As times change, so do condominium loans in Panama City Beach. The reason is because most buyers are people who purchase these properties as secondary residences or investment properties. The type of loans that banks grant for secondary residences are different from those offered for primary residences especially after the mortgage meltdown of 2008. Before the mortgage crisis, most lenders sold their condominium loans to Fannie Mae, Freddie Mac and any other bank or financial institution that was willing to take them on the secondary market.
Shores of Panama conveyed in 2007 at the same time as the Financial crisis of 2007-2008. The 307 unsold preconstruction condos went back to Silverton Bank which was promptly taken over by the FDIC in 2010. The FDIC began selling the units individually. The absorption rate was slow. Then they put the entire block of remaining condos up for auction in 2011. A bulk buyer purchased the inventory in 2012. I don’t believe the bulk inventory rented or sold as the bulk buyer expected. Owners get control of the board in 2014. The association wins a 12-million-dollar judgement in 2016 against several directors. Then releases the directors from the judgement in 2018 while purchasing the pool and club amenities from the bulk owner. The association chose to take out a loan to make the purchase. The bank put budget requirements on the association that shed some light on glaring financial issues. 2019 dues went up again as Shores of Panama begins to face their financial reality.
When compared to other gulf front buildings in Panama City Beach, Shores of Panama’s dues can seem high at first glance. This article will look deeper into the 2019 dues and what you can expect in the future. Association dues are usually made up of three separate cost centers. Operations, Reserves, and loans (if any). Understanding the operating budget is outside the scope of this article. We will cover reserves and the loan. In 2019 the association reported a 13.55% increase in dues. They reported “This was driven by the increase in cost associated with the mortgage of the pool vs. the lease payments as the main driver”. This section is my attempt to help you break down the math with my estimates.
Looking at the entire sales history of Ocean Villa, I compared the two bedrooms there with four other buildings that were constructed by the same developer and had identical floor plans. The graphs show a comparison of recent sales, the entire history, sales volume, and annual percentage change. Condos on the west side of the beach tend to demand a slight premium to those located in central Panama City Beach.
After a 10% increase in 2018, we are up 3% so far this year. Sales volume is down 40% compared to the same period last year. Preconstruction owners made up much of our inventory supply for years. This supply is quickly diminishing and returning us to sustainable sales volumes. Strict lending standards are keeping our condo market free from outside influences.
With only two months remaining in 2018 condo sales prices are up 10% year to date. Sales volume is up 12% compared to the same period last year. Fourth quarter sales volume is going to be significantly impacted by Hurricane Michael. This will be covered in further detail later. The majority of supply is being provided by preconstruction owners who have still not seen prices fully recover. We are seeing demand from people who want to own condos in Panama City Beach. While buyers are paying attention to the numbers, we have not seen speculators buying Panama City Beach gulf front condos. We can attribute this to strict lending standards preventing noncredit worthy buyers from entering the market. This is providing a balanced market free of outside influences.