Panama City Beach Condo Market Update

Your friends at have been searching for a little good news in the Panama City Beach Condo market.  The beaches look great.  Pier Park looks great. The new airport looks great.  The condo market looks a little ragged.

The following is our analysis of sales and re-sales from the 75 buildings contained in the data base. Developer sales not listed in the MLS were not included because we cannot confirm the existence of or lack of seller concessions.

There were significantly more sales during the first three months of 2010 compared to 2009 with fewer sales since May.  July sales took a steep downturn with approximately 40% fewer sales than 2009.  August doesn’t look much better. The oil spill didn’t help but the primary reason is due to the weak economy and the generally pessimistic outlook held by potential buyers.

Foreclosures and short sales continue to be major restraints to price stability. Bank related sales accounted for 47% of the total number of June sales and 60% of July sales.  A majority of the bank related sales were in the newer, beach-side buildings.  To complicate the problem, a large number of new foreclosures and short sales hit the MLS over the past month.  Bank related sales will most likely be with us for the next couple of years.  In one newer beachside building that has been particularly hard hit by bank sales, 34% of the current owners are $100,000 or more upside down.  Some are $300,000 upside down.  Many of these owners will finally throw in the towel.

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 since January 2009.  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 East, Grandview at Long Beach, Gulf Crest, Regency Tower, Tidewater, Seychelles, Splash, Sterling Reef, The Summit, Ocean Villa, Twin Palms, 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 14 buildings.  Foreclosure sale prices that were unrealistically low (mold problems for example) were not included.  There were 187 sales used in the chart.  The analysis does not try to skew the price trend in any direction.  The data is just the data.

Our January 2010 analysis predicted at least a 5% decline in value for all of 2010.  That was obviously too optimistic. We have blown past a 5% decline during the first seven months of 2010. The data indicates that the typical beach side, Panama City Beach condo lost approximately 13 percent of its value during the past 12 months and 9% in the last seven months.  The rate of depreciation appears to have accelerated over the past three months.  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.

  1. Financing a condo continues to be difficult for the average buyer.
  2. 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.
  3. The lack of robust national economic growth does not inspire potential buyers to pull the trigger on a large discretionary purchase.

So what’s in store for the rest of 2010?  It sounds like a broken record.  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 continue to be volatile.

Panama City Beach condos will continue to lose value. The question is how far prices fall before the bottom.  I’m afraid to speculate.  A good friend of mine likes to say “when you think it can’t get any worse, it does”.  The vultures and bottom feeder buyers are even scared. Purchase prices in this environment appear to be based on perceived risk. The lack of a robust economy is one risk factor. The potential of additional price declines is another.  However the overriding factor preventing a stabilized market is the seeming endless supply of bank related sales.

The market cannot stabilize until all of the properties that are held by owners that owe substantially more than current values and do not have the financial ability or the will to continue ownership are transferred to new owners.

For more information on individual buildings and units, visit

10 thoughts on “Panama City Beach Condo Market Update

  1. The only condos selling at my complex are those firesaled by the banks who foreclosed and then put them up at 50-60% of what the original buyer paid for them ( We have so many going through foreclosure and others that are on the edge, that there is no hope of any owner selling their units, probably for years to come.

    Many owners here would love to sell but they can’t bring themselves to offer their unit for 50% of what they paid for it 2-3 years ago. It is a mental block I guess but if they are not able to overcome it then their options are limited to using it themselves or renting it out.

    Even those who have purchased at todays low prices may find that they could have saved another 10-15% if they just waited another six months. While it is a buyers market you have to keep in mind that some condos associations are not in good shape. Our delinquency rate has never been higher, 42 condos are behind in quarterly dues payments (out of 168). The easiest way to ‘guess’ which condos are next for foreclosure is to just look at the delinquency list, any with 2 missed quarterly payments is almost always going to foreclosure and if it gets to 3 quarters then it is a sure thing.

    Once upon a time it was said that the happiest day of a boat owners life are the day he bought his boat and the day he sold it. Now you can just substitute the word ‘condo’ for ‘boat’!


  2. I am looking to buy a fc/shortsale beachside condo in the asking price of $100 to 150k . Cash buyer. How can I get a list of bank owned/short sale properties?


    1. Al (and everyone):

      Fannie Mae (while they still exist) list all properties that they own….and that they will finance. Go to and you’ll find about 28 condos in PCB for sale by Fannie Mae. (We’re closing on one soon ourselves.)


  3. Sellers should just hang in there and rent their units out. As mentioned in the article, we are expecting more rental nights due to the new airport. If we all work together to increase our tourism business to keep occupancies high we will do fine renting.

    Once the supply and demand of units for sale gets back in sync, we will see a sharp increase in values. Another way to says this is, as soon as the distressed sale inventory from banks and developers runs out, we will see a sharp increase in values.

    The main reason is that, even in today’s market, the current cost of land plus cost of construction are higher than the prices the banks and developers are willing to accept. Construction costs have not decreased that much.

    Once the distressed inventory is gone, Builders and Developers are not going to build a new unit and sell it for less than it cost to build. When the distressed inventory is gone, we will see a jump in value for all like new property.

    This doesn’t mean that values will return to 2005’s numbers but it will definitely be an improvement over today’s prices.

    Take your unit off the market for sale and enjoy the rental income.


    1. I agree Dennis. I believe that the inventory of short sales and bank-owned units will decrease significantly over the next couple of years. In the mean time, recent laws should have an immediate positive impact on the financial condition of condo associations:

      1.) Banks must now pay 12 months of past due assessments when they do take title to a condo….previously they were only required to pay 6 months of back assessments.

      2.) Associations can go directly to tenants and rental managers to collect rent from delinquent owners’ guests and apply the payments to the owners’ past due balances.

      3.) Associations can revoke the use of amenities (including cable television, if paid for by the association) for owners and their guests if the owner is delinquent on their dues.

      Furthermore, most of the newer beachfront condos in Panama City Beach are in litigation with the developers over construction defects. Most of these cases are likely to be resolved within the next 24 months or so.

      The decrease in the percentage of delinquent units, the resolution of pending construction litigation suits, and the affordability of existing beachfront condos should once again make loans on beachfront condo units something banks are interested in pursuing.

      None of this is going to happen overnight, but with all of the positive things going on in this area, I also believe we will indeed start seeing a sharp increase in values a few years from now.

      If an owner can afford to hang in there, they will help themselves and others by taking their unit off of the market and enjoying rental income that should return to a much stronger level next year and beyond.


  4. James certainly the change in the laws will help but on Item#3 about cutting off non-essential services to units that are not paying their association fees, I understand the law change is a little “murky” there, could you please site your source on that for the benefit of our HOA?


  5. The changes to the Florida Statutes contained in SB1196 were great for associations.

    The section that allows an association to suspend the right to use amenities is:

    “FS 718.303(3) If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association the association may suspend the right of the unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid. This subsection does not apply to limited common elements intended to be used only by that unit, common elements that must be used to access the unit, utility services provided to the unit, parking spaces, or elevators.”

    I have been thinking that this will be very hard to enforce unless you have electronic access to the amenities where you can easily deny access.

    I have also been thinking that cable tv would be considered a utility service and could not be suspended. If James is correct, this could turn out to be a real collection tool.

    Is bulk purchased cable tv considered a utility service? I’ll run this by our attorney; however, the law is so new, there may not be a quick easy answer.


  6. The charts seem to get messed up when they are inserted into the blog. The dates on the trend chart are supposed to be from 1/1/2009 to 9/1/2010. Jason is working on the correction.


  7. Dennis, it has been determined that both cable and internet service are considered utilities by our attorneys so they would be off limits. The change in the law will be helpful to some extent to collect from them but not anything close to what was hoped. The biggest change will allow associations to collect rental income from management companies to satisfy non-payment of HOA fees which in most cases include utilities. As always the HOA’s will have to jump through legal hoops in order to do this.
    As you mentioned to restrict usage of common elements such as the pools, exersize room, etc can be a challenge.


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