our 6th there in late 2022 (peak-ish time) and it’s been awesome. But we took our time and based our purchase off data only. Many realtors in that county are a disaster. So happy it’s working out for you!

Thanks, BP helped alot in research. I got to know about shared well headaches, septic issues etc by going through BP posts. great members kudos to everyone who are keeping this forum UP.

If everything goes well planning to add one more cabin by EOY. We are not looking for profits at-least for now, it need to pay by itself that is our goal and it is working as per our data.

[Ken Boone]

Quote from @Kyle Smith:

 What is your occupancy like for May on the pool cabins?

My pool cabin for May is 87% but I had to heavily discount some nights.  

So how low did you have to go on your rates to get these bookings?

[Kyle Smith]

Do you guys think the lower occupancies and rates we are experiencing this year is due to economy or it’s the new normal?

[Mike Anderson]

Quote from @Kyle Smith:

Do you guys think the lower occupancies and rates we are experiencing this year is due to economy or it’s the new normal?

I personally think its both. I don't think either of these is 0% the question is how much of the overall pie are both of these issues. Ultimately i think the next 12 to 18 months is going to be tough in a lot of ways and the economy will be shaping what the "new normal" is. Everything is cyclical.

[Chris Watson]

Quote from @Kyle Smith:

Do you guys think the lower occupancies and rates we are experiencing this year is due to economy or it’s the new normal?

 I contend it is the old normal.  We are back to close to 2019 occupancy with rates being 2019 to "2019 plus up to 50% increase" depending on property and management. The interesting part will be the owner's who are scared and leave rates low all through the summer.  I have had summer bookings pouring in this past week at high pricing for the Smokies. Will these be the owner's who sell? Will these be the owner's who will pump forums full of fear (i.e. the Smokies market is crashing)?

[Collin H.]

Quote from @Kyle Smith:

Do you guys think the lower occupancies and rates we are experiencing this year is due to economy or it’s the new normal?

 Both.  Demand is down, supply is up.  It's the normal for now. The bubble lasted 2-3 years, and so will the aftermath.  However, the one ingredient in this situation that hasn't been present before, is the Fed tampering with interest rates to keep mortgages artificially low - unreasonably so - and now they've taken the foot off of the gas completely.  Borrowing costs have increased over 100 percent.  That's a really tough one to deal with, and should be a lesson in government tampering with free markets.

[JD Martin]

Quote from @Kyle Smith:

Do you guys think the lower occupancies and rates we are experiencing this year is due to economy or it’s the new normal?

 There's no sure way to tell, but there's definitely too much inventory right now which is going to kill occupancy rates. I am dealing with the same thing on mine in Four Corners (Disney). There's just too much damned inventory and too many people willing to price to the toilet to keep people in their places. Some of that is people that bought from 2010-2014 or so really low prices, so they don't need to charge much, but a lot of it are people who also bought at the peaks and just want to bring in some money - any money - rather than just pay out of pocket. There's people charging $99/night around here for 4/3s with a pool. It's insane. I wouldn't take that kind of cheap money even if it still made money, because the extra utilities & wear & tear on the property isn't worth it. My baseline is $150/night. If I have to discount lower than that I'll just leave it vacant. I realize a lot of people can't afford to do that, so you end up having to try to stand out from the race to the bottom crowd. 

Ultimately, I'm glad I have a nice fleet of LTRs because I'd be heading back to work if I had to depend on STR right now.

[Kyle Smith]

Big view lots are still selling for $250k and up.  Some of them are gone in less than 24hrs. After calculating income for a new build plus cost of land, even with agressive nightly rates, it just doesn’t add up.  I’m seeing some lots selling up to $380k (this was off Campbell Lead Road) but it still shocks me.  

[Wilson Hunter]

Where are all the Short Term Shop people? Are they still active on Bigger Pockets?

[Jon Martin]

Quote from @Wilson Hunter:

Where are all the Short Term Shop people? Are they still active on Bigger Pockets?

I always cringed at the knee-jerk "only STR invest in vacation markets" advice. I think we are seeing how that played out.

[Dan Heuschele]

Quote from @Jon Martin:

Quote from @Wilson Hunter:

Where are all the Short Term Shop people? Are they still active on Bigger Pockets?

I always cringed at the knee-jerk "only STR invest in vacation markets" advice. I think we are seeing how that played out.

 That is not the Carls’ statement that made me cringe the most. 

"Drive to vacation destinations are recession proof". they stated this without having STRs through a recession. I had 2 STRs at the Great Recession (GR) that have currently over 20m people within a few hours drive (San Diego, Tijuana, Orange County, Los Angeles, riverside, and imperial county), not sure what population was at GC. I can say for sure the GR significantly affected our revenue. So much that we converted to student housing in off season and STR only in the summer.

This is not even a recession but it has been my slowest off season since the GR (not counting COVID lockdown periods). 

I posted a reply similar to the above every time I saw the carls’ post such a statement.

I will state that I do not think they were lying.   Overly optimistic without the experience to let them know that the statement was false.  So I do not desire this to be an attack the Carl’s.  Everyone posts their beliefs and sometimes they do not end up being true.  If I thought they were intentionally lying for the increased business, that would be a different case.  

Just like the GR did not last forever, this will pass.  If not over leveraged, just wait it out and you likely will do fine.  

Good luck

[Collin H.]

The Smokies ARE recession proof, in that 14 million folks tend to visit the GSMNP per year, every year.

And if you are a Pizza Hut franchisee in the area, you probably do well.  But if Pizza  Hut allows another 100 franchisees in the market, you’re probably toast.

It doesn’t matter how many million visit per year; at some point there isn’t demand to keep an infinite number of Pizza Huts busy.

I suspect there was a thought that the area could support an infinite number of cabins.  It isn’t, and will not.

[Wilson Hunter]

Just did a search and saw that the Carls went dark on Sep 25th, 2023. Weird…

My honeymoon cabin in the Smokies is a great investment, but I didn’t buy at an overhyped price and plan to hold it unless a forest fire or rockslide says otherwise.