Because I continually am asked similar questions about the current state of the market, I thought it makes sense to share some opinions with you regarding the real estate market in this area.
The market still has a long way to go down?
Some areas do and some areas are actually appreciating. It all depends on whether the market has embraced a building or subdivisions pricing structure. I know of several condo buildings and residential developments that have had more sales in 2008 than in 2006 and 2007 combined. The pricing is lower than in those two years, but units are moving and every time one sells a new “higher low” is established. Adagio, a Gulf front development located in Blue Mountain Beach is a great example of this trend. SeaCrest Beach, WaterColor, and WaterSound are examples of subdivisions where the market has responded well to current pricing. Most of these developments have corrected
between 30% and 50% from the peak market pricing.
Foreclosures and short sales represent the best deals?
Most of the properties in this category are the result of people who bought in an 18 month time frame at the absolute peak of the market and are far upside down relative to mortgage balance vs. property value. There are some diamonds in the rough. The process is long and tedious–banks have no sense of urgency, and properties are sold “as is” so what you see is not necessarily what you get. No repairs are usually offered and no warranties apply. The true best deals are from people who bought prior to 2004 and didn’t use their property as a piggy bank to enhance their life style. These people are realistic with the market and will still walk away from a closing with a check in their hands.
Why is buying real estate a good investment?
Real estate was never intended for a short term investment, just like stocks or any other long term holding. Every investment has a cycle which typically lasts about seven years. What happened in 2004 to 2006 was no different than what happened with the Dot com frenzy in the 90s. Prices were driven up by speculation and there was no value associated with the appreciation. I remember stocks that traded at very high P/E ratios and had negative earnings! Our real estate market was no different. We peaked at the end of 2005 and 2006 and now have gone through a correction phase. Well priced properties are selling as the long term potential is significant. One has to remember we are dealing with Florida resort coastal real estate–not a
primary residential product in a market like Detroit. There will always be buyers for second homes in a resort area. People do not want to eliminate vacations and quality of life components for which they work very hard to accomplish.
The New Panama City Airport:
Slated for completion in 2010, this airport will provide direct flights to the Mid-Atlantic and Northeast markets. This is where the majority of the U.S. population lives and has above average demographics. If you compare the current real estate pricing in this area vs. that of comparable markets in south Florida, Naples, Jupiter, West Palm Beach, Marco Island, Sanibel, etc., this area is significantly less expensive for similar products. As soon as people in the above markets can have direct access to this area and discover how much nicer the beaches, water, amenities, and people are, the next significant appreciation phase should occur. Smart Money just named the Panama City beach area as the number one place to buy a second home due to some of these factors.
The profile of today’s buyer:
Today’s buyer is one who has done extensive research and by no means overextends themselves with this purchase. They make their decisions based on financials, extensive data and research, and as to how the property best addresses their needs. They realize that there are current opportunities in today’s market and whether the pricing goes down another 5% is of little concern as their holding timeframe is long term. They are end users that will actually enjoy the property, afford the property, and possibly rent it out to offset some expenses, but are not dependent on rental income to cover costs. More people today are paying cash than ever before, and real estate provides diversification in their overall investment portfolio. As one of my
clients put it simply, “At least I can use my property if it depreciates. To date, I haven’t established any long term memories with my stock shares.”
How can I help?
If you are considering real estate in this area, I will provide you with all the data that is necessary to see if this is something that makes sense for you at this time. I will take the time to fully understand your objectives and to see if we can accomplish them together. I don’t subscribe to any hard sales tactics and have pretty much been involved as an owner with any aspect of a real estate transaction that is possible. My direct success depends on building relationships with success people like yourself, who one day may
purchase real estate in this area. My goal is to provide you with every tool that is needed to accomplish this objective.
John Holahan, REALTOR
john@eimersgroup.com
850-837-8880 Office | 850-582-2893 Cell
