for single-family homes, could be a good sign
Last January, the harbinger of a slow season, only one home sold in Palm Beach. It was priced for $2 million. This January, two single-family homes sold– for $3 million and $8 million – and nine homes went under contract, generating cautious optimism among local realtors and analysts, along with some misgivings.
“Some weakness still lies ahead for high-end properties, like those in Palm Beach,” said Brad Hunter, director of consulting for national housing data consulting firm, Metrostudy, South Florida Division. “That’s simply because of the poor performance for the economy in general.
“However, the rally in the stock market may provide a boost to the Palm Beach market. There are a lot of mixed indicators — some positive, some negative. But it’s encouraging that there’s a pipeline of pending sales.”
Overall, according to the National Association of Realtors and the Florida Association of Realtors, from December 2008 compared to December 2009, the number of home sales increased nationally (15 percent), for Florida (15.5 percent) and for Palm Beach County (33 percent).
For Palm Beach, on the other hand, the number of single-family home sales went down, from 104 in 2008 to 81 in 2009, according to Leslie Roberts Evans, a Palm Beach attorney who tracks and reports sales of single-family Palm Beach homes and condominiums in his Evans Report Analysis.
“The gains reported [by the Realtor associations] are due partially to the First-Time Homebuyer Credit and partially to the fact that home prices are down drastically because of foreclosures and short sales,” Evans said. “Neither of those applies to home sales in Palm Beach.
“November and December were slow in Palm Beach,” he added. “In January, there was a marked increase in activity, which will reflect an improved first quarter versus last year’s first quarter.” First quarter 2009, he reported, six homes sold in the $2 million to $6 million range.
Scott M. Gordon, an agent with Fite Shavell & Associates, represented the buyer in the first sale in January, an $8 million deal. “This January, compared to last January, it’s like night and day,” he said. “I’m showing every day. On my new listing, 14 people came through in a two-hour period.”
Gordon’s buyer, Campana PB Trust, a Southport, Conn., corporation, purchased 120 Canterbury Lane, owned by Bruce A., James M. and Robert S. Schwartz, represented by Ned Monell of Sotheby’s International Realty. The property, which closed on January 13, was listed for $9.9 million.
“A lot of people have been sitting on the sidelines,” Gordon said. “Now, they don’t think prices are going to go drastically down from here, and they see an upside in the values of properties, which are selling for a lot less even as late as September, 2008. There are a lot of good buys out there.”
January’s second sale, 146 Australian Avenue, owned and listed by Michael J. Flynn, sold on January 28 for $3 million. It was listed for $3.395 million. Michael Montgomery, an agent with Jeffrey A. Cloninger & Associates, Inc., represented the buyers, Patrick and Amber Turner.
“December and January are always slow times,” Jeffrey Cloninger said. “To have that number of sales pending is a great sign.
“We’ll have to see what happens this season, but my gut feeling is that we have hit bottom in Palm Beach. Prices have adjusted and 146 Australian is a good example of that – It was priced right and sold within 12 percent of the asking price. Buyers are pleasantly surprised at the values that are out there.”
Hunter notes that although buyers are not as adamant as they have been about getting a bargain, they are still looking for good value. “I think good value is going to be the watchword for Palm Beach for 2010.”
Jack McCabe, of McCabe Research & Consulting, LLC., is not enthusiastic. “Nine pending — one month does not a trend make,” he said.
He sees that big bonuses on Wall Street will translate to some real estate sales in Palm Beach and notes that some sellers are getting realistic. “Of course, Palm Beach has a mystique and it will always have that,” he adds.
“But this year, I’m predicting that ultra-luxury single-family homes are going to take the largest declines. We will see foreclosures on homes that are more than $750,000. They are over-leveraged and the owners have taken huge financial hits. When arms adjust and monthly payments go from $8,000 to $14,000 a month, they can’t do it and we’ll see price drops of 10 to 15 percent. What was $10 million this year will be $8 million next year.
“There have been a few foreclosures in Palm Beach, and people have been surprised. I think they will be more shocked to see how highly leveraged the property owners are.”