Panama City Beach Condo Sales 2008 Trend and Forecast

art rendering of Laketown Wharf condos in Panama City Beach The condominium boom of 2004 and 2005
has come and gone, leaving many speculators
and distraught investors standing in the
shadow of empty properties.

In 2008, many condo projects still have unsold units. High fuel costs, a weakening economy,
and the stagnant real estate market pose
threats to current property owners and future investors. Panama City Beach Guide invited
Sam Portman, a real estate analyst, to
present an overview of the first six months
of 2008.

His analysis is shown below. The bullet
points to the right highlight some of his
conclusions.

Though Portman forecasts trouble ahead,
especially for those who are overextended,
it may be shopping time for shrewd investors.
Qualified buyers can expect increased
negotiating power, and real estate will
continue to be a good investment. One
can only hope the market’s recent woes
will encourage a more realistic assessment
in development and financing.

Summary

Steady price decline around 15% in
the past 13 months
No empirical evidence that the market
has stabilized
Significant evidence that the pain is
not over yet
1,300 unsold developer units in Aqua, Origin of Seahaven, Shores of Panama, Tidewater, Emerald Beach, Grand Panama, Sterling Breeze, Palazzo,
and Ocean Reef
Does not include approximately 1,400 unsold units in Laketown Wharf, Magnolia Bay, and Marina Landing
Expect sale prices for Panama City Beach condos to decline another five to ten percent over the next 12 months

June 2008 Panama City Beach Condo Market Update

We recently updated our Panama City Beach condo sales data through mid June 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 through May mirror the number of re-sales from the same period in 2007 even though there has been a substantial number of new units come on line.

Panama City Beach condo sales by month graph

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 13 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 East; 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

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 nine buildings. Foreclosure sale prices that were unrealistically low were not included. There were 112 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 13 months with a total price decline of around 15%.

There is still no empirical evidence that the market has stabilized. However, there is significant evidence that the pain is not over yet. According to the Wall Street Journal more adjustable rate mortgages will reset to higher rates this summer than reset last summer. The number of sales for 2008 has been very similar to the same period in 2007. Mortgages for second homes continue to require extensive income verification and a significant down payment. Rental income to the owner from a property that is on a rental program typically just barely covers the holding costs while any mortgage payments come directly out of the owner’s pocket. As of 6/6/2008, county records indicate there are over 1,300 unsold developer units in Aqua, Origin of Seahaven, Shores of Panama, Tidewater, Emerald Beach, Grand Panama, Sterling Breeze, Palazzo, and Ocean Reef. That’s not counting the 1,400 or so unsold units in Laketown Wharf, Magnolia Bay, and Marina Landing. Fuel and food costs continue to increase.

Is the bottom in sight? Not yet. I expect sale prices for Panama City Beach condos to decline another five to ten percent over the next 12 months.

For more information on Portman's condo analysis check out his Web site. www.condosaletrend.com