The Pandemic triggered explosive property valuations in North Georgia, and nowhere was this more evident than in Big Canoe, GA. Social activity lockdowns in big cities like Atlanta, combined with free stimmy checks, fueled a boom in mountain vacation activity, as people rediscovered the outdoors. This dramatically increased the popularity of income generating mountain vacation rental properties as 2nd investment homes. General fears of a potential dystopian future, and higher crime rates, further fueled secondary home buying as a “backup plan” in the event of social unrest. PRIMARY HOME relocation was also fueled by these same factors. The wide open, spacious, safe mountain settings were calling, and people were coming, but it took cheap gasoline to get them here.
The bulk of the real estate boom buying occurred in 2020, and started tailing off in early/mid 2021. The average national price of a gallon of gas ranged from $1.86 to $2.25 during most of that time. Travel to, and around, the mountains was cheap. You have to drive a long distance to get to the mountains, but also, traveling within the mountain region on a daily basis is more intensive than in a metropolitan (or flatlander) environment. For example, in suburban Atlanta, a gallon of gas could possibly get you to the supermarket or a job several times (it’s often right around the corner – maybe a mile or two, or less, might even be able to walk or bike or take public transportation). In Big Canoe you can burn a couple of gallons of gas just getting to the IGA grocery and back. A trip to the clubhouse or post office could easily run you a gallon or more in some areas. Some rural areas of the mountains can be even more remote. Can’t imagine how much gas you burn running a multi-county-wide construction or services business. Living in these areas will become more expensive from a basic daily travel standpoint, and making a decision to travel here for vacation will definitely require people to look at their budgets harder. And make no mistake…. the average household budget is about to become very strained.
Some analysts are now warning that the price of a barrel of oil could rise as high as $150 – $200/barrel, an the cost of a gallon of gas rise to $5 – $7 gallon. Historically we even get close to the lower range of those levels, and we start to see economic hardship hit. Discretionary spending, like travel on weekend mountain trips, dries up. In 2008 the real estate crash hit everyone, everywhere, but the high end second home markets such as you find in the Big Canoe / North GA Mountains (also beach property) took very hard hits.
Sadly, the only real argument I have heard for real estate prices to continue onward and upward…. is inflation, or hyperinflation. The thought process is that as the dollar weakens, real estate will become an appreciating asset. That is a valid thought process…. normally. But we are facing something slightly different this time, “Stagflation”. Stagflation means higher consumer and (some) commodity prices through inflation, but also a stagnating recessionary (possibly depressionary) economic environment. In a stagflationary environment, as deteriorating economic conditions put people in the position that they MUST SELL, then the inflation side of the equation loses importance.
The primary question is, will rising oil and gas prices push the 2nd home market into the beginning of that downward cycle this time? And if so, how long before something breaks? And will the banks react the same way they did last time? The banks made it worse in 2008 by rapidly locking down financing opportunities to avoid contagion. Of course that loss of liquidity is what caused the foreclosure crisis to spiral out of control. In 2008 there was also room for the Fed to cut rates to “bail out” the economy. Rates are already at rock bottom this time around, and the Fed is stuck. If the Fed attempts a bailout by printing more money, then HyperInflation could be unleashed, and that could destroy the U.S. Dollar as the world’s reserve currency. Real Estate prices become almost irrelevant at that point.
And of course, Big Canoe’s POA Board, Insider Committee’s & Management is Doubling Down on Debt (link to a recent BCMatters article that should be re-read again and again and again…. until it sinks in), and speeding up the timeline for discretionary Million Dollar Projects (Watch this February 2022 Board Meeting Excerpt as POA Board Members fight internally, and Residents express outrage over a new $1.25 Million Chimneys Project recently passing – without prior public disclosure).
Adding the existing, internal Big Canoe strife over fiscal irresponsibility and transparency issues, to the eroding economic environment and higher 2nd home market travel costs, is going to increase potential buyers comfort with investing in the community? Yes? No?
What do you think? Share your opinions on our FB News Page.
https://www.facebook.com/FocusonBigCanoeGA
NOTE: My advice is to Prepare Now for the eventualities we may be facing as a community, region, nation, world. The rapidly deteriorating governance of Big Canoe is just a parable for the bigger picture.
Peace,
– david / publisher
Focus on Big Canoe, GA
* a publication of The Mountains Voice
Be the first to comment