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’ve been in Panama City over the past 31 years, [I’ve] seen the highs and lows of our real estate market,” said Scott Ingraham of Scott Ingraham Real Estate Group in Panama City Beach. “[But] nothing could have prepared us for [market events of] 2004, 2005 and now 2006.”
While the market is now in a correction period, according to local real estate experts, who said they 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,” Ingraham said, adding that the “flipping” phenomenon of previous years “has gone the way of the buffalo.”
Ingraham said that 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.”
According to Realtors like Scott Ingraham of Scott Ingraham Real Estate Group in Panama City Beach, “Nothing could have prepared us for [the market events of] 2004, 2005, and now 2006.” To be sure, the dramatic increase in sales in recent history do not reflect the “normal” pattern of the last several years. Below is a graphic representation of data collected by Metro Market Trends Inc. in Pensacola. It should be noted that the 2006 numbers reflect only half a year. If sales remain consistent during the second half of 2006, the year will end up very close to 1997 and 2000 in terms of unit sales. In other words, it will be an average year for unit sales.
The benefit of this stall, the experts agree, is the advantage potential buyers now have to choose from an abundant inventory with more flexibility in pricing. “If you’re buying a condo for a long-term investment, it’s a great time to buy. If you’re looking to make a quick profit, though, stay out of the market,” Davis advised potential buyers.
“There is a positive energy in the market right now, and we are starting to see a lot of buyers come back,” said Mimi Bass of Real-Eventures Inc. in Destin. “The market was stalled because there were many buyers who invested in preconstruction. As these projects fell by the wayside, many of these buyers got their refunds and decided to purchase existing property. We agents have those people who always say, ‘Call me if you ever find a really good deal.’ Well, we’re calling them now,” she said adding that she is finding deals that potential buyers shouldn’t pass up.
“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,” Bass said. “Like the stock market, the time to buy is when everyone is selling,” said Dave Otten, who owns a unit at Sunrise Beach in Panama City Beach and has a contract on a unit at Grand Panama Beach Resort. “Property values seem to have fallen anywhere from 10 to 20 percent depending upon the location and amenity level of the specific condominium complex. [But], we do not plan to sell any of our units at this time, [because] Panama City Beach is in the midst of reforming itself into a great vacation destination,” he said, adding that projects like the Grand Panama Beach Resort and The Towne of Seahaven are “evidence of the Renaissance Panama City Beach is experiencing.” Otten added that he would buy another unit despite his belief that the Florida Panhandle has been flooded with projects under construction.
“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. Our condo association at Sunrise Beach is doing just fine. We can create demand for our facilities by continuing to offer our owners and our rental guests a first-class facility with top-shelf services,” Otten said.
“Buyers can once again get excited about purchasing their Florida dream,” Ingraham said. “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,” Bass said. “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 shortterm 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.”
If there is urgency to sell, however, some agents, like Davis, have added a little incentive to make their listings stand above the competition. “One of my sellers came up with the idea of giving away a PT Cruiser with the sale of his condo this summer,” Davis said. “I had to agree that it was a great idea. With so many units on the market, this extra perk would at least get the property shown,” Davis said, adding that while the condo is not yet sold, the car has definitely attracted interested buyers.
The experts agreed that recent activity is not just indicative of a coast phenomenon but rather is part of a national trend. “It’s all about consumer confidence,” Bass said. “People across the nation are protecting their assets more. It’s not just the storms; we’re a country at war, and that makes people unsure about everything, not just real estate.”
According to a second quarter report released by the National Association of Realtors (NAR), existing condo and cooperative housing sales were down 10.5 percent at 818,000 units in July, from 914,000 units in July 2005. NAR President Thomas M. Stevens said in a realtor.org article that inventory increases are “more pronounced” in the condo sector. “Buyers generally have more choices in the condo market, so prices in many areas are fairly flat,” he said. “Speculators have left the market, meaning most buyers in the market today—both single-family and condo—are serious buyers who plan to stay in their homes as a long-term investment.”
“My observations are that the Federal Reserve raised interest rates 15 consecutive times; they went too far,” Otten said, adding that the result was too many people coming in and driving up the speculative market. “Many leveraged condo flips [then] realized that they had overextended themselves and [could] not afford to go to final contract on several units they purchased…[resulting in] the current market quagmire we find ourselves in,” he said.
“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,” Ingraham said.
“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,” Otten said. “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.”
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