Sam Portmans from CondoSaleTrends.com regularly releases reports on the condo market and updates on what the buying, selling, pricing trends are.
I hadn’t seen one in a while, but he just sent me his annual report of 2007. I must warn you, it seems sort of doomy-gloomy, but the report is based on sales facts, not opinions. A friend of mine always says, “We are where we are”, and that couldn’t be more true in this case. It is no secret the real estate market is hurting right now. All of us in the real estate business are dreaming of days where we aren’t living paycheck to paycheck.
These are the facts, click the “more” link for the entire report.
Panama City Beach Condo Market 2007 from www.condosaletrends.com
Panama City Beach Condo Prices Decline in 2007
Panama City Beach condo sale prices declined 10-12 percent in 2007 after a 10-15 percent decline in 2006 (see chart below). New issues have entered the markets that will exert downward pressure on existing condo sale prices during 2008.
Many speculators purchased properties from mid 2004 to mid 2006 at prices that were as much as 40 percent above current market values. The majority of these properties have adjustable rate mortgages for 80 percent to 90 percent of the purchase price with the interest rates resetting during 2008. The current mortgage market makes it much more difficult for an owner to refinance into a 30 year conventional mortgage. It is reasonable to assume that there will be more foreclosures in 2008 than there were in 2007 which will contribute to declining condo sale prices.
Stricter qualifications for borrowers in obtaining mortgages for second homes will keep many willing buyers out of the market. Current national economic conditions appear to be trending downward which may influence buyers to put off purchases of second homes. These factors will have the effect of reducing the number of buyers willing and able to purchase condo properties.
There are owners in several of the newer beach-front buildings that closed in 2005 and 2006 who have a preconstruction purchase price that is still below current market values. Those owners who are contemplating selling may reduce their asking price in order to facilitate a quick sale before the market deteriorates further. This will have the effect of additional downward pressure on current prices.
There are several thousand units nearing completion or waiting to close along the beach that will add to the supply of units available for sale. It appears that the number of condo units available for sale will exceed the demand for purchases during 2008.
2007 Market Trend:
The following chart illustrates the Panama City Beach condo sale price trend from January 1, 2007 to January 1, 2008. The chart depicts 103 condo sales from nine buildings ranging from 912 square feet to 1,492 square feet with one, two, and three bedrooms. This cross section of Panama City Beach condo units were chosen because there was a sufficient number of sales of each type of unit to be statistically significant in the analysis. The sale price of each type of unit is only compared to the typical sale price of that particular type of unit as of January 1, 2007. In other words, a unit type with a January 1, 2007 market value of $400,000 is represented as 1 or 100%. A July, $380,000 sale of that type of unit is depicted as .95 or 95% of the January 1, 2007 sale price.
The chart indicates an overall 10% to 12% decline in Panama City Beach condo sale prices in 2007.
Resales by Month of Panama City Beach condo units within the condosaletrends.com database:
The following chart depicts the number of resales over the past four years of condo units within the 70 buildings in our Panama City Beach condo database.
The chart illustrates that the number of condo resales has remained mostly steady over the past two years. Based on current market factors, we anticipate fewer Panama City Beach condo resales for 2008 when compared to 2007 or 2006.
Expect More Price Declines for 2008
There are several factors that will put additional downward pressure on Panama City Beach condo prices during 2008 including the following:
1. Adjustable Rate Mortgages that are due to reset in 2008.
2. Difficulty in refinancing adjustable rate mortgages.
3. An increased number of foreclosures.
4. Stricter buyer financial qualifications in obtaining mortgages for new purchases.
5. A perception of a declining national economy may keep buyers away.
6. An oversupply of available units for sale.
7. Profit-taking by existing owners before further market deterioration.
It may take several years before the downward sale price momentum trends upward again. It is not unreasonable to assume an additional five to ten percent decline in Panama City Beach condo prices during 2008.
However, if you are anticipating holding your property for more than five years, now is a good time to buy. The opportunities are especially good for cash buyers that can close quickly.
Thanks Sam.Print Story