Expectations High for Summer Condo Sales Following a Strong Spring
By Marcia Bradford, Condo Owner Magazine, June 15, 2013
If there was any question whether the condo market would rebound along the coastal areas of Alabama and northwest Florida, the sales performance of the past few months has put it to rest. Bolstered by a strong performance this spring, real estate professionals throughout the region are reporting a very positive outlook for summer condo sales along the coast.
Carmela Bell, a broker at ResortQuest Real Estate in Destin, Fla., said that dollar volume of condo sales is up along most of the northwest Florida coast. As compared to last year at this time, Walton County is up 15 percent, Okaloosa County is up 13 percent and Santa Rosa County is up 42 percent. Only Bay County has had lower sales (13 percent) than last year.
Sales have also been good in coastal Alabama this spring, according to John Brett, a broker at Brett Robinson Development Company, Inc., in Orange Beach. “Coastal area condo sales are outpacing last year’s sales and the year-to-date gross sales volume for our office is up 47 percent over 2012 levels,” he reported.
At Century 21 Meyer Real Estate in Gulf Shores, Ala., Sales Manager Jeff McLaurin remarked that “there is no question that condo sales along the beach are performing much better this year than last year.”
At his office, the number of units that had closed year-to-date at the end of May was up by 21 percent over 2012. This followed a strong performance in April, when the rate of closings was up by 23 percent over the previous year. Since June was the company’s strongest month in 2012, McLaurin said they are expecting sales this June to be very strong.
In another measurement of condo sales activity, McLaurin said Century 21 Meyer Real Estate’s listings are up 60 percent from last year and offers on listings are up 42 percent. But even though more people are putting condos on the market, the inventory remains fairly tight, he added.
Bob Shallow, Realtor and owner of ReMax/Paradise in Orange Beach, also indicated that condo sales are on the upswing.
“Our new business is fantastic,” he said. “The number of sales is going up and the supply is low, which is gradually increasing demand. Prices are moving up, but not by a large amount. For example, units in Pelican Point were selling at about $325,000 last year, but one just sold one for $360,000. That’s a good bump.”
He added that appraisals for condos are still a bit low, largely due to the remaining foreclosures still on market.
The Sweet Spot
With few exceptions, the most popular condos are still those right on the Gulf of Mexico, Shallow said, and the hot price range is between $325,000 to $350,000. “Gulf front properties are very hot right now, because there is a low inventory. It will remain low at least until prices jump a bit and more people are enticed to sell their condos.”
To some extent, however, the popular price point depends on the size of the condo. Brett said the current “hot price range” for his company is $300,000 – $500,000, with the units that have three or more bedrooms selling at the higher end.
Bell, who placed the hot price range in the Destin area ranges from $250,00 to $350,000, said she has noticed a 4 percent increase in the average price per square foot as compared to 2012. Compared to 2011, the price has increased by 8 percent.
“The number of buyers is about the same as last year, but what is significant is the inventory of available units is 23 percent less than last year’s average and about half what it was three years ago in May,” she said.
Bell added that the fastest-selling condos are those priced comparably to units in the same building that have sold recently. “However,” she added, “since the inventory is declining and there are not as many short sales or foreclosures available, buyers are paying slightly higher than the most recent sale,” she said. “Lately, it’s not uncommon to have an appraisal come in $10,000 to $20,000 lower than the sales price. Just last week we had four condominiums close at a higher price than appraised value.”
In addition to pricing a unit within the market for the property, Brett advised that condos in good condition, with up-to-date décor, generally sell faster.
Still a Regional Draw
As has been the case for many years, most people buying condos along this stretch of the Gulf Coast are from the southeast.
Shallow pointed out that this area is a practical choice for those living within about a 400- to 500-mile radius of coastal Alabama. Recently, he said, Texas has been providing a huge source of condo buyers, while Louisiana residents continue to be a strong part of the market.
“Over half our buyers are from the top four states of Texas, Tennessee, Georgia, and Alabama,” Bell said. “Less than a handful this year are international buyers and those international buyers were mostly from Canada.
Regardless of where they are from, a majority of those seeking condos are cash buyers, she added.
Having just completed a solid spring, real estate professionals said they are very upbeat about the prospects for summer.
Bell said she expects this summer’s condo sales in northwest Florida to outpace last year, with a steady increase in the number of sales while the available inventory is decreasing. Brett had similar predictions for Orange Beach and Gulf Shores.
There are a number of factors driving condo sales this year, according to Shallow. “In addition to this being a beautiful area for vacations, we continue to have low interest rates available,” he said. “This area also has a great rental market, as demonstrated by the past two years, which were the best-ever for tourism. We expect this year to be even better because — barring any bad weather — we are on the path to a fabulous summer.”
McLaurin said there are a variety of reasons why condo sales are on the rise again, but attributed much of the increase to the fact that most people are feeling more confident about the economy and more comfortable about buying a second home or vacation property.
“We are seeing sellers pricing homes more realistically than in the past, but we are also seeing stabilization of the market, so sellers have more confidence these days that they will be able to get prices closer to those they want than was the case in recent years,” he said.