May 2007 Market Update
International Airport Anyone?
By Christopher Arnold
Published August 18,2007
It has been an interesting June and July in the Panama City Beach Real Estate market. Let’s start off with the good news. Towne of Seahaven has started construction building out Main Street. Pier Park opened the new Grand Theater and has continued building out new shops. Panama City received final permit on the new international airport. Ebro Greyhound Park now has Texas Hold’em “No-limit” poker.
Now for to the not so good news. The mortgage secondary market has some large problems and banks are going out of business. In addition to those banking issues, some banks have declared virtually all condos in Panama City Beach “Condotels”. If that wasn’t enough, foreclosures are up.
The good news is self explanatory. Let’s go over the not so good news and explain how it impacts you as a buyer or seller in Panama City Beach. If anyone missed the May Market Update, you may want to read over it as a precursor to this update.
Now let’s go over my opinion of the banking issues.
Condotels
This one is so easy to fix. Don’t get a loan on a condominium from a bank that is going to declare everything under the sun a Condotel. I know several banks that will be happy to give you the best rates out there and not declare everything a Condotel. Even if they do they will still be happy to finance you at a great rate. They will also close on time rather than calling you days before closing to explain how they can’t finance you, have to increase your interest rate, or need another week or two to close.
Secondary Market
Now on to the secondary market. Everyone in the news started reporting mortgage problems a few weeks ago. The truth of the matter is we started seeing this back in June. Most of these problems don’t impact someone looking for a beach house or condo in Panama City Beach. All of the banks and mortgage companies going out of business are doing so because of loans they wrote years ago. These were mainly for the negative amortization loans, loans for people with horrible credit trying to buy their primary residence, and individuals doing stated income and no documentation loans that overextended. The first two don’t affect you. The third may. If you are doing a full documentation loan, this doesn’t affect you. If you are a business owner or self employed it is very likely that you will be looking for stated income loans. These are still available. I can’t find any 100% financing for stated income second homes. I can find plenty of 95% financing for you. I can’t find stated income stated asset. I can find stated income verified assets (you need to show a bank account with a balance equal to or greater than 6 months of payments) at great rates.
Panama City Beach Condos
Condominiums in Panama City Beach have continued to segment. I believe we have seen the market bottom on several new condominiums with strong amenities in Panama City Beach. I believe you will see others in the next three to six months. This is not to say that condo prices over all will not come down. What I am saying is that there are only a handful of owners in the new condominiums with strong amenities that will need to or be motivated to sell at these prices. Once they are gone the asking prices of the remaining units will be significantly higher. The absorption rate may drop, but prices coming back down at these specific condominiums is unlikely.
All of the other condominiums on the beach are a completely different story. If you can’t differentiate yourself from the other Panama City Beach Condos you are likely to have a hard time competing for buyers and rental dollars. I don’t believe we have seen the bottom of this market. Additionally, we are about to have several new condominiums switch from preconstruction to owner occupied where the contract holders are under contract at prices significantly above the overall market price. I believe this will affect the overall market, but have a drastically lesser impact, if any, on the condominiums that can differentiate themselves from the rest.
Should I buy now or wait
Many buyers ask if they should buy now or wait. In my opinion, it depends. If you are looking for a new condominium with strong amenities, I would take my time and make offers now. I have. I purchased two separate units this year. If you are purchasing for investment and looking for an older unit, I would be more apt to sit on the sidelines and see what happens. The thing about buying now is not solely focusing on the asking price. Neither condo I purchased this year was at the asking price. I put several offers out and two very attractive opportunities presented themselves. I often hear some buyers say I am going to wait for that special deal to come along. These seem to be the same buyers that come back a few months later and say “I will buy a condo if you can get the pricing we had several months back”. Once the desperate and motivate sellers sell their condo with a specific floor plan in a specific building, they are gone. We are unlikely to see that pricing again. That is the basic rule of supply and demand. The truth is that great deals and values rarely just come along. You have to create them.
Panama City Beach Condominium sales
According to my count, we had 74 condominium sales in June and 49 in July. I did not include and preconstruction sales.
In summary, you may want to focus more on the individual condominium rather than the general market when shopping. At the same time, you should not feel pushed into purchasing something you aren’t ready for. You can find the best deal in the world, but if you can’t afford to furnish it and make the payments it can easily come back to haunt you. On the other hand I honestly believe we are seeing some activity that clearly shows the bottom of the market at some condominiums and some of the individuals buying now are getting some phenomenal values. Keep in mind that developers will never be able to build condominiums for the prices they sold for only a few years ago. Construction costs and land cost made sure of that.
Disclamer:
All opinions expressed by Christopher Arnold on this website are solely Chris’s opinions and do not reflect the opinions of Prudential, Prudential Shimmering Sands or their or affiliates. Chris’s opinions are based upon information he considers reliable, but neither Prudential, Prudential Shimmering Sands nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Chris’s statements and opinions are subject to change without notice. No part of Chris’s compensation from Prudential Shimmering Sands is related to the specific opinions he expresses. Past performance is not indicative of future results. Neither Christopher nor Prudential Shimmering Sands guarantees any specific outcome. You should be aware of the real risk that property values can and do fluctuate both up and down following the purchase of a property. Properties values may go down in value once purchased. You must make an independent decision regarding the real estate market and your purchases of real estate. Before using any information contained on this site, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from other professionals that may be relevant in your decision making process.
