Changes are coming to our real estate market and what they mean to you is simple.  But before we look at what to expect let’s first talk about some basics of investing and real estate.

1. You should never buy or sell based on the economic conditions but rather based on your own timing. This can be answered with a couple simple questions:  Does buying or selling now achieve my financial goals?  If yes, sell.  If no, don’t sell.

2. Markets go up and markets go down but over time they always end up higher.

3. Therefore, you should only buy or sell based on your own timing and your own financial goals for buying or selling. If you sell at a loss, it’s a timing issue not a price issue.

4. Always, make sure you have the liquidity needed to carry an investment property through a down period because you don’t want to have to sell an asset in a declining market. And that hurts.

To demonstrate the impact of time on real estate values I pulled a graph showing the Average Sales Price of Houses Sold in the United States going back to the early 1960’s.  As you can see… over time… prices have been on a continual increase.  Granted there has been more volatility since the Great Recession in 2006 but even then, if you bought high in 2006 – 2007 and held the property you would have made it back into the black six years later in 2013 and it would be all good news from there.  Same can be said for if you bought at the peak in 2014 and 2018 – just hold a few years and you will be fine.

It’s liquidity that gets folks into trouble.  They buy or sell based on ego, a hunch, because “everyone” is buying or selling… whatever the case is if you are not financially prepared to carry a property through the next down market (and it’s coming) you will get stuck having to sell in a down cycle.  And again, that hurts. We will talk about how to deal with this later in this post.

If you’re a buyer, be careful here as well.  Why?  Here’s why.  If mortgage rates are increasing and you wait to capture a lower price but end up paying a higher rate for your money you can forfeit your savings on the buy price fast, giving it – and more- back to the bank in the form of a higher mortgage rate.

That’s great – Where is the headed in the short term?

Clearly if you have the time – time will be your friend. But what if you don’t have the time?  What if you don’t want to carry a property through a correction?  What’s going on in the market right now?  Well, here’s what we are watching:

Home Prices: One popular gauge of home prices known as the Case-Shiller index showed home prices posting their biggest ever year-on-year gain in March when they rose 20.6%.

Mortgage Rates:  Thirty-year rates tipped above 5% in April for the first time in a decade. And between June 9 and June 16 alone, they rose by 55 basis points (0.55%) — the largest one-week increase since 1987.

Inflation: According to the Bureau of Labor Statistics the energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005. The food index increased 10.1 percent for the 12-months ending May, the first increase of 10.0 percent or more since the period ending March 1981. Prices for food at home rose 11.9 percent over the last 12 months, the largest 12-month increase since the period ending April 1979. Prices for food away from home rose 7.4 percent over the last year, the largest 12-month change since the period ending November 1981. Energy prices rose 34.6 percent over the past 12 months. Gasoline prices increased 48.7 percent over the span. Electricity prices rose 12.0 percent, the largest 12-month increase since the period ending August 2006. Prices for natural gas increased 30.2 percent over the last 12 months, the largest such increase since the period ending July 2008. Shelter prices rose 5.5 percent over the last year, the largest 12-month increase since the period ending February 1991. Prices for household furnishings and operations increased 8.9 percent over the last 12 months. Prices for new vehicles rose 12.6 percent and prices for used cars and trucks increased 16.1 percent over the year, while prices for airline fares rose 37.8 percent.


Affordability is a problem

Axios is reporting surging home prices and mortgage rates have cut housing affordability by 29% over the last year, as measured by the National Association of Realtors. It’s the sharpest year-over-year decline in affordability on record. Housing market research firm Black Knight recently published that the monthly principal and interest payment on an average-priced home, by a buyer who puts 20% down, has gone up by roughly $600 —44% — since the start of the year.  That’s on top of gas, food, heat, and cooling… on and on.

Bank of America analysts wrote in a research note given 2022’s affordability collapse, these [home price appreciation] levels likely are at or near the peaks for this cycle. Key question is how much and how quickly they will decline?”

Let’s look at our local market – Data Tells a Story

To give you a feel of what is happening in our local real estate market we are tracking a few bellwether stats: Here’s what the data is telling us about the trends for the following real estate classes here at the beach:

Destin Condos

It looks like the inventory (supply) is growing and that along with high prices and high cost of money appears to be having an impact on the Pending Sales (under contract but not yet closed).  The likely result will be be a slow down in number of condos sold and negative pressure on sales prices going forward.

Destin Homes

Like with Destin condos it looks like the inventory (supply) is growing and that along with high prices and high cost of money appears to be having an impact on the Pending Sales (under contract but not yet closed).  The likely result will be be a slow down in number of homes sold and negative pressure on sales prices going forward.  Looking at the graphs – it appears that is what is playing out.

30A Condos 

Looking at the Condo data on 30a you will see that inventory (supply) is up since January but it’s been trending down over the last 3 months.  Pending sales are up and down.  This makes it hard to get a read on what to expect going forward.  We do get some information from the fact that the number of condos sold dropped dramatically in May while the median sales prices are pretty flat.

30A Homes

Okay, the number of new listings (supply) is growing and basic economic education tells us that as supply grows it get more difficult to capture high prices – especially if costs of money is increasing at the same time.  This shows up in the number of pending sales and the fact that the overall number of homes sold is flat to down.  Prices are still high but be careful here because prices are a lagging indicator and will likely start dropping off.

PCB Condos

It’s hard to get a good feel for Panama City Beach condos because inventory (supply) has been growing through March but has dropped in April and May – contrary to other classes.  The number of pending sales though is been pretty flat and even falling which shows up in the number of sales per month – flat to down.  Looking at sales prices they appear to be holding. Looking at the results so far this year I would say that prices are going to be firm at least through this summer.  

PCB Homes

Like the Panama City Beach condos the number of homes listed for sale was jumping but looks to have stalled out in May.  How this impacts sales going into the summer remains to be seen.  Pending sales is up and down so it’s hard to get any kind of direction here and both the number of homes sold and the prices of those sales appear to be trending up going into the heavy summer selling season.  My guess is because the average cost for a home in South Walton County is so high that the Bay Country homes here in West Panama City Beach look very attractive.  Look for that to continue. 

What’s Going On?

There is massive pressure on politicians right now to get inflation under control. Why? Well, inflation disproportionately impacts folks who make less money – the weight of the high cost of gas and food on an hourly employee is dramatically heavier than someone who earns several hundred thousand dollars a year.  It’s this dichotomy of haves and have nots that causes all kinds of problems: crime, social upheaval and worse – voters jumping to the other party.  One of the ways politicians address inflation is by increasing the cost of money (interest rates) so that not as many people borrow money to buy goods and services. In other words – they force the demand for goods and services go down and as we know from basic economic teaching – when demand goes down, prices tend to follow. In sum: the government is putting pressure on the Fed to increase “cost of money” to bring prices down.  

No good deed goes unpunished.

The problem with lowering the cost of goods and services is that is almost always leads to recession.  During recessions companies start losing money or not making as much which causes them to react by cutting costs including their work force. This causes employment numbers to escalate which is an equally big problem for politicians.  

So What’s Going To Happen?

Who knows, but the likely scenario is that we will continue to see increasing mortgage rates for a while (price appreciation is still way ahead of inflation numbers) with rates possibly exceeding 8% before it’s done.  The likely situation is that this inflationary period will give way to a recessionary period and cause the Fed to reverse it’s policy and start loosening up the money supply again so people start buying stuff and businesses start hiring people again. It’s a very delicate balancing act for sure and one that almost surely coincides with the next presidential election.  Note: I am not an economist – just a Realtor that pays attention – please do not consider this as investment advice.  

What Should You Do?

If you are an investor here at the beach and are considering selling – you need to be careful. The market has been going up each year since 2009 which means most Realtors have never seen a declining market and with hundreds of thousands of dollars – even millions of dollars – at risk… do you really want to trust your wealth to a Realtor that has never seen a market with eroding equity?

Who you have as your Realtor… matters.  I was there in 2004, 05, and 06, when the market corrected, and prices were dropping by the day.  We saw how buyers would walk away from earnest money deposits because they could buy a better property at an even lower price somewhere else.  We successfully navigated those waters and were able to save or make our clients a ton of money.

Whether you are buyer or seller a property here at the beach we want you to max out your position based on your financial goals and the current market conditions so with this in mind and based on years of experience our advice breaks down as follows:

Short Term Owner (Five years or less): If you plan on owning your property for five years or less, we recommend that you list and sell it now.  This allows you to lock in a really high sales price and mitigate all risk of price of price drops, tax code changes, and any other scenario that would have a negative impact on your profits.  Remember, you can’t go broke taking profits.

Long Term Owner (Longer than five years): If you plan on owning the property longer that five years, we recommend that you simply sit back and enjoy the ride.  This is because you have time to ride out the crazy ups and downs so they should not have much impact on you. We do suggest though that you look at your rental income and make sure you’re maxing that out.  If you would like to get a FREE, No Obligation rental projection for your property we recommend you contact Beach Stays Vacations (

Multiple Property Owner:  If you own multiple properties, we suggest that you sell and take one or more off the table and protect the equity you’ve built up. Keep your best properties and consider adding new ones when prices drop.

Long Term Buyer (Going to own five years or longer): If you plan on buying a property that you will own for five years or longer, we recommend that you buy now… and hold it – longer the better.  This will allow you to lock in s historically low interest rate and take advantage of high rental incomes. In addition, if you hold the property over time prices will go back up.  If you do buy, we suggest that you max out your rental income.  If you would like to get a FREE, No Obligation rental projection for your property we recommend you contact Beach Stays Vacations (

Short Term Buyer (Going to buy and flip): If you plan is to buy and flip the property, we simply say – be careful.  Operating on a short time frame escalates the risk of missing the market – for sure, but we do have people who are doing this and making big money.

Bottom Line

We are wealth builders, so our goal (whether you are buying or selling) is to build or protect your wealth – based on your financial goals and the current market conditions. Call us today and lets talk about how you can max out your position as a buyer, a seller or as an owner to continue building your family’s wealth well into the future.

Committed to your success,

John Moran – CEO The Smart Beach Investor | Keller Williams Realty AT THE BEACH TEAM 

Keller Williams Realty – For Your Place at the Beach

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