The Panama City Beach condo market realized its first bulk condominium building purchase this month.  In our September 2008 Market Update we mentioned Sterling Breeze had eighty three remaining developer owned units.  Sterling Breeze quietly sold off developer units to individuals for roughly $260 per square foot. 

At the end of October 2008 Sterling Breeze had forty five remaining units.   Forty four of these were sold in a bulk purchase for roughly $199 per square foot.  This leaves one remaining developer owned unit.  For all intents and purposes, the development is closed out.  All future sales should be considered resales. 

The next question is, what will the new buyer do with the units?  Will they choose to sell them?  If so, when and at what rate?  Even with other new two-bedroom condos on the beach selling at $199 a square foot, Sterling Breeze realized a strong absorption rate at $260 a square foot to individuals without advertising or even publicly putting them on the market.  Sterling Breeze could easily hold values at or above $260 a square foot in a real estate market that is struggling. 

The challenge for Sterling Breeze condominium will be the original preconstruction contract holders that closed.  Sixty two people closed on there condominiums at original preconstruction prices of roughly $398 - 460 a square foot.  We are likely to see a percentage of these original buyers that will need to sell there units.  This could be in the form of a foreclosure, short sale, or motivated seller.  As long as the seller prices the units correctly, they should have an active absorption rate in the mid $200's per square foot.  If we see the next bank make a pricing mistake, followed by another, overall pricing could be affected. 

Regardless, Sterling Breeze is a clear example that a higher end product in Panama City Beach can bring a premium in this real estate market.