Real Estate Information Archive

The Cat’s Out of The Bag
Panama City Beach is the Place to be

Panama City Beach’s present and future is brighter than its distinct white sand.

We who live here have known this for a long time, but the word is just getting out beyond the Emerald Coast. In a recent survey by SmartMoney, PCB was selected the No. 1 destination to buy a second home. America Online featured the list on its website.

This is a well-deserved honor because, as the article stated, “there is something for everyone.” There are beaches, several championship golf courses, an active nightlife, shopping, a range of luxurious beachfront properties, and much more.

PCB is priming for growth. A new international airport, scheduled to open next year, will bring a fleet of low-cost carriers and nonstop flights to the panhandle. According to the SmartMoney article, a flight from New York currently includes at least one connection with a travel time anywhere between 4.5 to 13 hours. Anil Pereira, CEO of SecondSpace.com, said the new airport this should boost tourism and property values because people would be able to fly in for the weekend.

Once grounded, tourists can already experience improved navigation. The new Hathaway Bridge, which opened in 2004 and links PCB to Panama City proper, features two bridges – one for each traffic direction. Each provided four lanes and a sidewalk. The former bridge, a single structure, had half the number of lanes and no sidewalk.

We have another advantage that few in Florida can claim. Our Deerpoint Lake freshwater source supplies more than 760 million gallons of water daily to Panama City and the surrounding area. This amount could accommodate many more people than could ever cram our beaches. The lake also has a public boat launch and provides some of the best fishing in north Florida.

With all these elements in place, expect more PCB recognitions in the future. Perhaps it’s fitting that we are getting a new airport. The area’s popularity is taking off, and it should be a fun ride.

For the past three years, patience for homebuyers has been a virtue.

Since the market peaked in July 2005, sales and prices have dropped steadily. As a result, buyers could afford to be choosy because there might be a better deal across the street.
Now it appears this trend is shifting towards a much better one that sends a message to potential buyers that procrastination is no longer an asset.

Florida’s biggest landowner, the St. Joe Co., believes the housing market may have reached the bottom. St. Joe chief executive officer Peter Rummell points to stabilization in the residential inventory as a positive sign, adding that buyers must be "retrained" to recognize the importance of buying a home now.

A Wall Street Journal article printed last week backs up Rummell’s claim. The article states that April 2008 likely marked the bottom of the U.S. housing market. It also notes that inventories are now declining because construction activity has been falling for such a long time that home completions are now just about falling short new home sales.

In Bay County, we have seen our condominium inventory drop from approximately 2,200 to 1,782 units, per our local Multiple Listing Service (MLS). Homes have fallen from approximately 2,200 to 2,028, a decrease of 172 homes. Townhomes also have shown a modest drop.

According to the Wall Street Journal, when inventories reach five months of supply sometime in 2009, home prices should stop falling.

Rising home sales are expected sooner. According to the NAR (National Association of Realtors), sales should turn around nationally by summer. Lawrence Yun, NAR chief economist, believes the extent of an expected recovery hinges on better access to affordable loans. NAR President Richard F. Gaylord said there is some discussion toward relaxing some of the burdensome lending practices. That would help buyers who are often slow in signing contracts because they can't secure credit with reasonable requirements.

If that occurs, combine it with the fact that cash buyers in the marketplace have rose from three to 24 percent – thus the best properties being taken off the market at a rapid rate – it’s clear that fence sitters need to move. The time for the best selection is now and, apparently, will not last long.

Prospective investors in Florida foreclosures need more than a buy low, sell high philosophy. They have to buy fast, too.

A local banker told me cash buyers in the marketplace have rose from three to 24 percent. Cash buyers have a distinct advantage because some homes need to sell before a foreclosure sale appears. This means that more savvy investors with cash are here already picking up the best properties, the cream of the crop. By the time everyone else figures out that this is the time to buy, the best properties will be gone.

A few years ago, even a few months ago, this was less of an issue. In addition to a smaller proportion of cash buyers, supply skyrocketed. In September 2006, Florida had the country’s highest foreclosure activity - more than four times higher than the national average – and accounted for 27 percent of the nation’s total.

By the start of July 2007, the Sunshine State had fallen to number two behind California but its foreclosure listing filing rate still grew 23 percent from earlier in the year. In February of this year, filings increased from January while it dipped four percent nationwide.

According to the latest research report from RealtyTrac Inc., however, the tide is changing. The number of Florida homes in some stage of foreclosure dropped seven percent from February to March as the national amount rose five percent.

Judging when the market will rebound for sure and property values will once again begin to climb is difficult. We probably have not hit bottom yet, despite the most recent swerve, but the surge in cash buyers is already a factor. If the savvy buyers are here with their cash, we should all pay attention!

For anyone looking to get in at a very low cost, and set themselves up for either reselling properties or renting them out for a substantial profit, the time to buy is now.

Weather forecasters are not the only ones paid when they make mistakes. Insurance companies profit pretty well, too.

And the Florida real estate industry is paying the price.

It’s been two years since a hurricane struck The Sunshine State, but residents continue to face rising insurance rates or dropped coverage. According to the Insurance Information Institute, rates are likely to rise between 20 and 100 percent over the next year for the 43 percent of the U.S. population living in coastal areas stretching from southern Texas to the northern tip of Maine. In addition, the Institute singles-out Florida as a possibility for even higher increases.

While current commercial and residential borrowers struggle to pay the premiums and prospective ones become hesitant to buy because of it – thus slowing the real estate sales market – insurance companies are laughing all the way to the bank. According to a St. Petersburg Times article last week, the property and casualty industry in America made almost $60-billion in 2006.

Eight hurricanes and three tropical storms either struck or brushed Florida between 2004 and 2005. Before, the average cost of homeowners insurance in Florida was $930. After, the cost had nearly doubled to about $1,600. For those living on or near the coast, such as Panama City residents, the cost of insuring a condominium or a house is closer to $3,000. Combine that with the fact that the last two hurricane seasons have been quiet and it’s clear why insurance companies are doing well.

Since the real estate industry took a hit from the active hurricane seasons, it should also benefit from the slow ones. The finger pointing for why this hasn’t happened goes to hurricane forecasters. These forecasters are trying to justify their grants and jobs by coming up with more reasons why they cannot be relied upon, but still should be considered an authority.

Dr. William Gray, a University of Colorado professor, has been prognosticating hurricane seasons since 1984. In April 2005, he and research associate Philip J. Klotzbach predicted that seven hurricanes would emerge that season (15 eventually did). The next year, they projected 17 named storms and nine hurricanes (there were actually 10 named storms and five hurricanes).

Gray and Klotzbach’s report released last week has a similar prediction for 2008: 15 named storms and eight hurricanes. This year’s forecast does include something new, however – a disclaimer. It reads: "Everyone should realize that it is impossible to precisely predict this season's hurricane activity in April.”

That hasn’t stopped some insurance companies from taking it as gospel and crying global warming – thought by many professionals to result in more hurricanes. Insurance companies are now using global warming as an excuse to raise rates and even dump clients, according to an article published last August on Scientific American.com. Florida Consumer Action Network Executive Director Bill Newton backed up the claim.

After living in Panama County for 37 years, I have concluded that I may have to be here hundreds of years, maybe thousands, to truly understand climate and weather patterns. One thing I do understand, however, is the only constant right now are raising insurance rates. That needs to change. Florida’s real estate future depends on it.