Pensacola area condo values rebound after recession
Pensacola, FL
Condominium owners who watched their property values plummet during the housing bust are enjoying home appreciation rates that exceed their single-family home owning neighbors.
According to real estate data from Zillow.com, median condo values in the United States are increasing at a 5.1 percent annual rate compared with a 3.7 percent rate for single-family homes.
Condos in the Pensacola area increased in value at an 8.7 percent rate between September 2014 and September 2015, Zillow found. Local single family homes increased by a rate of 3.6 percent, just under the national average.
The bulk of local homes are single family houses, as condos only make up about eight percent of Pensacola's housing stock, Zillow reports.
In the 32507 area code, made up of Warrington and Perdido Key, condo values increased by a 11.8 percent rate. Condos in the 32563 area code, made up of the eastern portion of Gulf Breeze, grew at a 6.5 percent rate.
Another local zip code with high rates was 32503, including Hyde Park and Scenic Highway, which grew at a 9.3 percent rate between September 2014 and September 2015.
Zillow's data for the 32561 area code, made up of Pensacola Beach and the western portion of Gulf Breeze, showed only a 2.3 percent increase in value for median condo prices.
Local realtors, however, said the beach is experiencing a hot condo market all around, caused by a fixed supply of condos not meeting demand.
"You sell one and the next one is selling a few months later at about four percent higher than it was a few months ago," said Gary Michaels, realtor and operations manager for the Mark Lee Team. "I think, in general, without a doubt that beach market and that second home market have just been on fire."
There are a number of reasons why condo values dropped as much as they did after the housing bubble burst, including high foreclosure rates due to unpaid homeowner association fees.
"If you want to buy a condo and you know that of the 30 in the building, five haven't paid their fees, and two have been foreclosed, demand for that building will go down rapidly," said Svenja Gudell, Ph.D., Zillow chief economist. "The roof won't be replaced, services won't be performed."
Today, condos are a better bargain for first-time home buyers or for those looking for an amenity rich and maintenance-free lifestyle, Gudell said, since HOA fees typically take care of maintenance and condos are usually located in urban areas.
Foreclosures aren't affecting condos as much as single-family homes, said Rusty Mack, a realtor with the Agency Real Estate Source.
"There are fewer repossessions in condos. And there are a lot more repos in houses," Mack said. "They are still a lot of houses in foreclosure and pre-foreclosure that are distressed waiting to be foreclosed compared to condos."
The values and the rate of appreciation is different across markets. In Miami, for example, 63 percent of the available homes are condos but luxury units are not rising as quickly as single-family homes.