As South Florida’s recession and financial crisis stretch out, foreclosures, mortgage woes and dramatic price cuts are becoming evident in gated communities and restrictive luxury island neighborhoods.
On Jupiter Island, where the average home carries a price tag of $5.6 million, market dynamics are better than the rest of the state, where almost one in four home loans is in foreclosure, but there are signs that times are tough even there. Multimillion-dollar discounts are more representative of the luxury enclave’s woes, but the very fact that short sales are now part of the market stuns broker Andrew Russo.
Russo, a principal at VIP Properties of Distinction with offices in Jupiter and Tequesta, can’t recall a foreclosure in the last 15 years in the exclusive enclave of about 600 estates on a barrier island 40 minutes north of Palm Beach. “Usually, I see cash buyers, with high net worth,” Russo said. “But now, I do have a short sale listed, at 120 North Beach. I have a person looking to buy it and I’m trying to get the bank to approve the deal.” The asking price is $3.4 million.
In all of Jupiter Island — the Town of Jupiter Island and Jupiter Inlet Colony — 12 houses have sold of the 60 homes listed this year, said Tom Turner, a realtor with Waterfront Properties in Jupiter. “Typically, there were 25 sales a year until 2006.
Sale prices have decreased, too. “In the peak year, 2005, we had four or five houses sell for more than $10 million. We haven’t seen that since,” Turner said.
To look at the two Jupiter Island areas individually, 46 homes are listed for sale in the Town of Jupiter Island (zip code 33445) to date, and seven have sold. Compared to previous years, seven homes sold in 2008, 17 sold at the peak in 2005, and, before the boom, in 2002, 11 homes sold.
In the Jupiter Inlet Colony area (zip code 33469), homes are less expensive, and six were sold — five inland and one on the Intracoastal Waterway. That one, at 104 Lighthouse, was bought by Olivia Newton John for $4.1 million. “It’s a nice piece of property, a deep lot, right around the bend from the inlet and a short boat ride to the Atlantic Ocean,” Russo said.
At the other end of the Jupiter Inlet Colony spectrum, one was a short sale, said Virginia Gallopo, broker owner of Exit Realty Oceanside, who specializes in short sales and provides broker’s price opinions for banks. The property at 151 Beacon Lane was listed in August 2008 for $1.29 million and sold this August for $899,000. Of the seven that sold in the 33445 zip code, only one sold in the early part of the year — a four-bedroom house at 74 Gomez Road that sold for $2.3 million in January.
In Russo’s experience, people buy during the winter season. “Historically, summers are quiet for sales on Jupiter Island, but not this year,” he said. “On the heels of a significant downturn in the real estate market and the near collapse of the financial markets, this off-season turned into a great opportunity to buy premier Jupiter Island real estate.” On average this year, the Town of Jupiter Island houses sold for 33 percent less than the asking price, with the worse case scenario being 48 percent.
All sold for less than the asking price and some took steep cuts, Gallopo said. At the high end, a house at 249 S. Beach was listed for $12.9 million in May 2007. It sold for $8 million in June; the house at 326 Beach Road was listed for $8.9 in January and sold for $6.5 in July; and 146 Gomez was listed for $11.5 million in October 2008 and sold this June for $6,010,000.
At the lower end, a home at 31 N. Beach was listed for $3.25 million in September 2007 and sold this May for $1.9 million.
Although these deep discounts suggest that sellers may need money, both Turner and Russo cautioned that these were not distressed properties. “Many houses that sold had either been on the market for a long time or the sellers were motivated. Others were just priced realistically,” Turner said.
Russo noted: “The sellers were not in trouble. They may have lost money last year, but most Jupiter Island homes do not have mortgages on them. These were not fire sales or anything like that. They were just sellers who wanted to sell and took the offer that was on the table.”
Jupiter Island homebuyers this year want good value and intend to live in their homes, Turner and Russo said. And both brokers are optimistic about the coming year.
“I call myself a realist, as opposed to a dreamer,” Turner said. “I think that the market has stabilized and will appreciate from here, but slowly.”
Russo added: “Buyers are recognizing the value, as prices have dropped about 25 percent from the 2005 peak. And one thing that most economists agree on is that we are heading into an inflationary environment, and real estate, especially exclusive waterfront homes, has always been a good hedge against inflation.”