Posted by: chris
on Dec 14, 2008
The Origin Condominium Auction results were interesting. The same auction group hosting the Ocean Reef, Palazzo and Marina Landing auctions presided over the Origin auction. While the auction format surprises many people, once again they delivered a strong number of contracts in a matter of hours.
Origin at Seahaven is not the easiest property to accurately report auction pricing on. This condominium contains many unique qualities that set it apart from some other condominiums on the beach. Having said that, Origin at Seahaven is a gulf view and not a gulf front condominium. It sits on the north side of Front Beach Road. The four separate floor plan orientations (north, south, east, and west) add to the complexity when comparing this condominiums to others on the beach.
Part of the condominiums appeal is that it is part of the Town of Seahaven. From day one it was marketed as the first phase in this development. The first 30 minutes of the auction was spent explaining the concept, management, and history behind Origin and the Town of Seahaven. They also noted how we should look at the new condominium tower under construction (referring to Emerald Beach Resort tower II) as a clear indication that Panama City Beach is moving ahead with new preconstruction projects. What they failed to mention is that Emerald Beach Resort Tower II is being constructed for Wyndham as a Fractional Ownership Tower. Because of the land, construction cost, and market conditions, it will be very challenging for any new preconstruction projects to break ground in the years to come. It could be quite some time before pricing can recover to a level that will allow developers to start new preconstruction projects in Panama City Beach. The last time I checked, you would have to charge between 400-450 a square foot to move forward with a profitable resort style preconstruction project in this area.
Posted by: chris
on Dec 11, 2008
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.
Posted by: chris
on Dec 03, 2008
Real estate condominium re-sales in Panama City Beach were flat in November when compared to November of 2007. Thirty-one resale condominiums sold in November 2008, when compared to the thirty-four (non preconstruction) sales the prior year. Twenty-two additional condos sold in 2007 that were sold as a result of preconstruction closings at Tidewater. The key to this market over the months to come is foreclosures, foreclosures, foreclosures. Many buyers in 2005 and 2006 are not capable of maintaining their monthly expenses for their properties. We are now seeing the result of this thru a significant increase in short sales and foreclosures. This is the leading cause of price drops in resale condominiums across Panama City Beach. Despite these price drops, we are not seeing an increase in the absorption rate. Even developers are not immune to this. Some condominium projects with excess inventory refused to lower pricing. As we start to see distressed sales from some of their original preconstruction buyers, pricing is falling to equal other comparable distressed sales in Panama City Beach.
In the September 2008 Market Update, we broke down the outstanding developer inventory that is sitting on the sidelines. Some of the developers have started releasing this inventory to the public thru different venues. Several condominiums like Marina Landing, Palazzo, Ocean Reef, and now Origin at Seahaven used one specific auction company to assist them with sales. While it can be interesting to see what actually passes for an absolute auction these days, I don't think anyone can argue that they are moving inventory. Sterling Breeze Tidewater, and now Shores of Panama have quietly offered special developer pricing on remaining units. Sterling Breeze has closed thirty-four condominiums to individuals, since the announcement at the new developer pricing. Tidewater's offering contains prices that are very close to current resale asking prices. The Ocean Reef Auction, in October, put close to fifty condos under contract. We are likely to see more offerings in the not too distant future.
I have talked to many of the buyers at the auctions and developer offerings. Many are very happy with what they purchased. Some seemed a bit surprised when they realized the condo and floor plan they purchased would not be selling at twice the price any time in the near future. Absorbing the excess inventory will be a prerequisite to a market recovery. I'm not saying that we haven't seen some price increases over auction prices. A good example is the west end units at Palazzo Condominium. There were more buyers than available units for this floor plan. We have already experienced a resale last month at $569,000. That is not bad considering four people purchased at $467,000 (including sales commissions) at the Palazzo auction. Palazzo condominium took advantage of their end units by designing open floor plans and glass that runs the length of the living area. I still know of a hand full of buyers actively looking for a west end unit. While we can see some immediate price jumps after the auctions, they are likely to be the exception and not the rule. What does this mean for all of the other buyers? Nothing! All of the buyers I work with have a clear understanding that they are buying the condominiums that meet their wants and needs. They also understand that if you are buying for an investment, you should be looking years out concerning resale, not months. You are unlikely to see significantly higher sales in the months to follow. What you are more likely to see in some condominiums is the supply to diminish. If the condominium and floor plan you purchased is no longer available at that price point, then eventually you will see higher prices. If you are looking for a west end Palazzo unit anywhere near $467,000 or an Ocean Reef west end unit on a low floor in the mid 300's, you are probably out of luck. That particular inventory is gone. We will need to go through this for each condominium and floor plan before we start to see a real estate market recovery in the Panama City Beach condominium market.
Too many of us are ignoring the resale units and some of the good opportunities that exist there. Panama City Beach has a variety of condominiums. Different condominiums have diverse locations and amenities. Just because a condominium schedules an auction, does it necessarily meet your wants and needs? Sometimes you can find better pricing at a different condominium that has more of what you are looking for. The reverse can just as easily be true. The Ocean Reef Auction sold condos for roughly 30% less than similar condominiums elsewhere on the beach. Buying a condominium should be more about your needs than the medium used to buy it.
