Loan rates for condominiums edged up one-quarter of a point last week following an unexpectedly strong May jobs report that caused bond yields to go up. Rates were briefly at 4.5% on a five-year ARM before falling back to there normal range. I think interest rates will have to go higher before we see any effect on Panama City Beach's condominium market. You can get more detailed loan information in my condominium loans in Panama City Beach article.
Unsurprisingly, 2015 has been off to a slow start for selling condominiums. Today, sellers are demanding for higher sale prices on their condo listings. This in turn is resulting in few buyers who are willing to spend those prices. With no supply of distressed sales, this is the new real estate market in Panama City Beach. Foreclosures and short sales rarely happen anymore and when they do reach the market, these properties are sold at the retail price.
The average 2016 sales prices for most condominium floor plans are continuing to increase, though they are doing so at a much slower rate than in prior years. But not all condominiums have seen price increases this first quarter. Some condos are experiencing decreasing average sales prices and a few that have yet to see a sale this year.
Our sales volumes are also down 10% compared to the 2015 January through April time period. It is important to note the current pricing levels we are seeing in many buildings. If you look at many of the condominium preconstruction prices, deduct the 20% down payment, deduct closing costs and ignore all of the upkeep costs, this is roughly the same price at which the majority of condos are selling.
We're seeing an overall theme of gradually increasing prices with sales volume falling back from the past three years' sales levels. This happens in waves (different floor plans in different buildings). There have been steady price increases over the last three years, and a large part of our sales volume occurred in floor plans located in the newer and most popular buildings.
Condominium prices have increased 5.6 percent this year. That is down from the 6.1 percent we were up in the June Market Update. It is not that prices have fallen, but that the majority of condos selling are of floor plans that bring a lower per square foot price. For example: A 2-bedroom floor plan with both bedrooms off the water is going to sell for considerably less than a 2-bedroom with a master bedroom on the water.
After three consecutive years of price increases (2013 - 10.6%, 2014 10.4%, and 2015 7%), the fourth year failed to materialize. 2016 is a mixed year for condo sales prices in Panama City Beach. On average the sales prices are down 1.8% this year. Buildings and floor plans individually have been a mixed bag.