“It ain’t what you don’t know that gets you into trouble.

It’s what you know for sure that just ain’t so.”   

Mark Twain

This quote has been bouncing around my brain for a few months now as I try to get handle on what owners, buyers, and sellers of real estate here at the beach should expect in the coming months and years. Our mantra is that we are wealth builders, that we are here to help you max out your position as a holder, buyer or seller. Whether you’re a long-term holder with no intentions to sell, a first-time buyer just putting a toe into the market, a professional investor looking to add a property to your portfolio, or you’re a seller looking to cash out leveraging the current market conditions to capture a high sales price, it does not matter to us – our job is to help you max out whatever it is you are doing.

One of the ways we do that is by watching the market and providing guidance on where values may be headed such that you can make better buy, hold, or sell decisions.  It is at this intersection where I find myself thinking about Mr. Twain’s quote.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

You see I was here selling investment houses and condos in 2004 and 2005 when prices were jumping up by the day, when as quickly as we listed a property we would have offers with escalation clauses attached rolling across the fax machine as Buyer’s agents waited on the phone to make sure we got their offer before someone else grabbed it.

I remember when buyers waived their right to inspections, appraisals, and everything else. When sellers were disappointed instead of happy that a deal closed. Why the disappointment? Because even though the deal they accepted was the highest sales price ever for that floor plan… by the time it closed… they felt like they were, “giving it away!”  Strange times indeed. While today’s market isn’t that hot, I am starting to see a lot similarities.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Back then I remember folks talking about how the market couldn’t keep going like this… and then it did… for months.  Every month that delivered further escalating prices people started to doubt themselves until they eventually convinced themselves that the old investing axiom – trees don’t grow to the sky – doesn’t pertain to this market. Every time there was a new record sales price folks would say things like… maybe this time it is different, and prices will continue to go up.

Eventually it got to the point where a lot of really smart people – locally, regionally, and nationally – were going on TV, radio and in the newspapers to talk about how this time the market is different, there is still a ton of room for price appreciation, that all is good in the real estate space and… and… and… they gave really good explanations why it was, complete with diagrams, graphs, and empirical data.

And then… it wasn’t.

The four most dangerous words in investing are: This time it’s different.”  John Templeton

Generally speaking, all real estate markets cycle through these four distinct stages:

  • Recovery: (growing optimism – you can almost feel it)
    • Rents and sales prices stop dropping and start to flatten out maybe even increase some.
    • Lending policy starts to loosen… not a lot yet, but some.
    • Demand ticks up… again, not a lot, but some.
    • Folks that were hanging on start selling.
  • Expansion (confidence shows up)
    • The economy starts to kick in – folks have money again.
    • Rent and Home Prices start to tick up.
    • Lending continues to get easier.
  • Hyper Supply: (frenzy)
    • Multiple Offers.
    • Buyers waiving all protections.
    • Banks happy to lend.
    • Prices jumping by the day.
  • Recession (Too much supply)
    • Inventory of property for sale skyrockets.
    • Rents and Prices drop – slow at first and then fast.
    • Foreclosure and short sales – A few then they’re everywhere.
    • Days on market climb – listing expire because there are no buyers.

Take a look at the graphs below – they show the Median Condo Sales Price each year going back to 1994 for the Destin Area and 1997 for the Panama City Beach Area.


Look at the years 1994 – 1996 and 2011 – 2012 on the Emerald Coast Condo Prices graph and 1997 and 2009 – 2012 on Panama City Beach graph, can you see these years as a Recovery Phase? Prices bottoming out and perhaps even bumping up a little?

How about 1996 – 2002 on the Emerald Coast graph and 1998 – 2002 on the Panama City Beach graph, can you see an Expansion Phase? Prices picking up, probably because the economy is starting to kick in, lenders loosening their grip a little, and demand was starting to get some traction.

Now look at 2003 – 2005 on the Emerald Coast graph and 2004 – 2005 on the Panama City Beach graph, can you see the Hyper Phase? Prices jumping way up probably with multiple offers, crazy demand, banks were happy to lend.

Finally, look at 2006 – 2011 on the Emerald Coast graph and 2006 – 2011 on the Panama City Beach graph, can you see the Recession Phase? Prices for rent and sale falling, foreclosures and short sales dominating, tough times to be a seller.

If you own a condo here on the Emerald Coast or in Panama City Beach – look at the graphs – where is our real estate market is at – now? More importantly, where does it appear to be headed?  And remember John Templeton’s words, “The four most dangerous words in investing are: This time it’s different.”


Let’s take a quick look at the Median Sales Prices for Homes over the years. 

Note: home values on the Emerald Coast graph are a little less volatile because there are more people living in them as primary residences as opposed to owning them as riskier “investment properties”.  Panama City Beach, while having some primary residences is still heavily populated with “investment properties”.

“Don’t wait to buy real estate. Buy real estate and then wait.” T. Harv Eker

Again, if you own a house here on the Emerald Coast or in Panama City Beach – look at the graphs – where is our real estate market is at – now? More importantly, where does it appear to be headed?  And remember John Templeton’s words, “The four most dangerous words in investing are: This time it’s different.”

Real Estate Cycles

To understand the cycles better let’s take a quick look at why markets change in the first place and see if we can use this information to help us anticipate future changes. In my opinion there are really on three primary factors that cause markets to cycle, and they are:

Affordability Goes Away.  This is simply when prices get too high and the result is that most buyers can no longer afford to pay the high prices sellers are asking – even if they want to. Right now, buyers have had the benefit of cheap money (mortgage rates are still at or near historic lows) which allows them to be able to afford to pay higher purchase prices then in previous years and that is great for the buyers and sellers who have put deals together. The downside is those sales are pushing current and future prices way up.

How far up can they go before affordability goes away? Hard to say.  One thing we are watching is the math.  What do I mean by this?  When prices get to a critical level, buyers no longer enjoy the benefit of the low mortgage rates. In other words, when the high purchase price exceeds the savings created by the low mortgage rates buyers can no longer afford to buy.

The result is affordability goes away and market’s shift until prices drop, buyer’s have more money to spend on real estate (income/wealth), or rates get even better.  With this in mind – in the coming year or years, which is more likely: People’s income going up, rates going lower or prices going down?

Supply and Demand Turns. This is straight up econ 101. When supply exceeds demand prices go down. When demand exceeds supply prices go up. That part is easy, where it gets more complex is in supply chain implications, availability of money from banks and other sources, and shifting migrations trends based on technology, weather, politics and more. For this discussion we’ll focus simply on the number of properties available to purchase (Inventory).

Right now, the inventory is very low which bodes well for sellers because buyers don’t have many options to choose from so if they can get the money (bank or elsewhere) they generally will pay whatever they have to for properties.

Right now, demand appears to be steady and because of a lot of factors (migration, technology, political…) I believe demand will continue to increase for Emerald Coast and Panama City Beach real estate for years to come. In short, I don’t think long term supply and demand will be the issue we have to worry about – it’s the short-term affordability and government policy that we need to keep an eye on.

Government Policy Changes. This is always a wildcard. At any time politicians can decide to pass laws that will directly and/or indirectly have massive impact on both affordability and supply and demand. They can pass laws hindering or loosening lending regulations (affordability).  They can pass or repeal laws that incentivize investing in real estate – think Capital Gaines Taxes, 1031 Exchanges, Inheritance Tax Rules… and more.

There are many ways Government Policy Changes can and do cause real estate markets to cycle, some are intentional, and some are latent functions of well-meaning legislation, but we need to be on the lookout for them at all times because they absolutely can impact your wealth.

Where are you in your Investing Cycle?

Long Term Holder

We define Long Term Holders as investors who are going to own a specific property for at least five years, longer the better. This allows you the benefit of sitting back and watching what is happening, preparing to capitalize if an opportunity presents itself (buy or sell) without the worry of having to time the market. This is a terrific position to be in.

Short Term Holder?

We define Short Term Holder as investors who are going to own a specific property for less than five years. If you fall into this category, we recommend that you sell soon if not now. Why? You don’t have the benefit of time to ride out a quick dip or a long downturn in the market. There are too many what if’s that can and do occur that negatively impact your wealth. Examples: What if someone fly’s an airplane into a skyscraper? What if a pandemic hits? What if a something causes the economy to tank…

Mitigate your risk and sell now when the market is still pretty clear and predictable. Next month will be less so.  Next year is harder to anticipate what will happen and the next two, three, four and five years are simply educated guesses.  If you are a short-term holder – take the surest thing you can get and sell now.

Buyer – Long Term Holder

We define Buyer – Long Term Holder as someone that is investing in a property with the intent to hold it for five years or longer. The longer the better. If you fall into this category, we recommend that you take advantage of the incredible interest rates that are available right now to set yourself or your family up for the next thirty years. Inflation is likely to have a massive impact on our lives in the years to come and a great hedge against inflation is a fixed rate loan on an income producing property. Think about it – if your mortgage is locked at a set rate (meaning it won’t go up) but your ability to increase the rent you collect (income) can and will increase with the market… that is a good situation.

CAUTION: Before you buy a property make every sure that it achieves your goal for investing and that it stays within your criteria properties you will buy. Do not buy on a whim. Remember, we are wealth builders and it’s our job to help you avoid going the other way. If you have questions about your goals or your criteria, please call us and we will help you with them.

Buyer – Short Term Holder

We define a Buyer – Short Term Holder as someone who will own an investment property for less than five years. If you are in this category, we consider you a “flipper” and simply offer a caution that anytime you are operating with a short time horizon the risk of bad things happening can go up dramatically.  Having said that, there are a lot of people making a lot of money flipping properties and my expectation is the next twelve months will allow for some terrific opportunities to find sellers looking to get out while it’s still safe and sell with enough meat on the bone to make the flip work.

“Generally, real estate is cyclical. You have to buy in a way that lets you afford the cycles. And you have to know where you are in the cycle.”

Gary Keller

Always Remember

Our job is to help you build and protect your wealth and the way we do that is by watching for trends in the market and then alerting you to opportunities based on your financial goals. To max out your goals you need to know if it’s a good time to Buy – we see prices are still appreciating, sell – we see prices are in decline, or Hold – we see prices are stagnant.

Just let us know if you want us to watch and monitor the market for you looking for trends and cycles such that you can make good, informed decisions about your real estate investments and your wealth. It’s what we do.  We are good at it. It’s why people like you hire people like us.

Committed to your Success,


John Moran – CEO
The Smart Beach Investor

Certified Luxury Home and Condo Marketing Specialists
Keller Williams Realty Emerald Coast
Gulf Breeze | Navarre Beach | Destin | 30A | Panama City Beach