The BP Effect series is brought to you by attorneys Reich & Binstock and Seeger Weiss LLP, which are helping businesses in Panama City Beach recover losses sustained directly and indirectly from the Deep Water Horizon oil spill. They can help your business too,
We just talked about how the oil spill impacted real estate at an individual Realtor level. Karen Smith with Beachy Beach real estate was rocking hard at the first part of this year with record breaking sales numbers when everything dropped off in May. For her, the BP Effect was dramatic, and real. When the leak was fixed, it was like her business just “turned back on.” There was a stark contrast between her August and September sales numbers.
The real estate industry as a whole on Panama City Beach has a similar story to be told. This story is told by the sales numbers. This second installment of a two part “mini-series” is going to be sort of a conversation-in-post look at what happened over the summer and in year’s past.
Just a quick disclaimer: For this post, I took a look at sold properties on Panama City Beach, and kept the search exclusive to condos and detached single family homes. I chose this specific area and these dwelling categories because I felt it would adequately represent what would have been subject to tribulation from the oil spill, and I wanted to keep it simple. For fun, I actually looked at monthly sold numbers, January through November from 2004 to this year. Let’s get started.
Condo sales this year were pacing to have significant gains this past summer. As with many other businesses in the area, the sales numbers for January through April were significantly better than last year. Just to give you an example, this year’s condo sales numbers were up 108%, 18%, 32%, and 24%, January through April, respectively. Among the 54 condos sold in January, 9 were in Grand Panama, 6 were in Majestic Beach Resort, and a few in Splash and Ocean Reef, among a spattering of other buildings.
In May, there were 63 condo sales, a 23% decline from the previous year. June was 34% down, July 43% down, August 41% down, September 34% down, October 33% down and November 10% down. It’s interesting to see the decline become less dramatic as the months wear on. December should be interesting to see.
This trend shows clear gains on an average of around 25% (not including the 100%+ gain in January) per month for the first part of the year, and an average of 35% losses during the months of May, June, July and August. If one were to speculate that this summer’s sales would have been equal to last year’s sales, local Realtors would have put over $650,000 in commissions in their pockets. Had the summer continues to see the 25% average gains we were seeing the first part of 2010, local Realtors would have put an additional $450,000 in commissions on top of the $650,000 we just discussed.
There were losses; losses in commissions, losses in lost opportunities, losses in perception that will determine whether someone will ever want to buy here again in the future.
Home Sales, like condo sales, were pacing to have gains this summer, although the numbers weren’t quite so dramatic. And, interestingly enough, the losses didn’t start setting in until July. The buyers of homes, in contrast to the buyers of condos differ, however. The condo buyers were more than likely buying under the pretense of using their purchase for vacation rental purposes, or at the very least, use their purchase seasonally. Either way, at the end of the day, the most likely use of a purchased condo on the beach was probably related to the pristine white beaches of Panama City Beach.
For the majority of the detached single family home purchasers, it could be reasonable to speculate that these purchases were not intended for seasonal or vacation rental purposes. The majority of the single family homes being bought were most likely to be used as residences for the purchaser. With this in mind, it makes sense that the losses in this category set in later and are less significant.
Think about it, if you took a job in the area, or you’ve been living here for a while, and you’ve been working on your home purchase for some time, the threat of oil coming to our shores is going to be less of a deterrent to buying. Furthermore, if you’ve been here, you’re just upgrading, downgrading, or just buying another home for kicks and giggles, just being here, being immersed in the market, you probably knew the oil wasn’t nearly as big of a threat as the national media was making it out to be.
The condo-purchasers, on the other hand, most likely were not from this area, not that aware of what was REALLY going on down here (which was nothing more than hype from outside news sources), and more subject to the opinions and commentary from reports that were mostly ignorant to what was actually happening on our actual beaches.
Of course, if they were smart, they were following our coverage of the spill, and knew we were less likely to have any reason to worry. 🙂
The data most definitely suggests that there were substantial losses in the real estate market that were directly associated with the BP oil spill. We’re looking at hard numbers here, but there is no way to tell exactly how much was really lost, given possible projected gains that could have been realized with all the national attention we were getting and our area being more accessible because of the new airport.
There are some in the real estate community that have been paid claims, and there are others that are being told that claims are not being paid on lost real estate commissions. There are some that are downright mad, and there are other Realtors that are grateful for what they have and are charging forward. Either way you look at it, the positive to all of this, is that we are now poised to have a more than phenomenal summer next year.
Real estate values aren’t exactly shooting skyward, but real estate is definitely selling, and selling well. The beach is busy, and we can all expect a very awesome summer next year. Hold on!
To read about Karen Smith’s story at Beachy Beach Real Estate, click here.