An interesting thing about a prolonged down market, after three years everybody gets bored. Real estate agents have quit trying to convince the public that the bottom has been reached because every month they were proved wrong. Appraisers have been beaten up so bad for relaying the bad news; you can’t get one to admit he is an appraiser in public. Sellers have thrown in the towel. Buyers loiter about like hungry vultures. Welcome to the 2010 Panama City Beach condo market. For those who are still awake, the following is our summary of the local condo market as of the end of 2009. Unfortunately, it looks exactly like the end of 2008.
The following is an analysis of sales and re-sales from the 75 buildings contained in the condosaletrends.com data base. Developer sales not listed in the MLS were not included because we cannot confirm the existence of or lack of seller concessions.
Some good news was a 30% increase in sales when compared to 2008. However, foreclosures and short sales continue to be major restraints to price stability. Bank related sales accounted for 36% of the 49 sales during November and 58% of the 44 sales during December. A large majority of the bank related sales were in the newer, beach-side buildings.
The market trend line is illustrated below. It is structured to show a sale price trend measured in terms of the percentage sale price as of a particular date. The starting date used was January 1, 2009 so we could show the price trend for 2009 year to date. We chose units from a variety of beach side buildings of different ages and sizes that had a sufficient number of sales as to be statistically significant. All of the sales used in this analysis are from beach side buildings. There is no collusion of beach side properties and off-beach properties. The buildings include Boardwalk Beach, Calypso, Celadon, Emerald Isle, Grandview, Gulf Crest, Regency Towers, Seychelles, Splash, Sterling Reef, The Summit, and Treasure Island.
The sale price of each type of unit is only compared to the typical sale price of that particular type of unit as of January 1, 2009. As an example, a sale of an 846 SF, 1BR/2Ba unit located in the Celadon is only compared to sales of 846 SF, 1BR/2Ba Celadon units. A unit type with a January 1, 2009 market value of $400,000 is represented as 1 or 100%. An October 2009, $380,000 sale of that type of unit is depicted as .95 or 95% of the January 1, 2009 sale price. The chart contained in the following price trend analysis is a trend line of the trend lines of the sale prices of each type of unit from the 12 buildings. Foreclosure sale prices that were unrealistically low (mold problems for example) were not included. There were 101 sales used in the chart. The analysis does not try to skew the price trend in any direction. The data is just the data.
The data indicates that the typical beach side, Panama City Beach condo lost approximately 12 percent of its value during 2009. Of course there are exceptions, especially with units that were sold exclusively through the developer.
As in the past, there are several factors at play that will continue to put downward pressure on current market values.
- Financing a condo continues to be difficult for the average buyer.
- There are still a large number of owners who have a mortgage in excess of $100,000 more than the current market value of their condo. There is no evidence that the number of foreclosure and short sales will decline in the near term. This is especially true for buildings that were completed prior to mid 2006. As an example, assessor records indicate that 41% of current Treasure Island Resort (completed in 2005) owners paid $100,000 to $300,000 more than current market values.
- The supply of developer owned units that have not been sold exceeds the demand. Tropic Winds and Ocean Reef appear to be working through their excess inventory, however at the current sales rate it may take 12 months to sell out. Shores of Panama, Grand Panama, and Origin at Seahaven will most likely take longer.
The increased number of sales is about the only good news from 2009. So what’s in store for 2010? The new airport will have a positive effect on the number of rental nights for the area but a minimal effect on condo sale prices. Foreclosure and short sales will continue to put negative pressure on current market values. Financing second homes located in Panama City Beach condo buildings will continue to be difficult. The number of sales will most likely hold steady at 2009 rates. Panama City Beach condos will lose another 5% in value.
When will the market return to normal? Market participants have to accept a new normal. High loan-to-value loans with minimal income documentation will not be part of the new normal. Purchases based on price speculation will not be a part of the new normal. Sale prices established over the past three years will not be a part of the new normal. Sale prices for the new normal will be somewhat less than today’s prices. The number of sales for the new normal will be similar to 2009. The market at the end of 2010 will look more like the new normal than the market at the end of 2009.
For more information on individual buildings and units, visit http://www.condosaletrends.com.