No matter the size (and label) of the pocketbook, it’s been a tough year for rich and poor alike. To date this year, foreclosures have been filed on 13 single-family homes in Palm Beach, with 5 of them sold, according to Wilshire International Realty broker owner Christine Franks.
In addition to the foreclosures noted by Franks, RealtyTrac lists 6 more, bringing the total to 19.
“I’ve seen some foreclosures and short sales that you generally don’t see in Palm Beach,” she said. “There were foreclosures in the early 1990s and in the late 1990s when the dot-com era collapsed. There are pockets of times when you see foreclosures in Palm Beach, but generally speaking, you don’t see people having financial difficulties that would result in short sales or foreclosures in Palm Beach.”
The five properties sold include:
1. Short sale: 271 La Puerta Way was bought in April 2006 by 271 La Pueta LLC for $2.8 million. The property sold in September 2009 for $3,550,000.
2. Deed was given back: 264 Country Club Rd. was bought in October 2007 by 264 Country Club LLC for $1,650,000 and the deed was given back to Lydian Private Bank in June 2009 for $1,243,077 in lieu of foreclosure, and then sold in June 2009 for 1,180,000.
3. Auction: 269 Pendleton Avenue was bought in September 2004 for $3,100,000 and sold at auction in February 2009 for $3,550,000. (This house was owned by Thanos Papalexis, who was sentenced to life in jail in September by a British court for the murder of Charalambos Christodoulides,)
4. Foreclosure: 1431 N. Ocean Way was sold in April 2009 for $900,100 to Waterfall Victoria REO LLC and then sold again in May 2009 for $1.5 million.
5. Foreclosure filed, but sold and auction canceled: 2 Via Las Incas – Richard W. and Marjorie Fuscone sold 2 Via Los Incas for $4,610,000 following a foreclosure action by Northern Trust Bank. The Fuscones bought it for $6,850,000 in January 2003. In February 2009, Northern Trust filed a judgment against the Fuscones scheduling a court-ordered auction for August 6. On July 24, the court cancelled the foreclosure auction.
In addition, homes sales, which numbered five closings in the first quarter, were off to a slow start in Palm Beach this year.
“Sales normally take place in the season, with some that go under contract at that time, closing in May, June or July,” Franks said. “But, this year, that didn’t happen. People weren’t even looking.”
The winter months are considered the height of Palm Beach’s season, when out-of-state “snowbirds” return to their Florida homes.
In the first part of 2009, “people were experiencing financial fears,” Franks said. “Financial institutions and insurance companies had problems and the government had to inject funds to keep them afloat. The stock market had a downturn and people lost money in 401Ks and IRAs. The auto industries had bankruptcy problems – some closed and some, the stocks were worthless – and the government had to intervene with funds.
“The fears were based on what they had lost and they were afraid of what else was going to happen.”
In the first quarter of 2009, 12 homes went under contract, with five closing in that time frame. By the end of the third quarter, according to Franks, there were a total of 48 single-family homes sold, and as of September 30, 427 single-family homes were listed for sale.
“We have not had a normal year since 2002 and 2003,” Franks said. “Last year, 2008, after three quarters, we had 410 homes on the market with 68 sold.”
Here are Frank’s numbers from earlier years for comparison:
2002 – 446 single-family homes were on the market with 112 sales.
2003 – 483 single-family homes on the market with 127 sales.
2004 – 449 single-family homes on the market with 188 sales.
In the first half of 2009, four single-family homes sold for less than the prior sales price, and, through September, three transactions were variations of trades. Franks also saw more financing with a purchase money mortgage.
The majority of this year’s sellers, excluding the foreclosures, were not in trouble, believes Franks. “Some people’s portfolios may have been hit. Others might be selling their second or third home. Some just wanted to move, from the Intracoastal Waterway to the ocean, for example, or downsize or upsize.”
This year’s buyers will reside in their new home, but they were looking for a good investment, Franks found. “In 2005, they were buying to flip, but that’s not who I see buying today. Buyers are looking at lower prices and not bashful in making what they consider realistic offers based on their assumption of what the current market is.
“When the buyer and the seller agree on a purchase price, that makes them the experts on the current market values.”
Franks anticipates an improvement in 4th quarter sales. “Last year, we had very weak seasonal rental activity with most people wanting one- to two-month rentals. This year, there have been many more calls in general and the people are looking for longer periods – 3 to 4 months, which is a more normal market.”