August 2009 Panama City Beach Condo Market Update

During the last 12 months we have seen a meltdown of the financial markets, the stock market tanked, and the housing market continued a steep decline. The Feds invested a significant amount of money to stop the free fall. The question on everyone’s mind is “have we begun to crawl out of the hole”.

The answer to that question depends on your perspective. From a national standpoint, large banks have begun to stabilize but smaller regional banks continue to be at risk due to their exposure to the mortgage backed securities in their portfolio. The stock market has regained approximately 50% of its’ loses. The overall national housing market appears to be stabilizing. However, we are more concerned about the Panama City Beach condo market than the national indicators.

First, the good news. The following chart indicates that the number of sales of condo units from the 70 buildings in our data base is up 7% during the first eight months of 2009 when compared to the same period last year. That is a positive sign. Before we extrapolate that increase for the entire year, we need to look at the history. For the first eight months in 2008, the number of sales was slightly ahead of the number of sales in 2007. However, for the entire year there were 3% fewer sales in 2008 than 2007. Statistically speaking, we will have to wait and see if the number of sales for 2009 will be substantially different than the past three years.

The graph below illustrates the number of monthly re-sales from the 70 Panama City Beach condo buildings in our database. The 2009 monthly re-sales through August appear to be trending somewhat higher than the past three years.

The number of bank related sales, foreclosures and short sales, continues to put downward pressure on current market values. Bank related sales accounted for an average of 43% of all sales within our data base during the first six months of 2009. 42% of the July sales were bank related. There does not appear to be any moderating to the number of bank related sales during the short term.

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 May 1, 2008 so we could show the price trend for the preceding 16 months. We chose units from a variety of buildings of different ages and sizes that had a sufficient number of sales as to be statistically significant. The units used in the analysis were:

Boardwalk Beach; Opened in 2005; 1,380 SF; 2BR/2Ba
Calypso; Opened in 2006; 1,226 SF; 2BR/2Ba
Celadon; Opened in 2004; 846 SF; 1BR/2Ba
Grandview; Opened in 2005; 1,492 SF; 3BR/2Ba
Gulf Crest; Opened in 2003; 1,388 SF; 2BR/2Ba
Emerald Isle; Opened in 2005; 1,146 SF; 2BR/2Ba
Treasure Island; Opened in 2005; 1,370 SF; 2BR/2Ba
The Summit; Opened in 1983; 912 SF; 1BR/1.5Ba
Regency Towers; Opened in 1975; 1,114 SF; 2BR/2Ba
Sterling Reef; Opened in 2005; 1,076 SF; 2BR/2Ba
Splash: Opened in 2006; 1,074 SF; 2BR/2Ba
Seychelles; Opened in 2006; 883SF; 1BR/2Ba

The May 1, 2008 market value for each type of unit was determined by analyzing sales data from January 1, 2008 to June 1, 2008. The sale price of each type of unit is only compared to the typical sale price of that particular type of unit as of May 1, 2008. In other words, a unit type with a May 1, 2008 market value of $400,000 is represented as 1 or 100%. An October 2008, $380,000 sale of that type of unit is depicted as .95 or 95% of the May 1, 2008 sale price. The sale prices and sale dates were charted with a price trend line for each type of unit. The chart contained in the 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 153 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 current market values of Panama City Beach condos have declined approximately 16% over the past 12 months. The rate of decline is similar to the 15% decline from August 1, 2007 to August 1, 2008. The trend line shows a moderating of the rate of decline over the past four months. This is a positive sign, however over the past three years the steepest rate of decline was in the September to February months.

There are several factors at play that will continue to put downward pressure on current market values.

During the market run up the vast majority of buyers were speculators lured by the prospect of easy money. These buyers are no longer in the market. Current buyers are those that actually want a beachside condo in Panama City Beach. Fewer buyers coupled with a supply that far outpaces demand will tend to drive prices downward over the next couple of years.
Financing a condo continues to be extremely difficult for the average buyer. Fannie Mae and Freddie Mac designated most area condo buildings as “condo-tells”. Fannie Mae and Freddie Mac will not buy mortgages backed by “condo-tells”. Financially qualifying for a loan has become much more strenuous. The difficulty financing a Panama City Beach condo means fewer buyers. Fewer buyers mean decreased demand while the supply remains high. The difficulty in financing will put downward pressure on current market values.
There are still a very large number of owners who have a mortgage in excess of $100,000 more than the current market value of their condo. Bank related short sales now outnumber foreclosure sales. A Short Sale is the sale of a condo in which the proceeds from the sale are short of the balance owed on the condo. Typically, banks do not record their intention of accepting a short sale. Public records may indicate a moderating in the rate of foreclosures while the number of foreclosure and short sales combined is not declining. There is no evidence that the number of foreclosure and short sales will decline in the near term. Forty percent of the sales within our data base over the past seven months have been foreclosure or short sale bank related sales. Bank related sales do not appear to be moderating and will continue to have a negative effect on sale prices over at least the short term.
The supply of developer owned units that have not been sold far exceeds the demand. The following chart shows the number of unsold developer units from ten high profile beach side buildings as of 7/24/2009 according to Bay County Assessor and Clerk & Recorder records. There is some anecdotal evidence that Aqua has several contracts that have not closed. There are over 1,000 unsold developer units that will need to be transferred to private ownership at some point. These 1,000 units don’t include the 1,500 plus unsold units at off-beach buildings such as Laketown Wharf. These unsold developer units inflate the supply of available condos and will continue to put downward pressure on current market values.

All indications are that there is more pain ahead for the local market. How far do we have to go before the bottom? It is not unreasonable to assume that sale prices will decline another 10% or more over the next 12 months and that may not be the bottom.

As always, if you lie to yourself about things concerning money, you lose.

Check out our new Panama City Beach Condo Market blog at the web address www.condosaletrends.com/blog.

– Sam Portman

www.condosaletrends.com

STOP Buying Real Estate

Accident Velocity sales in real estate is picking up and has had an increasing trend over the last several months; 8 months statewide, to be exact. Prices are still coming down, or showing signs of doing so, but more people are buying. Evidence is clear that people, in general, are more comfortable with the fact that the real estate market is in the toilet, and, in fact, the market isn’t really regarded as being in the “toilet” any longer, but rather just a strong “buyer’s-market”. Deals abound everywhere and sellers, now more than ever, are willing to negotiate on just about everything to hold onto the possibility of selling their property.

So, if you want to miss out on what Trump and Buffet are saying is one of the most lucrative buyer’s markets ever, STOP BUYING REAL ESTATE.

Statewide, and even nationwide trends reflect a positive upward trend in sales velocity, but locally, prices are still coming down, and velocity sales are about the same as last year. However, the overall “feeling” of the market has changed. Talking to a recent real estate purchaser, “I can’t say whether we’re at the bottom or not, but prices are lower than they have been in years, and the price is right for us to purchase and it be worth it to us.” “We’re not looking for a quick turnaround, but we are looking for something that we can use and rent out. . . we’re paying cash, so this is a good place to park money for the next several years,” said another recent real estate buyer.

Although the real estate market in Panama City Beach is proving to be a strong opportunity to buy condos, homes and other real estate with great deals coming on the market almost daily, local trends are not quite the same as the statewide and national trends. “We’re still not seeing any signs of price stabilization,” said a local agent.

In May 2008, 41 existing single family homes sold in Panama City Beach averaging $276,000 or $151 per square foot. In May 2009, 34 existing single family homes sold averaging $226,000 or $116 per square foot – that’s 17% fewer homes sold at 18% less than May 2008. Statewide, velocity sales has increased by a small amount monthly for the last 8 months.

In May 2008, 47 existing condos sold in Panama City Beach averaging $226,000 or $213 per square foot. In May 2009, 45 existing condos sold averaging $199,000 or $181 per square foot – that’s 4% few condos sold at 12% less than May 2008.

Statewide existing home sales rose 18 percent during the month of April with a total of 13,111 homes sold compared to 11,133 homes sold in April 2008, according to FAR. April’s statewide existing home sales were slightly higher than statewide activity in March.

The national median sales price for existing single-family homes in March 2009 was $174,900, down 11.5 percent from a year earlier, according to NAR. In California, the statewide median resales price was $253,040 in March; in Massachusetts, it was $255,000; in Maryland, it was $264,302; and in New York, it was $222,500.

In Florida’s year-to-year comparison for condos, 4,660 units sold statewide compared to 3,862 units in April 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $106,600; in April 2008 it was $178,900 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $177,600 in March 2009.

Talking with Jim Free of Jim Free Realty, “There are a lot of cash buyers right now, financing isn’t very easy, but the Florida Association of Realtors is in the process of talking to Fannie Mae about some lending issues that could help.” Many are jumping at this opportunity as interest rates are down, yeilding low returns on investment accounts. The down prices in real estate provide a great place to “park” money and give the buyer something tangible to use. The only quarell is how long will you have to “park” it before you can take it back out with a profit. For those not worried about that, real estate proves to be a great option.

On The Beach Show, the buyers we are working with are mostly looking for fixer-uppers citing that the deals are usually better there and emphasizing a willingness to put a little “elbow-grease” into a purchased property to save money. The Hot Deals that garner the most attention are properties that are super cheap, but require a little work. Some of these homes have been listed as low as $50 per square foot, and proving hte market is hungry for real estate deals like this, most of them are off the market within days of them being made available.

So, if you are a buyer, the story hasn’t changed if you are looking for the best deal out there; you still have to fight for it. If you are a seller, you can sell your property and sell it quick if it is priced super cheap; meaning that the perceived value is significantly lower than other recenly sold properties on the market. If you are an agent, work hard and you’ll be fine. Everyone is looking for that beat up foreclosure that is $50 to $75/foot or that listing where the seller is losing his shirt. Become specialized in finding the right deals for your clients and keep them up to date regularly with a great web site, blog and consistent email notifications. And, follow up, for crying out loud; just because your clients don’t respond, doesn’t mean they aren’t interested, you just haven’t sent them something yet that illicits a response.

Hot Dog Story – Do What You Do and Change for No One

Okay, I know there is so much talk about all the awful things that people see happening in our world. Lucky for me I DO NOT buy into that. There will always be challenges and struggles and while this one seems to be very daunting I have learned that those that find the bright spots and DO NOT operate out of fear end up on the top and better yet they enjoy getting there.

Please go to this link and read this incredible hot dog story that just might convince you to just keep on doing those things that you know work. I have always loved this story and it is quite relevant today. Do not give in to the negative small minded thinking and talking that we hear so much of. Most of us have more than we need and plenty that we could be sharing with others.

I am so grateful to all of you that have made my life so bright and always filled with promise. I decided a long time ago to align myself with people that were looking for the possibilities rather than the problems. I have been writing gratitude list since I was 10 years of age and it has never failed that my life is so filled with more goodness than not.

Thanks to all of you and go read that story and share it with others…. lets the spread the good stuff. I believe the world needs a shot of happy stuff and I am just the girl to deliver it.

Remember my get even list, it is really long…. “The only people we need to get even with are those that have helped us”

with overflowing gratitude,

Karen Key Smith

Florida Real Estate Outlook for 2009

Are you the type of person who believes the glass is half full or the glass is half empty? If you think the glass is half empty, then you probably think that real estate in Florida is in the toilet. If you’re the positive type and believe just the opposite, you’re probably not listing to the national media who continue to bash the state of the market at every given opportunity. Don’t believe everything you hear! Real estate is local in nature, and we in Bay County are very blessed to have many factors working in our favor to turn this market around.

Real estate markets are, by nature, cyclical, and we happen to still be in a downturn. Take heart though; our real estate downtown began much earlier and was much steeper than many other parts of our fine country. As you know, we were helped by numerous events beyond anyone’s control (force majeure)…hurricanes, shark attacks, “flippers” (who are, buy the way, speculators, not investors). Reason, and historical data, both demonstrate that we should be nearing the end of a very ugly time to sell your home. When buyers ask me, “When do you think the market will reach bottom?”… my answer is always, “When you see it start to go back up.” You can no more try to time the real estate market than you can the stock market

Despite what you may hear on the media, people are still able to obtain loans for homes. They may be required to have more down payment money available and to have a good credit score, but there are banks and mortgage brokers lending money. And, if you are a veteran and can qualify for a VA loan, the time to buy is now. Also, don’t forget the first time home buyer credit, which is available as a $7,500 tax credit until the middle of 2009.

Although mortgage money is available if you qualify, right now, cash is king. As fast as investors fled from the market, savvy real estate investors have been dreaming of this time to return. The quintessential buyer’s market! Now is definitely the time when buyers get to pick and choose among the large inventory and can actually cashflow a property. For anyone who can buy right now, you should be looking. NOW! Opportunities abound, and there will be tremendous returns to those purchasing property right now. Remember, real estate is always meant for a long turn hold. The “flipping time” is gone with the wind. But real estate is tangible and REAL.

So, how’s that stock market treating you right now?

2008 Panama City Beach Condo Market Analysis

2008 was a turbulent year for the local real estate market and 2009 doesn’t look much better. The Panama City Beach, Florida condo market continues to trend downward. New sale price lows are set almost every month in high quality beach-side buildings. There are numerous examples of list prices that are below the lowest reported sale price of a particular model unit. Foreclosure proceedings in high quality beach-side buildings have accelerated in every quarter over the past year. The number of monthly, arms-length, market-rate sales from the 70 buildings within our http://www.condosaletrends.com database continues to decline. The market dynamics at play in the local market and just the market inertia will most likely drag prices lower.

The graph below illustrates the number of monthly re-sales from the 70 Panama City Beach condo buildings in the http://www.condosaletrends.com database (20,000 Units). The total 2008 re-sales are lower than any year over the past five years.

The sale price 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 May 1, 2007 so we could show the price trend for the preceding 19 months. We chose units from a variety of buildings of different ages and sizes that had a sufficient number of sales as to be statistically significant. The units used in the analysis were:

Boardwalk Beach	Opened in 2005	1,380 SF	2BR/2Ba
Calypso	Opened in 2006	1,226 SF	2BR/2Ba
Celadon	Opened in 2004	846 SF	1BR/2Ba
Grandview	Opened in 2005	1,492 SF	3BR/2Ba
Gulf Crest	Opened in 2003	1,388 SF	2BR/2Ba
Emerald Isle	Opened in 2005	1,146 SF	2BR/2Ba
Treasure Island	Opened in 2005	1,370 SF	2BR/2Ba
The Summit	Opened in 1983	912 SF	1BR/1.5Ba
Regency Towers	Opened in 1975	1,114 SF	2BR/2Ba
Sterling Reef	Opened in 1975	1,076 SF	2BR/2Ba
Splash	Opened in 2006	1,074 SF	2BR/2Ba
Seychelles	Opened in 2006	883SF	1BR/2Ba

The May 1, 2007 market value for each type of unit was determined by analyzing sales data from January 1, 2007 to June 19, 2007. The sale price of each type of unit is only compared to the typical sale price of that particular type of unit as of May 1, 2007. In other words, a unit type with a May 1, 2007 market value of $400,000 is represented as 1 or 100%. An October 2007, $380,000 resale of that type of unit is depicted as .95 or 95% of the May 1, 2007 sale price. The sale prices and sale dates were charted with a price trend line for each type of unit. 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 were not included. There were 184 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 rate of price decline has been mostly steady over the past 20 months. Compared to 2007, it appears that typical prices have declined approximately 15% over the past 12 months. There are numerous examples of condo units that are listed for sale at prices below the lowest sale price of that particular unit. Price stabilization in the near term is not indicated.

The Panama City Beach condo market will not hit bottom until most if not all of the unsold developer units are transferred to private ownership. The condo market will not hit bottom until most of the condo units whose owners are significantly upside down, with high “loan-to-purchase price” mortgages and who do not have the financial horsepower to hang on are sold at current market values.

2009 will most likely see additional price declines, fewer sales, and additional foreclosures.

Sam Portman, www.condosaletrends.com

No Real Mortgage Relief Despite Government Efforts

To say 2008 has been a bad year for real estate is just a wee bit of an understatement. Property values have plunged by some 35% nationwide and foreclosures are expected to exceed 2.2 million for the year. Nearly 4% of all outstanding mortgages are currently delinquent and in Florida the rate of delinquent mortgages leads the nation at 7.82%.

The impacts of the sub-prime fallout, resulting credit crunch and global recession are all taking a serious toll on homeowners who often find themselves unable to sell or refinance as they owe more than their homes are currently worth. The Federal Government has made several impotent attempts to bring relief to homeowners and stem the tide of foreclosure and it seems more plans are bandied about almost daily.

So what options are available to struggling homeowners?

Early this year, the President announced an informal plan that brought together a coalition of banks, mortgage-servicers, credit counselors and investors to provide loan work-out solutions to borrowers facing foreclosure. The Hope Now Alliance, as it was called, was a non-governmental effort and since its inception has helped some 1.7 million homeowners through loan restructuring and modification. Unfortunately, the Comptroller of the Currency reported this week that, of all those helped in the first six months of the year, more than half were already back in default.

In July, The Housing and Economic Recovery Act of 2008 became law creating, among other things, the Hope for Homeowners program to be administered through HUD and offer a vehicle for borrowers who were upside down in the homes to refinance to a lower, more affordable interest rate. The plan, intended to help hundreds of thousands of homeowners relied on the current lien-holders of the properties willingness to write down the principal balance of the mortgage to 90% of the current market value. Second lien holders would have to also agree to re-subordinating their liens to the new first making them basically worthless.

As one might imagine, most lenders were reluctant and chose to pursue their own work-outs with borrowers on a case by case basis. As a result, only a handful of borrowers were helped by the plan. HUD has since revised the principal write down requirement to 96.5% of market value but still requires the borrower’s new payment be no more than 31% of their gross monthly income.

So what is on the horizon? Is there any real relief in sight for homeowners facing foreclosure? Several plans have been presented from a variety of governmental agencies but none yet have the full support of Congress and the White House. One plan offered by Sheila Bair, Chairwoman of the FDIC, would lower borrower’s rates to as low as 3%, extend the amortization period to as much as 40 years and defer a portion of principal to some future time.

Another plan proposed would have Fannie and Freddie offer a low fixed rate to both homeowners and buyers to not only help those with unaffordable payments but also generate demand for housing as buyers would presumably be drawn into the market – attracted by the lower rates. This would help stabilize home prices that ultimately are at the heart of the problem. The Obama transition team also is said to be working on a plan though no details have yet emerged.

So what help is there for struggling homeowners right now? Sadly, very little. The silver lining is that several robust plans that could have a real impact on the problem are being discussed seriously and the new administration will have the political capital to insure that whatever plan emerges victorious passes quickly. That is why Fannie Mae and Freddie Mac, along with Governor Charlie Crist, have placed a temporary moratorium on foreclosures until January. The hope is that by that time, after a new president is sworn into office and details of the plan are ironed out, there will finally be a real and workable alternative to foreclosure for millions of Americans.

To have any teeth, the final plan will have to contain several aspects of the plans already discussed. It will have to provide for a low fixed rate, a forty year amortization and some postponement and/or forgiveness of some portion of principal. It must also, and this is critical, offer the same terms to homebuyers with a minimum down payment requirement of 5% and a HUD backed mortgage insurance plan to safeguard banks so they will indeed lend. Without renewed demand for housing to stop home price decline, any new mortgage rescue plan will simply be buying time.

For this and more, visit my blog at www.activerain.com/blogs/hpalmer

Hunter Palmer

Florida Home and Condo Sales Up ?24% in September

Florida existing home and condo sales were up in September 24%, the highest year over year increase in almost three years.

A total of 10,817 existing homes sold in the state of Florida in September, that is 2,092 more than sold during September 2007. The last time the state of Florida reported a higher year over year gain was in 2005.

The September sales report from the Florida Association of Realtors shows a 24 percent increase in the sales of existing homes in the state; this represents the sixth month in a row that the sales figure has exceeded its 12-month moving average (average of the previous 12 months). This is a clear sign that the significant price declines that have occurred across the state are leading to a more rapid absorption of the housing inventory.” – Dr. Sean Snaith, economist and director of the University of Central Florida Institute for Economic Competitiveness.

Although the sales are up 24% this year, that increase can largely be attributed to the sharp decline that the housing market suffered at the end of the summer 2007 with the subprime mortgage meltdown. In July of this year, only six more existing homes sold in the state of Florida than did in July 2007.

Florida’s median home price in September was $175,100, down 22% from the same period a year ago, at $224,700. However, September’s median home price is still 10.3% higher than 2003’s number of $158,800.

During the September time period, year over year, existing condo sales experienced an 11% increase, from 2,595 to 2,878. The statewide median condo sales price was $153,800, down from $197,000 in September 2007 or a 22% decrease.

Panama City/Bay County reported 111 total existing home sales for September 2008, down from 117 (5%) homes sold during the same period 2007. Existing condo sales were down 28% September 2008 from 2007, from 67 to 48. The average sold price for Bay Couty was $213,770 in September 2008, down 19% from $264,122 during the same period 2007.

If you take out the top 10 highest priced from both time periods (September 07 and September 08), the average sold price was $193,848 in 2008, down 6.7% from 2007’s number of $207,942.

So, housing prices are still falling, but velocity sales are picking up. I suspect they will continue to pick up, and hopefully that rate will be exponential. As prices continue to fall, more and more people will be able to justify making a purchase.

Source: Florida’s existing home, condo sales increase in September 2008

Condo Market after Ocean Reef Condo Auction

The Ocean Reef auction on October 18, 2008 concluded with a reported 35 sales. Sounds good but they still have over 140 unsold units in their inventory. The 2BR/2Ba units sold for $225,500, including the auction fee, which is about 20% less than recent sales of very similar Emerald Isle 2BR/2Ba units. This tells us that there are a few buyers out there willing to buy at a 20% discount. The Palazzo auction in August told us there were a few buyers out there willing to buy at a 10% discount. The question is whether buyers will demand more than a 20% discount at the next auction.

We reported in July that there were over 1,300 unsold, high-quality developer units in beach-side buildings in Panama City Beach. The Palazzo auction sold 50 units in August, the Ocean Reef auction sold 35 units in October, and Sterling Breeze closed 30 units in-house since July. That still leaves around 1,200 unsold developer units that need to be sold. 1,200 unsold developer units most likely means more auctions and lower prices.

The local condo market continues to trend downward. The chart later in this post indicates that sale prices as of October 2008 are down 15% compared to October 2007. New lows are set almost every month in high quality beach-side buildings. There are numerous examples of list prices that are below the lowest reported sale price of a particular model unit. Foreclosure proceedings in high quality beach-side buildings have accelerated in every quarter over the past year. The number of monthly, arms-length, market-rate sales from the 70 buildings within our database continues to decline. The market dynamics at play in our local market and just the market inertia will most likely drag prices lower.

Is there any good news here? If your basis for news is the year 2005, then market values have declined 50% and the world is coming to an end. However, if your basis is the year 2002 then story is more upbeat. Let’s look at the 744 square foot, 1BR/1Ba units in Long Beach Towers. These units were selling in 2002 for around $175,000. Currently, they are selling in the $215,000 range for a 23% increase since 2002. The rate of inflation in constant dollars over the same period was 21%. Not bad when you consider any other long lived item (vehicles, equipment, etc) you purchase almost always depreciates over time.

It is unreasonable to assume that residential property will always increase in value at a rate higher than the inflation rate. If you extend price increases at a 2% to 3% rate above the inflation rate over a 30 year period, people will be spending more than 75% of their income on a place to live. That is not a sustainable scenario.

Is this a good time to buy? If price is your main consideration, the operative question becomes “is it a good time to buy today relative to what point in time”. Certainly, today is a better time to buy than six months ago. But is it a better time to buy today than six months from now? The answer you will get depends on the agenda of whom you ask. Speculation in this kind of market is not for the faint of heart.

The following is an update of our usual, no spin data from http://www.condosaletrends.com which we hope will help you in your investment decisions. As always, if you lie to yourself about things concerning money, you lose.

We recently updated our Panama City Beach condo sales data through mid October 2008. The graph below illustrates the number of monthly re-sales from the 70 Panama City Beach condo buildings in our database. The 2008 monthly re-sales since July appear to be trending lower than past years.

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 May 1, 2007 so we could show the price trend for the preceding 19 months. We chose units from a variety of buildings of different ages and sizes that had a sufficient number of sales as to be statistically significant. The units used in the analysis were:

Boardwalk Beach; Opened in 2005; 1,380 SF; 2BR/2Ba
Calypso; Opened in 2006; 1,226 SF; 2BR/2Ba
Celadon; Opened in 2004; 846 SF; 1BR/2Ba
Grandview; Opened in 2005; 1,492 SF; 3BR/2Ba
Gulf Crest; Opened in 2003; 1,388 SF; 2BR/2Ba
Emerald Isle; Opened in 2005; 1,146 SF; 2BR/2Ba
Treasure Island; Opened in 2005; 1,370 SF; 2BR/2Ba
The Summit; Opened in 1983; 912 SF; 1BR/1.5Ba
Regency Towers; Opened in 1975; 1,114 SF; 2BR/2Ba
Sterling Reef; Opened in 2005; 1,076 SF; 2BR/2Ba
Splash: Opened in 2006; 1,074 SF; 2BR/2Ba
Seychelles; Opened in 2006; 883SF; 1BR/2Ba

The May 1, 2007 market value for each type of unit was determined by analyzing sales data from January 1, 2007 to June 19, 2007. The sale price of each type of unit is only compared to the typical sale price of that particular type of unit as of May 1, 2007. In other words, a unit type with a May 1, 2007 market value of $400,000 is represented as 1 or 100%. An October 2007, $380,000 sale of that type of unit is depicted as .95 or 95% of the May 1, 2007 sale price. The sale prices and sale dates were charted with a price trend line for each type of unit. The chart contained in the 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 were not included. There were 177 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 rate of price decline has been mostly steady over the past 19 months. Compared to October 2007, it appears that typical prices have declined approximately 15% over the past 12 months. Price stabilization is not indicated.

Sam Portman
www.condosaletrends.com

Real Estate Market Conditions on Panama City Beach – September

September 2008 Report – Panama City Beach

Slightly over 4.5 % of the total Beach inventory for detached single family homes sold in September, down from slightly over 5% in August. If all things hold steady, there is over 19 months of inventory on the market. As of Oct 04, 2008 there were 750 DSF listed in the Bay County Association of REALTORS® MLS System for Panama City Beach. Out of the 34 homes that sold in September, 9 were foreclosures, 1 was a short sale, 3 were builder sales and the rest were typical sales. September 08 was 17% slower than August of 08 in total DSF’s sold, 34 compared to 41. The foreclosure rate of sales for detached single family homes on the Beach fell slightly to 26.5% of all the sales for September compared to 30 % in August. The absorption rate decreased slightly from 5% to 4.5% but the overall inventory of DSF also fell from 780 to 750. Out of the 35 homes 1 canal front home sold. There were no other waterfront sales. The average price per square foot was $142, including all 34 homes. However, if we nixed the top and bottom 5 the average price per square foot actually rose to $147.16. The average days on the market for all 34 homes was 206, a 12.5% decrease compared to August, which was 236. As of October 4th there are 66 DSF under contract (about 8.8 %) and 750 listed. This is a 3% improvement over August . These numbers overall are more positive than negative and reflect a slight strengthening. This is no time for elation but any sign of encouragement is welcomed.

2.6 % of the total Beach inventory of condominiums sold in September. This indicates a 38.5 month inventory of condominiums on the Beach and the statistics are basically the same for gulf front condo’s. As of October 6th there were 1582 total condominium listings, 1090 of which are gulf front. Out of the 41 total condominiums that sold in September only 4 were foreclosures (or slightly under 10%), one of which sold at auction, 5 were short sales (about 12 %), the other 78% were conventional sales. If gulf front condo’s were considered alone, all 25 sold for an average of $264.35 per square foot. If all condos are taken into consideration, the average price per square foot slips to $224.42. The average days on market for all condo’s sold is 134 and for gulf front only, 143 . As of October 6th there are 90 condos under contract out of 1582 total for the beach, or slightly over 5.6 %, and out of that there are 40 gulf front out of 1090 listed, a bit less than 3.7%. The numbers in September trended negative for condos. The absorption rate decreased from 3% to 2.6%, the average price per square foot declined for all condos about 9% and for gulf front 9.25%. There were less than half as many foreclosures sold but a significant growth in short sales or pre-foreclosures. The silver lining is that the overall inventory decreased by 38 units.

No inventory for multi-family homes sold in September. There are 65 active listings and 2 under contract as of October 6th.

About 2.6% of attached family homes sold in September for a total of 7 sales out of 266 listings. This leaves about 38 months of inventory on the market. There were 3 foreclosures sold out of the 7 and the average days on market was 88. The average price per square foot was $178.52. There are currently 19 units under contract. This sector of the market, though slipping a bit in absorption rate by about 1%, improved strongly in price per square foot, 22.5%, and decreased in average days on market by 26%. That is the bright spot in the market this month. It ought to be noted, however, the product that sold was a newer product across the board than last month’s sold inventory.

Sold	Listed	Avg DOM	Avg Price/SF	Mo’s of Inv	Abs. Rate	Forcl	Undr Const
Detached Single Family
34	750	206	147.16	19	4.5%	26.5%	66
Condo’s Total Panama City Beach
41	1582	134	224.42	38.5	2.6%	10%	90
Condo’s Gulf Front Only
25	1090	143	264.35	27.7	3.6%		40
Multi-Family
0	65
Attached Single Family
7	266	88	178.52	22.5	2.6%	42%	19

There are some things to keep in mind. One, these are snap shot reports not movies. There can be huge swings month to month which may yield either despair or elation depending on whether there is a sharp increase or decrease.

Second, these reports relate to posted listings and sales in the Bay County Association of REALTORS MLS System. Some sales occur “for sale by owner” or at auction. The average days on market for a property to sell is based upon a selling price that is competitive with the average sale price per square foot of the units that have sold. One must even fine tune it further because the average sales price per square foot that sold ought to be more tailor fit for a particular property based on age, condition, and location.

Buyers should note that there are far more seller-sold deals moving in this market than there are foreclosures. It would be foolish to simply look at foreclosures as de facto, the best deal of all. Many sellers are equally or perhaps more motivated than many of the banks that own property. All of us need to realize that there is simply far too much inventory on the market and both REALTORS® and sellers would do the market a favor if they could pull inventory that is simply overpriced. The only way value will build again is when the absorption rate improves and inventory decreases.

If you’re overpriced now you have very little chance of moving your property. In this market, one should sell only if one must; it is not a wise time to sell if it is discretionary. Buyers should be strongly encouraged by these market conditions.

Guessing the bottom of the market is like guessing the bottom of the stock market. We have been in a three year price correction. Our airport is well underway, we have had major improvements, businesses have come to our area, our property taxes have been lowered, Lord willing we will escape hurricane season with little damage, our election cycle will be soon over, the dollar is beginning to strengthen once again, even insurance rates have been eased in most cases, interest rates are near historical lows and the war is seeming a bit more victorious than defeatist in the most recent months.

All these positives must weigh in against the challenges that we have faced both locally and nationally and we all hope, with good reason, that in fairly short order the momentum will shift and affect our market positively. (The statistics provided above were all true as of September 2008 and were the product of Bay County Association of REALTORS® MLS System.)

Scott Seidler GRI
Broker-Associate
Prudential Shimmering Sands Realty
850-774-5007
ScottAndSonjaRealEstate.com

Condo Re-Sales Plummet

Here at www.condosaletrends.com, our only job is to take the data and present the trends so market participants can make informed investment decisions. So, no cheerleading, no anecdotal evidence. The data takes us to where the data takes us. We only track the sale of condo units within the 75 buildings along Thomas Drive and Front Beach Road (20,000 plus units) that are in our database. The analysis covers this particular segment of the market.

The number of real estate sales over a defined period does not by itself tell us if the bottom is near. However, the number of sales is a major factor in how supply and demand affects the market and merits analysis. Be warned, the following analysis is not for the faint of heart.

Our goal in this post is to look at the number of sales in order to gleam knowledge, based on empirical data, as to “what the hell is going on” around here. The “number of sales” or the “percentage of sales compared to listings” is not meaningful without comparing it to something.

The following table illustrates the number of arms-length condo sales from buildings in our database. The Palazzo auction sales are not included because they would skew the trend. What we really want know is how the auctions of unsold developer units may be affecting the larger condo resale market.

The August 2008 sales were down about 30% from the August 2007 sales and were trending downward from the 2008 May, June, and July numbers. The next table shows the number of sales from June 1, 2008 to September 15, 2008 compared to the same time frame in 2007. Because of the short time frame, the sales are broken into ½ month intervals. These are the reported numbers as of 3:30 pm 9/17/2008.

There were only nine reported sales for the first two weeks in September 2008. There were only three reported sales during the second week in September. Granted, there may be one or two additional sales within this time frame that are reported in the coming days. The data indicates that the trend in the number of sales is downward and steeply downward since late August. We will have a better idea of the sales trend in October after all of the September data is in.

The Palazzo auction resulted in 48 sales. As of 9/15/2008, public records indicated that 42 have closed. There are anecdotal reports that Palazzo has additional post auction contracts which have not closed. There are anecdotal reports that Sterling Breeze has 35 contracts based on some auction-type pricing, however none have closed. Ocean Reef with 162 total new units (only eleven units have closed since opening in March 2008) is holding an absolute auction for 31 units on October 18th.

It appears that the process of transferring 1,200 plus unsold developer units to private ownership is adversely affecting the number of sales within the larger resale condo market. In other words, those buyers who are financially able and willing to buy appear to be bypassing the Realtor/Seller relationship typical of most resale transactions and opting instead for the perceived discounts offered by the auctions or directly by the developers.

The data indicates that the number of sales of existing properties will continue to decline to levels we have never seen. Resales just can’t compete in terms of age and price with all of the unsold developer units.
Put on your spurs and hold on tight. This is going to be a wild ride.

Sam, www.condosaletrends.com