NUMBER ARE SHOUTING!!! REAL ESTATE IS HEATLY IN DESTIN!

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Today to reassure our valued investors, homeowners, and prospective buyers that the current pricing of our beachfront condominiums in Destin, Florida, is both sustainable and secure. We are not foreseeing a real estate price bubble in the foreseeable future. To validate this assertion, we have conducted in-depth research examining the median sales prices of such properties since 2002.

2002 - 2004: Pre-Bubble Years

In the years leading up to the 2005 bubble, beachfront condos in Destin experienced steady price growth. The local economy was strong and the demand for vacation homes was on the rise, pushing up property prices.

2005: The Bubble

2005 saw an unprecedented spike in property prices. Speculation, easy credit, and a surge in demand resulted in a real estate bubble. Prices increased rapidly and unsustainable levels were reached.

2006 - 2011: The Stall and Fall

Post the 2005 bubble, the market experienced a period of uncertainty. Prices stalled and then dropped. The housing market crash of 2008 further exacerbated this situation, resulting in a significant price drop.

2012 - 2017: The Stabilization

In this period, the market started showing signs of stabilization. The prices bottomed out and began a gradual recovery. The market began to adjust to the new normal.

2018 - Present: The Recovery

From 2018, a clear recovery trend was seen. The demand for beachfront condos in Destin started picking up again. However, this time the growth was steady and sustainable, driven by a stronger economy and tighter lending standards.

The current state of the market reflects a healthy and sustainable growth pattern. Prices have been increasing at a consistent rate, indicating stability in the market. Moreover, unlike the 2005 bubble, this growth isn't fueled by speculation or easy credit. Instead, it's supported by genuine demand, robust economic indicators, and more stringent lending norms.

We remain committed to keeping you updated on the market trends, and we're confident in the stability and sustainability of our current pricing. As always, we're here to answer any questions and provide you with the necessary support to make informed real estate decisions in Destin.

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 A 20-Year History of the Destin Condominium

Market (2002-2023)

NUMBERS ARE SHOUTING: REAL ESTATE IS HEALTHY!

The purpose of this newsletter is to demonstrate that our current pricing is sustainable, and that we do not anticipate a real estate price bubble any time soon.  To do so, we have       researched the Median sales prices of Beachfront Condominiums located in Destin FL, for every year since 2002. Consequently, our scope includes the years preceding the 2005 Bubble, the 2005 Bubble itself, the years of stalling (when no one exactly knew where the market was), the long valley of stabilization, and the recovery experienced since 2018.

When taking a historical perspective, a factor often overlooked is inflation. One dollar in 2002 had the buying power of $1.65 of today.

We have consequently adjusted the Median Sales Prices for each year to account for the compounded inflation rate until now. Since 2002, the compounded inflation rate has been 1.65. Since 2010, the factor has been 1.36. When applying inflation factors to the ‘actual’ Median price, the evolution that we see is quite different from the one witnessed when we look at the ‘actual’ numbers only. Yet, we will all agree that comparing the 2002 raw data with 2022’s is tantamount to comparing apples and oranges.

The double-entry table displays, the annual inflation rate, the accumulated inflation,  the historical data, ‘raw’ (4^th, blue column) and ‘adjusted-for-inflation’ (5^th, orange column), of the Median Sales Prices of beachfront condominiums in Destin, FL. The blue curve (on the chart on the back side)        displays the evolution of ‘raw’ values. The orange curve visualizes what the same data looks like when adjusted for inflation.

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· The blue curve (‘raw’ data) registers a pre-2005 Bubble jump from $290,000 in 2002 to a peak of $1,087,500 in 2006.

It is followed by a stall from 2007 until 2010 when values

reached the bottom at $278,500. Then, a gradual creeping upwards to reach $390,000 in 2018. In 2019 began a solid

upwards trend with $494,750 that year, followed by $497,250

in 2020. Then, prices jumped to a Median of $605,000 in 2021,

to reach $670,000 in 2022.

· The blue curve below underscores that prices in 2022 were higher than those of the 2006 peak: $1,087,500 in 2006 vs. $670,000 in 2022. This is almost 40% higher. The media, avid for sensational news, reasons as follows: If 2006 caused the ten-year crash that we know, how much worse off should we            

be now?! Beware, a new bubble is near, a crash is coming!

The orange curve ‘Adjusted for Inflation’ has a different appearance and tells a different story. 2002 began with a robust and stable market at $479,950. The bubble peaked in 2005 and 2006 with Adjusted Median Sales Prices of respectively $3,548,000 and $3,423,00. The bottom was hit in 2010 with a low of $278,000. Seven years later, by 2017, the prices had crept up to $390,000. This represented a 4% increase per year. Then, in 2019, a new stronger upward trend gained momentum, reaching $494,750; followed by $497.250 in 2020; $605,000 in 2021; and $670,000 in 2022.

· The orange curve evidences that the 2005 peak ($1,062,228) was 39% higher than today’s price ($670,000) – when inflation is taken into consideration.

· The market stands today almost 40% below the peak of 2005 – this is roughly half-way between its bottom and its peak. One could not define a more stable and sustainable situation.

What factors should we also consider? In 2005, most buyers were  (1) flippers and (2) highly leveraged. Furthermore, (3) only a small pool of investors, primarily from N. Florida, Georgia and Alabama, was involved in these buy-and-flip transactions. Since 2019, driven by the new trends of remote work and immigration from other states, the pool of buyers has become wider and stronger, originating from most of the eastern half of the United States. These buyers favor cash purchases. They also are end-users. The attention given since 2019 to NW Florida by large investment funds, such as BlackRock, has compounded the demand and improved the buyers’ solvency.

In addition to the factors outlined above pointing at the financial stability of the new buyers, the market has gradually recuperated from the abysses of the 2011-2017 era, and stabilized at a price level that we deem reasonable, even affordable considering the demand. In comparison to other Florida markets such as Tampa Bay, South Florida, we are a steal!

We hope that this data-driven analysis has provided you with a deeper understanding of our local real estate market and dispelled any worries about an impending bubble. We remain confident in the sustainable growth and stability of our beachfront condominium market in Destin, FL, and we are committed to providing you with the most accurate and up-to-date information to support your investment decisions.

We also invite you to reach out to us directly with any further questions or for personalized advice. Our experienced team is always here to help you navigate the real estate market.

As always, thank you for your trust in our services. We look forward to continuing to serve you.

What factors should we also consider? In 2005, most buyers were (1) flippers and (2) highly leveraged. Furthermore, (3) only a small pool of investors, primarily from N. Florida, Georgia and Alabama, was involved in these buy-and-flip transactions. Since 2019, driven by the new trends of remote work and immigration from other states, the pool of buyers has become wider and stronger, originating from most of the eastern half of the United States. These buyers favor cash purchases. They also are end-users. The attention given since 2019 to NW Florida by large investment funds, such as BlackRock, has compounded the demand and improved the buyers’ solvency.

In addition to the factors outlined above pointing at the financial stability of the new buyers, the market has gradually recuperated from the abysses of the 2011-2017 era, and stabilized at a price level that we deem reasonable, even affordable considering the demand. In comparison to other Florida markets such as Tampa Bay, South Florida, we are a steal!

We hope that this data-driven analysis has provided you with a deeper understanding of our local real estate market and dispelled any worries about an impending bubble. We remain confident in the sustainable growth and stability of our beachfront condominium market in Destin, FL, and we are committed to providing you with the most accurate and up-to-date information to support your investment decisions.

We also invite you to reach out to us directly with any further questions or for personalized advice. Our experienced team is always here to help you navigate the real estate market.

As always, thank you for your trust in our services. We look forward to continuing to serve you.

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