Drive along the water in Panama City this month and you will pass two things that do not usually appear in the same sentence about coastal Florida real estate: a bulkhead reconstruction crew working the St. Andrews Marina, and a run of older bayfront condo buildings a few blocks away that are selling faster than the headline numbers say they should.

The headline number says the market is soft. Panama City's price per square foot was down 8 percent year over year as of July 2026, according to Movoto's local tracking. Zillow's figures for the city put the average home value at $343,939, down close to 4 percent over the past year, with homes going to pending in around 72 days. Panama City Beach tells a similar story on the single-family side, with a median sale price hovering near $380,000 to $390,000 this spring and summer, down modestly from a year earlier, and inventory sitting at roughly 8 months of supply, which is buyer's market territory by most industry benchmarks.

If that were the whole picture, a relocation buyer or an out-of-market investor would reasonably conclude Panama City is a market to wait on. It is not the whole picture.

The Number That Doesn't Match the Story

Florida Realtors' second-quarter 2026 report on the state's townhouse and condo market includes a line that is easy to miss if you are only scanning single-family stats: Panama City posted the largest percentage increase in condo and townhouse sales of any metropolitan area in Florida, up 40.1 percent year over year. That is not a modest recovery. It is the biggest jump in the state, ahead of markets that get far more national attention.

A market where the average home value is falling does not usually also lead the state in sales growth for an entire property type. Both things are true here at the same time, and that contradiction is the actual story.

Why a Rising Sales Count and a Falling Median Can Coexist

The explanation sits in how the growth is distributed. Statewide, Florida recorded 27,106 townhouse and condo sales in the second quarter of 2026, up 9 percent year over year, but the median sale price barely moved, holding at $310,000. The growth was not spread evenly across price points. Closed sales of units priced below $200,000 rose 18.4 percent to 6,205. Sales of properties at $1 million or more jumped 29.5 percent to 2,195. The middle of the market, where most of the median-price headlines get their numbers, grew far more slowly than either end.

That is a barbell, not a rising tide. Two different buyer pools are active for two different reasons. Entry-level buyers are chasing affordability wherever they can find it. Buyers at the top are less sensitive to mortgage rates and are moving on inventory that meets a higher bar for building condition and amenities. A citywide or statewide median cannot see either group clearly, because it averages them into a number that describes neither.

Panama City's condo stock happens to skew toward the affordable end of that barbell more than most Florida coastal markets, which is why a statewide pattern shows up here with outsized local force. A 40 percent jump in a market where the inventory is disproportionately entry-level condos is not a coincidence. It is what you would expect to see if the state's affordability-driven surge concentrated in exactly the kind of building this city has more of.

Where the Volume Actually Sits

The affordable end of that barbell in Panama City clusters around the older bayfront buildings near Historic St. Andrews rather than the newer Gulf-front towers on Panama City Beach. Landmark on St. Andrews Bay is one example locally marketed as the lower-cost alternative to Panama City Beach's Gulf-front stock, sitting a few blocks from the historic district, the public parks along the water, and the marina itself.

Buildings like this were not, until recently, where the momentum was. Florida's condo market spent the past several years absorbing new structural inspection and insurance requirements that followed the Surfside collapse, and older buildings statewide bore the brunt of that uncertainty. Reserve requirements went up. Insurance got harder to place. Buyers who might have looked at a 1970s or 1980s bayfront building instead looked past it. The Q2 2026 numbers suggest that hesitation is easing, at least for buyers at the lower end of the price range who are willing to underwrite the risk that older buildings still carry.

The Infrastructure Quietly Underwriting the Bet

What makes Panama City's version of this story different from a generic statewide recovery is that the waterfront these older buildings sit on is being rebuilt in public view, not just discussed in a planning document.

The St. Andrews Marina, built in the early 1960s and heavily damaged by Hurricane Michael in 2018, has been under active reconstruction since the city reopened its first 50 rebuilt slips in April 2024. In June 2026, city commissioners approved a cost-plus contract to move that rebuild into bulkhead reconstruction, according to WJHG's coverage of the commission meeting, with pricing tied to actual materials, labor, and contractor costs as the work continues.

A few blocks away, the city's Downtown Marina redevelopment has moved from concept to design. The city's own progress report describes a series of public charrettes held at City Hall in January 2026 that drew more than 200 residents, stakeholders, and planning professionals, followed by an April 2026 presentation from planning firm Dover, Kohl & Partners laying out conceptual designs for the marina uplands. Because the site sits within a Community Redevelopment Area, any future lease revenue from the project would flow back through the CRA rather than disappear into the general fund, which is the kind of financing detail that tells you the city intends to follow through rather than shelve the renderings.

Neither project directly moves a condo's list price. What they do is remove a piece of the uncertainty that has kept buyers away from older buildings on this stretch of water. A buyer weighing a 1980s condo near a marina that is visibly being rebuilt, with a second public infrastructure project moving from public meeting to funded design in the same year, is underwriting a different risk than a buyer looking at the same type of building next to a marina nobody is touching. That difference does not show up in a median price. It shows up in whether someone is willing to make the offer.

What This Means If You're Comparing Neighborhoods

The practical lesson for anyone actually comparing Panama City to Panama City Beach, or to another panhandle market, is to stop reading the single metro-wide number and start asking which segment and which stretch of waterfront a specific listing sits in.

A few questions worth asking before treating any Panama City median as decisive:

• Is the building older bayfront stock near St. Andrews, or newer Gulf-front inventory on the Beach side? The two segments are behaving differently right now, and a citywide average blends them into a figure that describes neither well.
• What is the reserve funding status and recent insurance renewal history for the specific building? The statewide inspection and insurance reforms hit older buildings unevenly, and that variance matters more than the neighborhood label.
• Is the property within walking distance of either marina project, and does that proximity show up in the asking price yet? Public infrastructure that is under active construction, rather than merely proposed, tends to get priced in slowly.

None of this is a reason to assume every older condo near St. Andrews is a bargain, or that the marina work guarantees anything about future value. It is a reason to treat the 40 percent sales figure as a signal worth investigating property by property rather than a headline to take at face value.

A Few Direct Questions

Does the 40.1 percent figure apply to Panama City Beach too, or just Panama City proper? Florida Realtors reports this figure at the metro level, which covers Bay County broadly and includes both cities. The city-specific data diverges. Zillow's five-year figures show Panama City Beach home values up modestly over time, while Zillow's figure for Panama City itself shows a year-over-year decline as of mid-2026, which is part of why the condo sales surge is worth separating from the single-family narrative rather than folding into it.

Does the marina rebuild actually cause condo prices to rise? The research does not support that direct a claim, and neither should you take it as one. What the timeline supports is a correlation worth watching: sales growth concentrated in older, lower-priced condo stock near a waterfront where public capital is visibly being spent, in the same year that growth appeared. That is a signal, not a proof of causation.

When will the St. Andrews Marina bulkhead work be finished? Public records available as of this writing describe the contract approval and the scope of the bulkhead phase but do not include a firm completion date. Anyone timing a purchase around the project's completion should confirm current status directly with the city rather than relying on a projected date.

If you are weighing a purchase near St. Andrews Bay, comparing it against a Gulf-front listing on the Beach side, or trying to figure out what a specific building's reserve study actually means for your offer, that is the kind of property-by-property read Compass & Key does for a living. Let's Connect and look at the specific numbers behind the listing you're considering, not just the metro average.