Base closings and investment potential

[Caroline]

Greetings,

Three years ago I bought a little house in a former Navy town in the San Francisco Bay Area. When the base was closed 8-10 years ago the town fell into a steep decline. My realtor reported that at that time she couldn't GIVE a house away for any amount of money.

But we've since bounced back. It goes without saying that proximity to San Francisco had a LOT, if not everything to do with that. But I can't help but think that there was also a big "recovery effect" as the town has transitioned away from its reliance on the Navy.

There was a lot to recommend the town once the Navy left -- space to expand as a bedroom community, large stock of Victorian houses to be re-gentrified, proximity to an urban center, ability to add a ferry service to that urban center, etc.

I'm wondering if the upcoming base closings will have a similar effect -- a big dip in the prosperity of the affected town / sinking home prices, etc., followed some years later by a recovery.

That would make for an investment opportunity, methinks. However, I have exactly ONE datapoint here... my town. I'm wondering if anyone else has thoughts / experience / wild guesses about this topic?

Muchas thanks!
Caroline

 

[Patrick]

I'm wondering if the upcoming base closings will have a similar effect -- a big dip in the prosperity of the affected town / sinking home prices, etc., followed some years later by a recovery. 

That would make for an investment opportunity, methinks.  However, I have exactly ONE datapoint here... my town.  I'm wondering if anyone else has thoughts / experience / wild guesses about this topic?

Muchas thanks!
Caroline

I would say the downturn is virtually certain, but that the recovery is not.  How long can you hold on waiting for things to turn around so you can make a profit?  There is a town in my state that was thriving due to government employment.  When the planes went away, so did most of the people and now the place is a "ghost town."  I don't know if it ever will recover.

 

[Jay_Gatsby]

Perhaps it depends on whether the location is desirable for reasons other than the military base. For example, if they closed a Navy base in San Diego, the property would be snapped up in a heartbeat due to the climate. The same could not be said for, say, North Dakota, etc...

 

[tozz]

This is part of my game plan.  Not to benefit from the misfortunes of others, but a major shipyard is closing in my area.  Several thousand highly paid jobs will disappear, and I am thinking that this, combined with the end of the local real estate bubble, will offer some near-coast bargains two or three years from now.  I'm not worried about the area becoming a ghost town as Patrick mentioned--the area is desirable for other reasons.  As always, my game plan is subject to change within the next ten minutes.

 

[Caroline]

Perhaps it depends on whether the location is desirable for reasons other than the military base. For example, if they closed a Navy base in San Diego, the property would be snapped up in a heartbeat due to the climate.

That's exactly what happened here -- fabulous location -- we have all the building blocks that Sausalito has (vintage housing stock, ferry to SF, great climate, long waterfront, etc. etc.), but the Navy actually DEPRESSED the place during its long tenure. The lovely Victorian buildings were all sub-divided into little apartments, the downtown was chock-full of bars, etc. etc. (I actually looked at an old Victorian for sale whose basement had been subdivided into 20 tiny little rooms -- wonder what THEY were for?? The mind reels.)

I don't expect that ALL of the closures would do well... but a targeted sub-set might.

 

[Jarhead*]

Caroline:

My guess is Alameda.

You certainly didn't make any mistake in buying there when you did in my opinion.


I have moved (19 years ago) to the N/E corner of Calif., as my wife and I could no longer put up with the traffic, congestion, of both the bay area and So. Calif.

But my two daughters both live in the Bay Area, and they really like it. (Hell to get old)

Although, today, I might make an exception, as it's 105 degrees here. (This is the time that living in the Bay Area is admittingly pretty nice).

In any case, as long as you have a long time horizon, the bay area, because of climate, and plenty of things to see and do, in my opinion will continue to be a solid place for real estate.

 

[maddythebeagle]

very interesting idea. I like it. I wouldnt worry about "profiting" if it is going to be a retirement place to live in. Maybe the federal and state governments should encourage this in some of these areas to boost the economy. How about some tax breaks.

 

[Nords]

I actually looked at an old Victorian for sale whose basement had been subdivided into 20 tiny little rooms -- wonder what THEY were for?? The mind reels.

Naval history trivia for $200, Alex! What architectural subdivision style resembled many fine businesses on Honolulu's Hotel Street during WWII?

But I can't help but think that there was also a big "recovery effect" as the town has transitioned away from its reliance on the Navy.

There was a lot to recommend the town once the Navy left -- space to expand as a bedroom community, large stock of Victorian houses to be re-gentrified, proximity to an urban center, ability to add a ferry service to that urban center, etc.

I'm wondering if the upcoming base closings will have a similar effect -- a big dip in the prosperity of the affected town / sinking home prices, etc., followed some years later by a recovery. 

That would make for an investment opportunity, methinks.  However, I have exactly ONE datapoint here... my town.  I'm wondering if anyone else has thoughts / experience / wild guesses about this topic?

Sure, it works, but how long will it take?

Navy BRAC'd NAS Barbers Point in 1993. That pummelled a weak real estate market even further (it had started to slip in 1990) and the recovery (some say bubble) didn't begin until 2000.

The Barbers turnover is still in limbo today with disuptes on how to divide the income from ceded lands (a native Hawaiian sovereignty issue) and uncertainty over whether an aircraft carrier will be moved here. Meanwhile the surrounding community's new homes have encroached right up to the runway fencing. They're gonna be very unhappy in the Ocean Pointe development if they have to welcome a wing of F/A-18s in their backyard.

This is part of my game plan. Not to benefit from the misfortunes of others, but a major shipyard is closing in my area. Several thousand highly paid jobs will disappear, and I am thinking that this, combined with the end of the local real estate bubble, will offer some near-coast bargains two or three years from now. I'm not worried about the area becoming a ghost town as Patrick mentioned--the area is desirable for other reasons. As always, my game plan is subject to change within the next ten minutes.

If you're talking about Portsmouth or SUBASE New London, both of those places have been contaminating the soil for literally centuries. Petroleum products & heavy metals will be an issue for at least the next decade. (FWIW, Naval Reactors is hypersensitive to public criticism. Nuclear waste won't be a lingering problem.) The 1980s cutbacks at the SUBASE shipyard put both New London & Groton into a deep depression that was only saved a decade later by the Indians building the Ledyard casino (Foxwoods? I don't remember the name). I don't know what the Portsmouth solution will be but it could easily take a decade or more.

I guess one way to do it is to have that friendly realtor who'll call you when they can't give 'em away. Then wait another year or two (until they offer to pay you to take them). There might even be a third wave of panic selling/buying before all the inventory is shaken loose. And then be prepared to wait 5-10 years for the turnaround.

But in the next 20-25 years you'll both be handsomely rewarded for your prescience.

 

[brewer12345]

I have had similar thoughts about a base scheduled to close in my area - Earle NWS. However, I suspect that any vacated RE will be eagerly gobbled up.

 

[newellcr]

Just in, http://news.yahoo.com/news?tmpl=story&u=/ap/20050824/ap_on_go_ca_st_pe/base_closings.

Portsmouth and New London are off the list...

 

[brewer12345]

Yup, and they are closing Ft. Monmouth. If the area isn't too badly contaminated, I bet it will be snapped up by big time developers.

 

[Nords]

If the area isn't too badly contaminated...

When it rains really hard in Pearl Harbor, the inner harbor shines with a rainbow coating of diesel fuel.  Don't smoke topside and for gosh sakes' don't light off your welding torch under the pier.

It's not leaking barges or sneaky bilge-pumping duty officers.  It's the runoff from a century of spills & leaks saturating the topsoil.  And Pearl Harbor has paved over most of the topsoil already!

I hope the Monmouth developers have their own soil engineers... and plenty of liability insurance.

 

[cube_rat]

Caroline:

Although, today, I might make an exception, as it's 105 degrees here.  (This is the time that living in the Bay Area is admittingly pretty nice).

Ex-Jarhead - You must be in Sacramento or Rocklin . It's hotter than the hinges of hell out there.

 

[Tadpole]

Yup, and they are closing Ft. Monmouth.  If the area isn't too badly contaminated, I bet it will be snapped up by big time developers.

Yea, they are moving down here. I'll let you know if it affects real estate. I dread it but we might have another big wave of development. This place is beginning to make Baltimore look empty.

 

[kirkj55]

Greetings,

Three years ago I bought a little house in a former Navy town in the San Francisco Bay Area.  When the base was closed 8-10 years ago the town fell into a steep decline.  My realtor reported that at that time she couldn't GIVE a house away for any amount of money.

But we've since bounced back.  It goes without saying that proximity to San Francisco had a LOT, if not everything to do with that.  But I can't help but think that there was also a big "recovery effect" as the town has transitioned away from its reliance on the Navy.

There was a lot to recommend the town once the Navy left -- space to expand as a bedroom community, large stock of Victorian houses to be re-gentrified, proximity to an urban center, ability to add a ferry service to that urban center, etc.

I'm wondering if the upcoming base closings will have a similar effect -- a big dip in the prosperity of the affected town / sinking home prices, etc., followed some years later by a recovery. 

That would make for an investment opportunity, methinks.  However, I have exactly ONE datapoint here... my town.  I'm wondering if anyone else has thoughts / experience / wild guesses about this topic?

Muchas thanks!
Caroline

My guess is Vallejo