Panama Beach Realty

 Real Estate Condominium Sales in Panama City Beach were down in August when compared to August of 2007.  Forty-five condos sold in comparison to the one hundred and one that sold the prior year.  Forty-two of the condos sold in 2007 were preconstruction closings at Shores of Panama.  So we should actually be comparing forty-five in August 2008 against fifty-nine non-preconstruction sales in August 2007.  These numbers do not include the Palazzo Auction Sales.  Palazzo closed thirty-one condos in August that have yet to be recorded in the MLS. 

Many people seem to talk about the bottom of the real estate market like it is going to happen on some specific day in our nearest of futures.  For much of our condominium market in Panama City Beach, this is not feasibly possible.  It is in our best interest to realize that we have a supply and demand situation.  Our first indication of this is the number of foreclosures and short sales that become more and more prevalent in many of the condominiums across the beach.  Our second indication is the number of finished condominiums with a significant amount of developer inventory sitting on the sidelines.  While there is a reasonable possibility that the majority of this inventory could sit in the sidelines for quite some time, at least some of it will have to make its way into the Panama City Beach real estate market.

There are two main developer situations.  There are the developers who can stay ahead of their construction loans, and those who can not.  Depending on the cost of construction and how many of the preconstruction units closed, many developers have reduced their loans to a manageable point or paid them of completely.  This is the case with the majority of the outstanding inventory.  Some of these condos completed construction more than twelve months ago and have showed no signs of reducing prices. 

Some of the last condominiums to convey in the Panama City Beach Preconstruction cycle naturally had the highest preconstruction prices.  Aqua, Grand Panama Beach resort and Origin at Seahaven have shown no signs of developer units being sold below preconstruction prices, but resale asking prices are working their way down. 

The past twelve months have brought challenges, to say the least, getting preconstruction contract holders to close on there newly finished condominiums.  This resulted in some developers scheduling auctions and developer offerings at reduced prices.  Most of these have seen favorable responses.  The Palazzo Absolute Auction appears to have sold a significant amount of outstanding developer owned inventory.  Sterling Breeze quietly reduced prices and the results appear promising.  Tidewater soon followed offering pricing similar to the price per square foot the Palazzo Absolute Auction produced.  The Ocean Reef Absolute Auction can serve the developer well if pricing aligns with buyer's expectations. 
There are still some condominiums we have yet to hear from.  Shores of Panama Phase II has closed eight units so far.  Laketown Wharf has closed 47 condominiums to date.   

Our bayfront properties are a bit more challenging.  The absorption rate is significantly less than a gulf front condominium.  While these properties are great condominiums, the best use is likely to be residential or second residence and not short term rental.  Until the asking prices reflect that, we are unlikely to see buyers.  Magnolia Bay's unclosed units have gone back to the bank.  While resale asking prices have steadily come down over time, we have yet to see sales.  Marina Landing's Absolute Auction was canceled after the fourth condominium was sold.  Only two of those four units that were successfully auctioned actually closed.  Reflections Spa and Resort appears to have closed all of its condominiums. 

There are also condominium projects that are not directly on the water.  Cabana West converted its condos to apartments.  Cabana Cay and Island Reserve are still working thru preconstruction sales.

We do have a considerable amount of developer inventory on the sidelines.  If a hand full of these condos (Ocean Reef, Tropic Winds, Shores of Panama, and Laketown Wharf) figure themselves out, the rest could conceivably stay on the sidelines for quite some time.  Developers could just as easily put them on the market.  There is no way to predict this.  The likely hood is that we will see a little of both.  Ocean Reef and Tropic Winds will not need many sales to satisfy the outstanding construction loan.  The total 2757 unsold developer units is not near as daunting as it seams.  This number was taken from Bay County records and is broken down at the end of this article.

If unsold developer inventory was our only obstacle to a bottom of the market, we would be in reasonable shape.  It is not.  Individual owners who can't afford to hold there units, speculative buyers, short sales, and foreclosures are leading the way in price reductions.  Having said that, most of the active condominiums do not have reasonable asking prices in today's market.  There are currently 1616 total condos listed in Panama City Beach Florida.  At least two thirds of the inventory has unreasonable asking prices.  You can currently find a three-bedroom condo in a given building asking in the mid 300's and another condo with the identical floor plan asking in the mid 600's.  How can someone justify that?  Until the correctly priced inventory is absorbed, we will not see an over all bottom or stabilization of the overall condominium market in Panama City Beach. 

There is some good news.  Only a fraction of the 2757 developer units and 1616 active resales would need to be absorbed to conceivably facilitate a market bottom.   Once the inventory that needs to sell is absorbed the market should stabilize or bottom.  This is likely to be different for different condominiums and floor plans.  This is likely to happen over a period of time once we achieve this point.  There is a growing populous around the country and globe discovering Panama City Beach.  National articles are starting to focus on Panama City Beach again.  The developers auctions are bringing in buyers that would normally stay on the sidelines or are were not aware of the area.  This is helping in the absorption of the excess inventory. 

Buyers, there are some very attractive prices out there on some units.  Just make sure everything makes sense.  Don't think you are going to turn around and sell something you bought at auction or as a resale in the next 12 months.  It is very unlikely to happen.  Original preconstruction prices have nothing to do with a properties current value.  Having said that are some beautiful developer and resale units available at what can easily be seen as very attractive pricing.  There are also plenty that are clearly not.  Take your time and find something that you like and meets your needs.  The Panama City Beach area is coming along nicely and there are plenty more good things to come.

Here is the outstanding inventory of developer units according to Bay County Records:

Condominium                        Remaining Developer Units

Gulf front
Aqua                                                            61
Tidewater                                                  137
Shores of Panama                                     376
Palazzo                                                       67
Sterling Breeze                                           83
Ocean Reef                                              155
Grand Panama Beach Resort                   135
Tropic Winds                                            164 (still under construction)

Gulf Front Subtotal                               1178

Gulf View
Origin at Seahaven                                  153
Laketown Wharf                                      731

Gulf View Subtotal                                  884

Bay Front
Magnolia Bay                                            74
Marina Landing                                         54

Bay Front Subtotal                                128

Other Projects
Island Reserve                                       288
Cabana Cay                                           279

Other Project Subtotal                          567

Total                                                  2757

I made every effort to produce the most accurate information possible. No warranties, expressed or implied are provided for the data herein, its use or interpretation. The assessment information is from the last certified tax roll, unless otherwise indicated. All other data is subject to change.