Does the Condo Market Resemble the Titanic?

With a rate of predictably paralleling the uncertainty of summer storms, the real estate market on the Emerald Coast has experienced recent activity unlike anything in the forecast of two years ago. Since I have lived in Panama City over the past 31 years, [I’ve] seen the highs and lows of our real estate market, but nothing could have prepared us for the market events of 2004, 2005 and now 2006.

While the market is now in a correction period, we are watching prices level out and available inventory increase, Condo Owner decided to seek the advice of those in the know to translate the terms and give readers the bottom line. The outcome? Unanimous. We are now focused on true end-users looking for a lifestyle as well as an investment. The“flipping” phenomenon of previous years “has gone the way of the buffalo.”

Pictured above is Laketown Wharf in its preconstruction phase with Ripley's Believe It Or Not Museum presented as the Titanic.

In 2003, anyone who knew anything about our real estate market expected a spike of 25 to 30 percent in pricing just to bring us up to some parity with our neighbors to the west. No one expected what transpired with the ‘flippers’ coming to town. During 2003, two-bedroom condos were selling at the end of the year for less than $250 per square foot. By the end of 2005, the price for a two-bedroom [unit] was about $500 per square foot, with developers asking up to $600 per square foot for their new projects.

What people don’t understand is that we are not experiencing a bad market; we just experienced this short time period of the buying and flipping, but people buying today can still expect a respectable return of 10 to 20 percent a year. Like the stock market, the time to buy is when everyone is selling. Property values seem to have fallen anywhere from 10 to 20 percent depending upon the location and amenity level of the specific condominium complex. Panama City Beach is in the midst of reforming itself into a great vacation destination with projects like the Grand Panama Beach Resort and The Town of Seahaven are evidence of the Renaissance Panama City Beach is experiencing.

I would not be afraid to buy a quality unit in a first-class facility with nice amenities. I believe complexes that have only average amenities will have a difficult time attracting numerous buyers at this time because the current supply has far surpassed the current demand. Buyers can once again get excited about purchasing their Florida dream because prices are down below $350 per square foot, with sellers willing to negotiate.

If considering selling, however, I would think about what I have invested and determine what a respectable return is. While we were all brainwashed into thinking we were supposed to make hundreds of thousands in resale, most people still find $25,000 is respectable, and they can still expect that. People have to understand that a real estate investment was never supposed to be a short term one, especially with closing costs and other expenses that relate to the transaction. You’re supposed to hold on to it for a year or longer. Do the math and don’t just throw a price out there based on what others are trying to sell for because, chances are, they’re probably not moving.

We have a lot of great new condos and condo resorts coming out of the ground. Most are being fueled by now long-term property owners.

As owners compare the value of buying real estate on the Emerald Coast versus in the Miami/Ft. Lauderdale, Naples/Ft. Myers/ Sarasota areas, they will realize that their investment dollar will go much farther in Northwest Florida. We still have a Baby Boomer turning 60 every 10 seconds in America. Unless they prefer the desert, my guess is that they will follow the sun, the water and the dolphins to the Emerald Coast.