Is the Gulf Front Condo Market at the Bottom?
As a real estate professional who specializes in Gulf Front Condos in Panama City Beach, I get asked all the time for my opinions about the current market. Are condo prices going to drop anymore? When are prices going to start going back up? Are short sales and foreclosures still dominating the market? Should I buy now or wait a little longer?
In my opinion, I think now is a great time to buy. I know what you’re thinking. “Of course he’s going to say ‘buy now’, he’s a real estate agent and he just wants to make a sale.” Not so fast, I like to base my opinions on facts and not just good old fashioned optimism. So here are the facts.
The Bay County Multiple Listing Service (MLS) shows that there were 44 gulf front condos in Panama City Beach sold in January of 2011. In Jan. of 2012 that number was up to 47. It’s a slight increase of almost 7% I know, but let’s look a little deeper. The average sales price in Jan. of 2011 was $183,509. In Jan. of 2012 the average was $217,436. That’s nearly a 20% increase in sale price in just one year.
Are you thinking that 2012’s average sales price must have been skewed by the sale of a huge, really high priced penthouse? Think again. The highest priced sale in Jan. 2011 was $600,000. The highest priced sale in Jan. 2012 was $540,000. Even if that weren’t the case, we can level the playing field by looking at the average price per square foot. In Jan. 2011 this was $164.27/Sq.Ft. In Jan. 2012 it was $183.93/Sq.Ft. That’s a 12% increase.
Are foreclosures and short sales still dominating the market? Yes and no. In Jan. 2012, 36% of sales were either foreclosures or short sales. While that’s still a considerable percentage, it’s actually down from 45.5% in Jan. 2011. If you are the type of person that likes to see these numbers in a neat and clean format (like me) here’s a handy table.
Gulf Front Condo Sales Comparison
|
|||
| Jan. 2011 | Jan. 2012 | % Change | |
| Total Sales | 44 | 47 | 6.82% |
| Average Price | $183,509 | $217,436 | 18.49% |
| Average Price / Sq.Ft. | $164.27 | $183.93 | 11.97% |
| % Foreclosure/Short Sale | 45.50% | 36% | -20.88% |
| Listing $ vs. Sold $ Variance | -7.85% | -4.48% | -42.93% |
The bottom line is that nobody has a crystal ball. Any investment carries inherent risk. The savvy investor looks at the big picture. Does the picture of today’s condo market in Panama City Beach look like we’re at a snow capped peak or are we somewhere near the bottom in the foothills?
If you are interested in finding out more about Gulf Front Condos in Panama City Beach, please contact me, Opey Russ Broker-Associate at Beach Beach Real Estate, at 850-699-1996.
PCBDaily 
I like the stories regarding current events and beach events, I dislike the beachy show. I prefer to see only pictures and facts, not drop dead georgeous comentary and “it will not last”. Your comments to the City Council and the County Commission seem to have a big impact, so the comments section to the articles are great. Most real estate articles are good unless they are flooded with “now is the time to buy” we all know the lenders have a large portfolio of defaulted loans and as soon as they can foreclose and start selling we will see more product on the market. Now is always the time to buy from the perspective of the agent, so I prefer to see the facts on sales as % of asking price and $/sf pricing.
LikeLike
The table above clearly shows stats for both % of asking price and $/sf. The average price per square foot in Jan. 2011 was $164.27/Sq.Ft. In Jan. 2012 it was $183.93/Sq.Ft.
Average sale price in Jan.2011 was 7.85% less than the avg.list price. In Jan. 2012 the same comparison was 4.48% less. If you prefer, another way of looking at the same numbers is in Jan. 2011 avg. sale price was 92.15% of avg. list price. In Jan.2012 avg. sale price was 95.52% of avg. list price. As the guy at the road side tomato stand says, “you can have 6 of one or a half dozen of the other”
One quick question, if you don’t like the “drop dead gorgeous” commentary on the http://www.TheBeachShow.com, are you one of those guys, Hugh, that claims to read Playboy only for the articles?
LikeLike
Ouch. I must say, very unprofessional reply
The immaturity reflected in the last sentence reflects poorly on yourself as well as your business. Very often in business, we have to maintain our professionalism even if someone offends us personally. I would have been much more impressed if you would have just completely left out that last paragraph.
In regards to your stats, your argument of “here are the facts” needs more facts. You presented comparison statistics for only one month. There is a reason why investors look at one month, 6 month, one year & five year trends before making an investment. You’re on the right track with your comparisons for January of 2011 to January of 2012. But can you present us with more “facts” by also comparing the previous Decembers, Novembers, Octobers, and Septembers?
Thank you for your article. I know that you wrote it with the intention of helping people better understand the current market, and you did a great job. I would just like to see some more of that info now 🙂
LikeLike
Hi Monica,
Thank you for your comments. First let me say that I am never personally offended by anyone’s comments about my writing. This is a forum for opinions and as the saying goes, everybody’s got one. I’ll try to address your concerns as professionally and with as much maturity as possible. But I’m not making any promises 🙂 I purposefully chose to compare the factual statistics for the month of January 2011 to January of 2012 because in the gulf front condo market in Panama City Beach, January is typically the busiest season for sales. It has been my experience that people like to buy in January so they can get their condos ready for the rental season which begins with Spring Break in March. If an investor buys a condo in September, then they have to pay “carrying costs” — association dues, utilities, taxes, etc. — for several months before they can realize any substantial rental income. No offense to our snowbird friends. Ask someone that owns a scooter rental business to compare sales in January between years and they’ll probably laugh – or cry – as the case may be. But in the interest of fairness and full disclosure, here are the figures for “Decembers, Novembers, Octobers, and Septembers”
Month
Year
Avg. List $
Avg.
Sold $
Variance
Avg. $ Sq.Ft.
%
Short Sale / Foreclosures
Dec
2010
$254,196
$239,365
-5.83%
$185.32
53%
Dec
2011
$233,542
$217,569
-6.84%
$187.26
28%
Nov
2010
$217,091
$201,136
-7.35%
$178.78
39%
Nov
2011
$247,968
$230,546
-7.03%
$191.56
43%
Oct
2010
$246,359
$227,354
-7.71%
$186.90
35%
Oct
2011
$236,839
$220,902
-6.73%
$208.18
26%
Sept
2010
$254,445
$234,674
-7.77%
$194.87
45%
Sept
2011
$225,855
$208,682
-7.60%
$214.38
34%
Sep-Dec
2010
$245,129
$227,977
-7.00%
$187.00
45%
Sep-Dec
2011
$235,747
$219,055
-7.08%
$212.92
31%
A cursory overview of these statistics shows that the average sales price for 3 out of 4 of these periods is less than the same period for the year before. Not quite the rosy picture I painted in my original article you might say? Maybe, but the price per square foot is significantly higher and the percentage of foreclosures/short sales is significantly lower in 3 out of 4 of the corresponding periods with the exception of November. Could L-Tryptophan have something to do with this? Admittedly, I may have the sense of humor of a 12 year old boy, but my 25+ years of business experience tells me that there is a trend here, and that trend, according to these numbers, is – dare I say – optimistic.
My Best,
Opey
P.S. I absolutely LOVE Blue Fish Movies. Reminds me of the days of Drive in Theaters only better. Keep up the good work!
P.S.S. Pull my finger 😀
LikeLike
Haha. Your reply to my comment alone would be a great article! Very informative and as a math nerd, I like numbers. And by the additional numbers you presented, it does seem like right now is actually a great time to buy. Can you tell me why Origin units have such a low price point yet don’t seem to sell? My friends just purchased at Boardwalk, but we looked at units at Origin. One appeared to be a great deal at $115, but has been on the market for hundreds of days. Also, in your experience, what condos yield the highest ROI for investors? Thanks again, Russ. And I’m glad you love Blue Fish 🙂 I am very nostalgiac, so I love the open air cinema concept. And we do it big!
LikeLike
Not Opey but there are a couple reasons I would not consider purchasing a condo at Origins:
A, Not on the beach.
B, Current rental policies that are decreasing the value of the property.
I can’t believe I’m the only one with these thoughts.
LikeLike
While that’s just rosey news for anyone that has cash and can buy a condo, will there ever be any relief from those of us that didn’t dump our condo and run away when the market tanked and still continue to pay for something that is worth half of what we paid for it? I feel like the very bank I pay every month is also the enemy thats selling condos so low it’s killing any chance I have of an appraisal to at least refinance at a lower rate. I feel like I’m being punished for being responsible. Am I missing something?
LikeLike
Believe me when I say I empathize with your situation, Andrea. I bought my home in 2005, have never missed a payment and my bank won’t refi for the very same reasons. When I first got my financial adviser license, my wife gave me a crystal ball. Unfortunately, batteries were not included so I have to do my prognosticating the old fashioned way, through research, historical analysis, market trends and my all to often ignored but seldom wrong gut feelings. Historically, real estate market prices, when adjusted for inflation, have taken anywhere from 2 to as much as 10 years to rebound to the level of the previous peak. However, the peak in 2007 was so much higher, and the fall was so much greater than previous bubbles, that some analysts are saying that it could take as much as 20 years. Of course these figures vary widely depending on location and other factors.
My gut tells me that it’s going to be in the 5-10 year range for Panama City Beach. My reasons are many and you’ve just inspired me to write an article detailing them. Thank You Andrea, and please stay tuned!
Here’s a link to a website that has some good trend charts: http://www.jparsons.net/housingbubble/
LikeLike
It’s no surprise the Great Recession was preceded by a period of cheap loans — which led to condo-flipping as developers from South Florida, Texas and Mississippi built “Vegas-style” monstrosities along Front Beach Road. The faster they rise — the harder they fall!!
LikeLike
Sadly, we weren’t condo flipping. Units in our complex had been going for as much as $200,000 (back in the condo flipping days). We got ours at about $135,000. Banks are now selling them for about $45,000 – $65,000
LikeLike
Andrea my experience and knowing others who owned condos along the Gulf Coast, getting a resolution from BP was really not that difficult. The important aspect was DOCUMENTATION and actually claiming your condo and it’s receipts on your income taxes. Fraud on peoples part had nothing to do with it. All one had to do was call and get a case number, after receiving the package they sent you, fill it out along with the required documentation showing the loss and that you were actually claiming it on your taxes, and send it back in. IF you did not send EVERYTHING they asked for, your claim would be rejected but you could refile. IF you had questions, you could call them, it might be several days before they returned the call but I found them extremely helpful. BP decided that in order to clear the vast number of claims, they would offer two settlements IF you promised not to join one of the Class Action law suits. If you were an individual and lost wages, if you had filed a successful claim, they offered you $5,000.00. If you had a business (and renting your condo is considered a business), you were offered $25,000 to clear out your claim.
Most of the complaining has come from folks that could not document a loss either for working for cash and not filing a tax return or businesses that took much of the money and never claimed it.
LikeLike
Russ,
Don’t know about others but I like that you are trying to be objective about the situation, while remaining optimistic. Nobody knows what the future holds… we might get another hurricane that level the condos, the market might take off like a skyrocket with Bank coming to the senses and refi everyone, another spill may happen and we get 75% more foreclosures OR Florida comes to its senses and legalizes gambling one mile from the beaches edge. I understand the great amount of frustration, especially from those trying to be responsible and the same bank screwing them over by undermining the price with 75-85% off short sales. It’s a bad situation for everyone but the rich.
LikeLike
I agree Bob. I love hearing stories about how people are getting these big checks from BP now. One guy got a check for $25,000 for loss of rental income! ( same type of unit as me)I do that much business in a whole year and the oil spill happened after spring break! I guess my punishment was working my butt off to make sure my condo got rented. I answered 10 times as many phone calls, followed up with my guests to make sure they new the beaches were fine. and busted my butt to rebook any cancellation that came my way. Who knew that if I sat down and did nothing, I would have a got a big fat check! I have a feeling there is a lot of fraud out there in those claims because I managed to keep my condo rented in PC Beach with a lot of effort. I had a hard time proving any hardship because of my efforts and the previous year I had used a monster mega rental company on the beach, that stunk! Is there I box I can check for all of the additional hours of work I put into making sure my condo got rented? Nope. Again, just the ones that sat on their butts get the free money. Disclaimer: The beaches at our end of PCBeach were never closed. Those that had units where the oil spill cam ashore is a whole different story.
LikeLike
Andrea
I am sorry that you are frustrated but it sounds like you have an amazing work ethic so please do not even want to be anything like the folks who have done wrong. You are on the very right path. I suspect with your drive and energy you will find success in every circumstance.
I did loose big as a Real Estate broker and yes like you I worked extra hard and spent extra money on advertisements to show the rest of the world that we were still the most beautiful beaches. On a funny note that was not so funny at the time…. I opened my office 1 day before the oil spill. Up until that time I had been working from home. GREAT timing… huh?
There will always be those that take advantage and take a hand out but thankfully there are more people out there that do not do that. They use every opportunity to do the right thing so those are the people I will give my attention and my honor.
My company continues to thrive as we weather all the ups and down and we did not get any money from BP…..we sure could have for all the lost deals after customers backed out. Even though our beaches were great the perception that they were not and the negativity of the large news outlets led them to be fearful.
But here we stand grateful that the last rental year was one of our Beaches best ever and our sales for our company were one of our best. Our beach and community is one of strength and perseverance as we are used to standing together and strong with all that comes our way because we still live on the most beautiful beach with the most beautifully spirited people!!!!
Blessings to your business!!!!
LikeLike
Thanks, Hopefully gas prices won’t be our “oil spill” for 2012. I am finding that renters are staying fewer days. Is anyone else seeing that trend?
LikeLike
Opey:
This was a well-thought, objective article considering your career. I would appreciate you giving us more information on the PCB real-estate market/trends, other than what can be found from Trulia. You have a good, hands-on perspective given your business.
Were there any key characteristics such as Building, Location, #Bedrooms that positively affected pricing?
Are there any Zoning restrictions in PCB that would prevent future overbuilding ?
LikeLike
Dominic
Opey had to take off with his family and have some family time so I suspect he has not seen this lovely kind note from you. As his friend and part owner of Pcbdaily and the broker and owner of Beachy Beach I assure you that we will answer your questions.
Opey knows his stuff and is a teacher to many of us so you are wise to listen to him!!! I promise to make him work extra hard when he returns and I know he will soon to get his belated birthday present from me.
We so appreciate all of the kind comments…. and the not so kind. I am sorry that the fellow does not like our Beach sbow, thankfully most people enjoy it and we sure enjoy doing it.
So thanks to you!!! We appreciate you!!!
LikeLike
Hi Dominic,
Thanks for the complimentary comment. Sorry for the delay in my response. My wife and son forced me to go to Colorado this past week and hid my smart phone and laptop from me so I would pay some attention to them. Colorado has this stuff on the ground that looks just like our beautiful white sand but I wouldn’t recommend walking barefoot through it. – Brrrrrrrrh!
The key characteristics you mention all play a factor in the current market. My analysis above was for the entire gulf front condo market, irrespective of building, location and # of bedrooms. As I tell my clients, there are 2 distinct markets for gulf front condos in PCB. The older generation consists of buildings that were built between the early 1970’s and the mid 1980’s. These are buildings like Dunes of Panama (1972-4), Regency Towers (1975), Moonspinner (1981), Sunbird (1984) and the like. These buildings typically have a much lower average sales price and price per square foot.
The newer generation began with Long Beach Towers around 1997 and includes buildings like Sterling Beach (2003), Boardwalk Condos (2005), Calypso (2006), Shores of Panama (2007), Tropic Winds (2008-9) and more. This generation boasts some pretty impressive resort style buildings with a host of amenities. Average sales price and price per square foot are typically much higher than those in the earlier generation.
As for differences in # of bedrooms, most buildings have 1,2 and 3 bedroom offerings. There are a few with 4 bedroom units as well as no-bedroom “efficiency” units but the price per square foot analysis tends to level this playing field.
As for Zoning Restrictions in PCB, there have been some measures taken to make further development unattractive at the moment. I believe the largest deterrent to new development to be the large amount of new inventory currently on the market, albeit shrinking. When the new units are gone, you can bet your sweet patooty that more development will happen. Here’s a nickel, I’ll take 3 cents change please. 🙂
LikeLike
I am new to rental beach property. I would like to ask a lot of stupid questions. Please bear with me. Thank you.
1) Is there a 2 bed rooms condo unit at beach front selling for $150K?
2) What was the peak selling price in 2005 or 2006 for 2 bed rooms condo?
3) What is the property tax?
4) What is the monthly maintenance fee on the condo unit charged by condo management? Does the fee keep on increasing every year?
5) What is condo insurance cost? Also the flooding insurance cost?
6) What is the yearly maintenance cost for the 2 bed rooms unit by the owner such as painting, rust proofing, and plumbing.
7) What is the property management fee to manage the rental unit? Also the room cleaning service fee?
8) What is average rental income per year for the 2 bed rooms condo unit?
9) I know summer season is the busiest. How about spring, autumn, and winter?
LikeLike
Ed, Sounds like you need a good real estate broker! Your questions could have many different answers depending on what you are looking at. Good luck on your search.
LikeLike