Update 6/12/21: We are now at prices where preconstruction number should have worked for developers. Calypso is selling condos above 475 per square foot. One of the remaining challenges for developers is financing construction. I will have a new article soon.
Original Article: Three years after my 2017 Preconstruction Condo Sales in Panama City article, not much has changed. We are still years away from new preconstruction condo projects breaking ground in Panama City Beach. Recent sales include a Calypso 2 bedroom + bunk floor plan for $477,000, and a Palazzo 2 bedroom + bunk floor plan for $465,000. It will be quite some time before we see enough buyers willing to pay $570,000 for the same floor plan in a preconstruction project. That is roughly the price point needed for preconstruction to be profitable. I believe resale pricing needs to increase at least another 20% before we see any measurable preconstruction reservation and contract demand. It is also important to understand Calypso and Palazzo are on the west side of Panama City Beach.
Looking at the entire sales history of Ocean Villa, I compared the two bedrooms there with four other buildings that were constructed by the same developer and had identical floor plans. The graphs show a comparison of recent sales, the entire history, sales volume, and annual percentage change. Condos on the west side of the beach tend to demand a slight premium to those located in central Panama City Beach.
Condo pricing is 1.9% lower for the year. Even with Covid, the condo market is holding its own. A decade of strict lending requirements created a market of financially sound owners. Panama City Beach will navigate 2020 with ease, but don’t expect average values to be significantly higher this year.
There have been many recent news stories about preconstruction condos in Panama City Beach. While the condo market has made a nice recovery, it is a little premature to forecast another preconstruction boom.
Shores of Panama’s December 2019 auction advertised 99 Luxury Condominiums being auctioned off on December 4, 2019; 20 selling absolute with no reserve. All 20 of the absolute units had final bids as shown below. As of 1/19/2020 only 16 of the 20 absolute condos have sold and 20 other bulk owner units have been recorded as sold in Bay County Records. So out of the 99 advertised condos, it looks like 36 have sold to date. We will follow up later and update this number.
Following an increase of 10% in 2018, we are already up by 6.9% in 2019. Compared to the same period last year, the sales volume is down by 21%, but still higher than we expected. Since 2011, we have been able to see a healthy balance with our sales volume performance. I am not seeing any signs of what would be considered as a ‘real’ pre-construction supply. As such, sales price increases and a steady volume all reflect the fact that Panama City Beach is continuing to improve, mature, and grow as a vacation destination.