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Written by Chris Arnold.

Panama City Beach Condo Market Overview - January 2025

Sales volume plummeted beginning in February 2024, leading to the onset of significant price drops by July. From the second to the fourth quarter, prices fell by 15%. The average yearly drop of 5% from 2023 to 2024 doesn't fully capture the depth of these price falls. Rental income decreased, while many associations saw a notable rise in condominium budget costs in 2024. In 2025 many associations are once again budgeted for higher overall expenses. Many buildings costs were partially offset in 2024 by a considerable reduction in insurance rates. Although insurance costs remain much higher than they were five years ago, they were lower than many associations had anticipated in their 2024 budgets.

Individual Floorplans are Telling Different Stories

Certain Condo Buildings Maintain Stability and Value

Some buildings and specific floor plans have maintained their value, showing resilience against market pressures. For example, Calypso's two bedroom plus bunk floor plan has consistently sold within the range of 705k to 810k, with the most recent sale of unit 2-204 at 745k. Sterling Beach Condominium's two-bedroom floor plan actually increased in price from 2023 to 2024.

Most Condominium Buildings and Floorplans are Blurring the Lines Between a Crash and Correction (15-25%)

The majority of buildings have not been as fortunate as Calypso and Sterling Beach, witnessing approximately 20% price drops this year. Ocean Reef Condominium’s two-bedroom floor plan serves as a prime example, with prices retreating back to levels seen in 2021, reflecting the broader trend of significant price reductions across many condominiums.

Condo Sales Volume

In 2024, condo sales totaled 430, marking the lowest sales volume in 20 years.  The market is facing obstacles like interest rates staying higher for longer, tighter lending standards, the rising costs associated with owning a condo, and a decline in rental income.  Despite these headwinds there is still a noticeable (though diminished) demand from buyers willing to purchase condominiums at sensible prices. The sales volume seen in 2024 might well establish the new norm for future years.

Factors Driving The Pricing of Panama City Beach Condos for Sale

Supply Dynamics

Panama City Beach Number of Listings 241228

The number of active listings can be deceptive. Typically, fewer than a third of the condos listed in any given building are priced at levels that attract buyers. There's no influx of new supply since developers are currently unable to construct new units, effectively freezing the market supply. A significant majority of existing condo owners are either not facing high interest rates or are mortgage-free. More than 75% of owners bought their condos prior to the 20% price surge in 2021. This year, I've only encountered one foreclosure and no short sales.

Condo Association Costs

Condo association dues continue to rise due to inflation. Although Master Insurance Policies saw a significant reduction in 2024, with another 10-15% decrease expected in 2025. Many buildings have seen a substantial increase in reserves thanks to the new Structural Integrity Reserve Study (SIRS). Additionally, Milestone Inspections for condominiums over 25 years old have led to special assessments in some cases. 

In-Depth Articles on This Topic

Strict Condo Lending Requirements

For years, increasingly stringent lending standards have narrowed the options for financing condo purchases. All signs indicate interest rates will remain higher for longer.  You can see more details here:  Condo Loans in Panama City Beach.

Advice for Prospective Buyers and Sellers

For Buyers

  • Choose the Right Building: It's astonishing how often buyers switch buildings shortly after purchase.
  • Assess the Condo Association's Health
    • Gain insight into why the association fees are set at their current rate.
  • Anticipate Special Assessments: Special Assessments Aren't Sudden.  Understand what major maintenance projects are coming up, such as exterior painting, elevator refurbishments, concrete repairs, and fire system updates.
  • Spot and Leverage Pricing Weaknesses: Understand any price vulnerabilities and capitalize on them.
  • Calculate the True CAP Rate for Each Floor Plan (if applicable): Don't rely solely on rental projections; determine the actual Capitalization Rate for each unit type.

Your buyer's agent should offer expert and precise advice on all these points. They should guide you to make the correct decision from the outset, making the process straightforward and stress-free.

In Panama City Beach, engaging a buyer's agent us unlikely to cost you a dime, as nearly every condo listing still provides a commission for the buyer's agent. This year, I've only come across one listing without this commission, which ultimately sold for well over 6% below market value. Feel free to reach out if you'd like to explore some past negotiation scenarios. In my most recent transaction (negotiating for the buyer), the negotiated sales price resulted in an agreement (at the sellers request) where the seller paid extra documentary stamp taxes to ensure the true sale price remained undisclosed to other owners in the building.

For Sellers

Partner with Knowledgeable Real Estate Professionals

The market for condos remains active. If your property is not selling, it might be time to delve into the reasons why. Properties that have been enhanced with thoughtful upgrades and decor often sell at a higher value. It's important to have a clear understanding of your property's real market value.

Diligently Evaluate Incoming Offers

Should your agent or broker lack expertise in evaluating incoming offers and vetting lenders, you may repeatedly encounter contracts falling through.

Questions?

Feel free to contact me.

Christopher Arnold

Broker

850-625-5113

Calypso Condominium, Panama City Beach real estate, Panama City Beach condos for sale, Ocean Villa, Real Estate Market Updates, Ocean Reef, Sterling Beach Condominium

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