The future of Laketown Wharf in Panama City Beach is again dealt a blow of uncertainly as the owning bank, Corus shows increasing signs of weakening. Friday, they reported a quarterly loss of $260.7 million and stated that more than a third of their “$4.1 billion in outstanding loans were nonperforming.” On the bright side, Mike Dulberg, Corus’s CFO reported that they have $758 million in capital and $4 billion in liquid assetts and the vast majority of its $7.6 billion in consumer deposits is federally insured.
In the article, Daniel Cardenas, senior vice president at Chicago brokerage Howe Barnes Hoefer & Arnett Inc., was quoted:
“The company is in dire straits. Barring a surprise injection of private capital and/or a dramatic rebound in condo values, Corus appears unlikely to survive 2009.”
The article was published in the Wall Street Jounal Commercial section in limited “subscriber only” format, but I found it elsewhere, in full:
"The nature of our area will change forever, and in a great way."
Dr. Ed Wright, former Dean of FSU-PC and current stand-in director of the Bay County Economic Development Alliance was gracious enough to start our series of Leader Profile interviews that will showcase the local talent that our area possesses. Dr. Wright shares with us his former role as Dean, his current role as EDA Director, and what we may see in the future of Bay County.
Koertge: You are the former dean of FSU-PC, how long were you the dean?
Wright: Almost seven years.
Koertge: Did you move to Panama City for that specifically?
Wright: I did. I was serving as the Dean of Humanities and Social Sciences at Colorado State University when The Florida State University position was advertised. My wife and I had long connections with Panama City, had come here to the beach many times, plus my wife had family just outside New Orleans, so it was close. In addition, I had done a lot of work with Gulf Coast Community College. I was happy where I was, very successful and doing well, but when I told my wife about the position, she said four words to me – ‘get your typewriter out.’ This was the only time I applied for a job in several years and low and behold, we ended up coming.
Koertge: So, tell us about the timing of your move.
Wright: It was just the right time for me, and it was time for real growth at FSU-PC. FSU had been fairly unresponsive prior to my coming to the needs of the community and the community was getting a little restless about it. That was communicated to me pretty quickly. When the dean before me, Larry Bland, who was the founding dean – great guy, had been here for years – retired, they put together a commission of city and university people to talk about the future of the campus. This group came up with a plan or rather an inventory of needs. Part of my role in the beginning was to respond to that inventory of needs. Of the many things we did, we brought in daytime programs, as well as other educational programs to help broaden our teaching capability. However, one of the most important programs we brought on was the engineering program. The initiative was to create a real full time or day time campus.
After about 6 years in the seat, we decided it was time to retire. It was time to spend time with family and my mother, and also we timed it because the new buildings coming along. We figured with the new buildings and a great enthusiasm and buoying up of support – what a great time for a new Dean to be here and benefit from that very important time. And, now they are online, and what a great thing that is. I walked through them the other day, and they are very nicely done.
Koertge: If you could name one, what would you say was the highlight of your career at FSU-PC? Wright: One highlight of my career is crystal clear to me, and it is a story that I’ve told hundreds of times. This story captures the mission of a regional campus, it captures Panama City, and it captures what FSU Panama City has become. The first graduate of the Electrical Engineering program was a young woman. The commencement was always the highlight for many of us because you get to see all these people that have worked so hard come to the conclusion of their educational career with high hope for what the future will bring them. Many of them, for a long time were non-traditional students achieving their goals and making a difference in their life and in their future. So, here’s a gal who was a single mom with three kids, living at home with her parents, working as much as she could – the day she walked across that stage, her life changed forever. Now she’s working a great job, has been there for years, and has been able to offer her kids a life they never could have had before. And, importantly, the life of the community changed forever because her role in It will be different, her contribution to It will be different. That’s really what this is all about.
Koertge: What is the Bay County Economic Development Alliance? Wright: the EDA is a public/private partnership consisting of county municipalities in partnership with private companies such as St. Joe, Gulf Power and various others that contribute or have an interest in the economic development of our area. The whole purpose of the EDA is to attract new businesses and employment opportunities and help existing industries to expand and bring new business. The board is a volunteer board led by Lisa Walters, a partner in Burke and Blue. She’s a great gal, works so hard.
Koertge: What roles does the Economic Development Alliance play in the community?
Wright: The whole purpose of the EDA is to develop proposals, to target businesses that could benefit from it, provide industry related information to businesses, participate in marketing events (sometimes jointly with the Great Northwest), working with companies that may want to relocate here to perform site location studies among other things, and to structure and develop packages of incentives that are provided based on certain qualifications of the businesses. The EDA’s job is to market the region and work with those that would like to develop as potential employers in our area. Nextel and Oceaneering coming to Bay County are some examples of past EDA efforts.
Koertge: What is your role as the temporary director of the EDA? Wright: Well, first, try to keep the place running (laugh). I came down the week before Ted [Clem] left and received lots of briefings about the current goings-on in our program. 2008 closed out with 11 active projects in the works and I’m also involved in facilitating the building of new relationships. I’ve worked with three inquires in the two weeks I’ve been here from companies interested in our area or in the Southeast that may develop into fruitful relationships – we are in the business of developing proposals catering to these types of solicitations.
In addition, equally important, and maybe even more important, rather, is the search for a new executive director. We’ve got to develop a process to bring about that search and to find the right kind of person for this position.
Koertge: People, locals and tourist alike, tend to overlook Port Panama City, what do you see on the horizon as far as economic development with regards to the port? Wright: Certainly, I think, Wayne Stubbs has done a terrific job as the director of the Port; he has certainly expanded their capability. They have some land constraint issues, but that is alleviated by their having an industrial area right up 231 that is directly connected by rail that is actually being developed – that’s a really important site for future development. I think that we’ll see some activity that will make that land more interesting to a potential business that may come here in the near future.
There is a lot of potential, and we are going to try and accelerate that process so some of the ground work is complete for that future potential business. Then of course, there is the distance from the Yucatan. You know, this port is closer to the Yucatan than Miami, because from the Yucatan, you have to go around Cuba to get to Miami. Not to mention the progress with the new Panama Canal and the possible future activity that could open our area up to with the capability to accommodate much larger ships.
Koertge: Can you speak into those things unique to our area that are setting the stage for Bay County to explode? Wright: The industrial park around the airport and the developable property within the fence, about 400 to 500 acres, in terms of aviation related business is a huge advantage that our area will have. In the future, we will have tremendous opportunity that may be difficult to foresee at this time. For example, with the airbus A380 project, if the timeline of the new airport were more further along, we would have very likely been the site instead of Mobile. So, there are lots of things that could happen that are related to access to an airstrip or runway that this site certainly affords.
And of course, the whole commerce park outside the fence has the potential for logistics and cargo-related types of businesses, and its a great opportunity for businesses to build what they want as opposed to trying to retrofit something that is already there. Something else that is sometimes overlooked is the growing number of defense contractors that support the Navy base, Air Force research lab, and the Civil Engineering center at Tyndall. We’ll see that number grow.
The Navy base has become, really, a hub for a lot of different technologies. In fact, one of the things I tried to do after I retired but was still doing some work here was to get the new airport to be a test bed for new technologies. It is a great place and opportunity because you can bring a new system in, plug it in and see how it works.
Finally, where in the southeast can you land a large cargo aircraft with relative ease, and with ease, I don’t mean in regards to the length of the runway, but in regards to the amount of airspace. This airport will have lots of available airspace, timewise, with regards to cargo operations. Now, nothing is happening in this specific arena, so I don’t want to mislead anybody, but I’ve always believed that we have the opportunity when the economic base is sufficient to talk about a regional cargo kind of location. We will have lots of space to develop the kinds of distribution centers that you would need and plenty of space in terms of airspace and times that you can have access to the airspace.
And I still believe that if Airbus will manage to become profitable in their manufacture of their huge cargo carrier, the A380, then FedEx and UPS may pick up a dozen a piece. Where are you going to fly that huge plane into? Currently there is only one airport in Florida that can handle a plane of that size in terms of runway length and turning radius capabilities – Miami. As I understand, our airport should be able to handle something like this, however, they may have to do some modifications to accommodate turn radiuses and taxiway requirements, but again, we’re dealing with a clean slate. These are some of the kinds of things that we will have to offer.
Koertge: What sort of regional impact does the new airport potentially have? Wright: Oh, its huge. And we haven’t even begun to talk about the impact it will have on The Beach, if you will, the destination of Pensacola to “the bend”. And the way it potentially changes this tourism market in terns of access, if we get a low cost carrier. We’ll get people coming out of larger cities that have never heard of our area before and the potential to bring international travelers. This will change the nature of this destination forever, in a great way.
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?
FNMA released new condo eligibility guidelines for mortgages acceptable to be purchased by FNMA in Announcement 08-34. These new guidelines are directed specifically toward condominiums located in Florida. The guidelines specify particular situations that place additional restrictions on condominium mortgages that FNMA will purchase in the secondary market. The new guidelines have an effective date of January 15, 2009.
Some of the highlights are:
Reduced loan to value ratios.
70 percent of the total units in a project must have been sold or under a bona fide contract to a principal residence or second home purchaser. This could affect new buildings such as Trade Winds, Ocean Reef, Origin of Seaheaven, Grand Panama, Shores of Panama, Etc.
No more than 15 percent of the total units in a project can be 30 days or more past due on the payment of their condominium/association fee payments. This includes the unsold units where the developer is responsible for paying the HOA fees.
Increased insurance requirements for the HOA and the unit owners.
Projects are ineligible where a single entity (the same individual, investor group, partnership, or corporation) owns more than 10 percent of the total units in the project. This may affect Emerald Beach where the Wyndham Corporation owns more than 50 percent of the units. If a hedge fund comes in and buys 10-20 percent of a project, say the Trade Winds, it could mean that FNMA would not purchase any mortgages of the remaining units.
Review of the project HOA budget and income statement, especially for projects where the developer is still in control of the HOA. This could be a problem for projects where the developer has not fully funded the required HOA fees of the unsold units.
Projects are ineligible where the HOA or developer (if he is still in control of the HOA) is named as a party to current litigation that relates to the project. This could affect Shores of Panama that is in bankruptcy or projects where the developer is being sued for nonpayment of construction work or services.
Lenders are also increasingly reluctant to lend on what they consider to be condo-tels. FNMA may consider projects with any of the following characteristics as condo-tels:
Front Desk/Registration Service
Central telephone system
Daily cleaning service
Advertising rental rates
Central key system
Few or no full time residents
Short-term rentals
There are exceptions to all of the rules. However, if you have a great contract from a well qualified buyer, don’t be surprised if the loan gets rejected by the lender. Additional loan collateral requirements will mean fewer sales and a longer market recover period.
In an effort to plug Florida’s $2.6 billion deficit, lawmakers are threatening to sweep $190 million from the Florida Affordable Housing Trust.
The fund was established in 1992 and is funded directly from a portion of doc stamp taxes and is used to build new single-family homes and multi-family housing projects and for financial assistance programs.
Originally, lawmakers were eyeing a more robust taking of $284 million, but when it was estimated that the fund appropriations would only generate $170 million for 2009, they lowered their steal to $190 million. This taking away of this money will negatively effect the real estate and housing industry in the state of Florida.
This morning an email was sent out to all BCAR members, but I wanted to get this issue in front of the readers of pcbdaily.com. Please don’t hesitate to email Representatives Jimmy Patronis and Marti Coley and urge them to NOT STEAL THE MONEY FROM THE FLORIDA AFFORDABLE HOUSING TRUST.
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.
At the end of 2009, Citizens Property Insurance Corp., Florida’s largest home insurer, probably will be free to raise rates for the first time in three years.
On Tuesday, a state-appointed task force charged with returning Citizens to its original role as the state’s insurer of last resort agreed that any increase in Citizens’ rates should be capped at 10 percent a year for three years to ease the financial burden on policyholders.
It’s one of several recommendations the 11-member task force will submit to the Florida Legislature this month.
Citizens’ rates, which were frozen at 2006 levels, aren’t high enough to pay claims should a major hurricane strike the state, experts say. The rate freeze expires at the end of this year, and the state-run insurer said it plans to impose higher rates as soon as possible.
2008 has been a monumental year for us at pcbdaily. We’ve seen super awesome growth, expanded our content base tremendously and have reached out to more people than we had ever expected.
Looking back, the top stories covered good times and bad, with some of the bad times being good for others and some of the good times being bad for some.
4 of the top 10 articles talked about new additions to our area, namely Pier Park and the new Panama City Bay County International Airport (I know, we need a new name, and that will be addressed in 2009).
Walking around the mall, it is sometimes hard to imagine that this time last year, Pier Park’s roads were not even paved yet. Colorful buildings had been erect for some time, but the mall as a whole was still just under 2 months from opening. Looking back, it amazes me how quick somethings get done.
The new airport has hit milestones aplenty during 2008. Just a little over a year ago, the airport groundbreaking ceremony took place. When 2008 rolled in, the airport was caught in a legal battle with the NRDC and the Fiends of PFN.
In what was expected to draw out for months, the case was totally thrown out on January 25th, clearing the Airport Authority for construction immediately. The case was in many instances described as frivolous, and was not taken seriously by the judge. Opponents touted the failure of an affirmative vote in a non-binding referendum vote, but were never able to validate the fairness of the actual vote in regards to it being represented to all those affected.
For the new airport, 2008 brought the site from a stumpy, patchy 4,000 acre site to a cleared, grubbed site that is almost completely brought to grade with terminal parking installed, foundation work for the terminal complete, an asphalt-paved runway with some concrete and funding for a full 10,000 foot runway.
As the economy has plunged during 2008, so have real estate prices. Now, this has been a topic of hot debate on pcbdaily. I’ve oft been blasted by the Realtor community for spreading “bad news” and not “helping” the market by taking part in the media frenzy of negativity. However, the reality is, those that are complaining should be putting that energy into finding buyers because now is a great time to buy real estate.
Plunging prices mean good deals for all buyers. I understand the hesitation and skepticism, but things will not always be this way, and in 10 years, us agents will be doing our homework on baypa.net thinking to ourselves that we should have bought as much as possible back in 2008 and 2009 when prices were so cheap. 3 of the top 10 articles of 2008 were specifically about condo auctions in Panama City Beach. The Palazzo condo auction story took the cake, trailed by the Ocean Reef Auction and the cancelled Marina Landing auction. The Seahaven auction actually made it in the top 15 and is only a few weeks old.
The other 3 articles of the top 10 articles of 2008 on pcbdaily have to do with problems at local condos and the condo market as a whole. Laketown Wharf has been a sore topic for many with the developer being a self-proclaimed Trump with a Drawl – Jerry Wallace.
A largely vacant, 750 condo, elephantine monolith, Laketown Wharf actually had great aspirations, with some possibility of success had it come unto creation mid 2004. With huge swimming pools, a Balagio-style fountain/light show, a 650-seat live performance theatre, 5 restaurants and 1,000’s of square feet of retail space, it was planned to be almost a small town.
With less than 70 closings, it has been largely regarded as a complete and utter failure, but Laketown Wharf yet has a bright future with Corus stepping in. 2009 should bring something good for that development, hopefully.
Anyway, enough – enjoy the articles and looking back on 2008!
As 2008 is quickly drawing to a close, there are still buyers who are “on the fence” about signing that purchase contract right now. If you are considering purchasing a home for your personal residence, probably the most important reason to purchase before the end of the year is the ability to file for homestead exemption for the year 2009. This will provide a substantial tax savings, not only for 2009, but for the entire amount of time you intend to use the property as your personal residence.
In addition, the homestead tax exemption was recently raised to $50,000 per tax year and is now “portable” for those homeowners who would like to move up to a larger home or downsize for retirement. For additional information, please contact the Bay County Property Appraiser’s Office at http://www.baypa.net.
There are many additional reasons to buy in Bay County even if you miss the December 2008 deadline for homestead purposes: low interest rates, very affordable housing, a $7,500 tax credit for first time home buyers, and others. Look for additional information on these great opportunities in the upcoming weeks of 2009.
Through a series of rate cuts and capital market tinkering, the Federal Reserve has finally managed to push down long term mortgage rates to levels not seen in nearly forty years. The rate on the conforming thirty-year, fixed-rate mortgage was hovering close to 5% on Friday as the yield on the ten year treasury note sank to 2.07%. This thaw in the mortgage credit market is a welcomed sign that the ingredients are coming together to hopefully re-energize the comatose housing sector.
This huge swing came after the Fed lowered the funds target rate to a range between 0% and .25%. This marks the tenth time for the Fed to cut rates in the last 15 months.
The Mortgage Bankers Association reported a surge in mortgage application activity over the past week as homeowners rushed to refinance their existing mortgages. The combination of low rates and low housing prices should also create some demand in the purchase money market as well as consumers look for safe investments in these difficult economic times. Though a flood of buyers is unlikely, we can be optimistic that the first quarter of 2009 and beyond may see an increase in real estate sales and, hopefully, an end to home price declines.