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House-hunters may have to hunt harder

Posted On: 10-21-2012

By Darrell Hofheinz

Daily News Real Estate Writer

With island real estate brokers and agents having barely caught their breath after a busier-than-usual summer sales season — particularly for lower-priced single-family homes — they’re bracing for the aftermath as cooler weather arrives.

And that, they agree, is a market where the number of homes for sale has plummeted, even as house-hunters have returned to Palm Beach with an eye to buy, their confidence buoyed by a strengthening economy and a surging stock market.

What those would-be buyers are finding, however, is a lack of better-quality properties for sale. The reason is two-fold: Many of those homes left the market after prices finally dropped to levels buyers found acceptable. And many would-be home sellers have been reluctant to list their properties, because they feel no real pressure to part with their homes and are wary of today’s lower, post-recession selling prices.

“Great homes, regardless of their price point, are pretty scarce,” acknowledges Bill Yahn, who heads Corcoran Group’s island operations.

“The people who want to sell are embracing the current pricing. I think you’re seeing a lot of houses that are not on the market that would be otherwise, if the owners were willing to sell at the current pricing.”

Carol Hickman, brokerage manager for the island office of Sotheby’s International Realty, agrees that it’s become harder to find better-quality listings, echoing other real estate professionals interviewed for this story.

Hickman recently prepared a report — parsing data from the Palm Beach Board of Realtors Multiple Listing Service — that compared the number of homes available in July, August and September to 2011 levels.

“Last year in the third quarter there were 250 active listings for single-family homes. Now there are 210,” Hickman said.

Those local numbers fall right in line with national trends pointing to a recovering housing market. Last week, Realtor.com released data that showed the number of U.S. homes listed for sale in September had dropped 18 percent from the same month of 2011. The time those homes spent on the market was also 11 percent shorter than it had been a year prior, according to the website run by the National Association of Realtors.

Strong summer

Even if the number of residences for sale is down, optimism appears to be up on the part of those who will be selling them in the coming season.

“The summer was a lot stronger than I thought it would be,” said broker Ava Van de Water, who heads Brown Harris Stevens’ Palm Beach offices. “The market has come back. We’ve seen a very healthy, slow rise.”

Most of those single-family home sales have taken place on the North End for properties priced at $3 million or less. The mid-range category of homes priced between $5 million and $10 million has been slower to ignite, as has the ultra-luxury waterfront market.

The exceptions in the high-end category included three sales this summer of oceanfront properties priced at $20 million or more. Those included the year’s largest transaction, a private sale — brokered by Lawrence A. Moens Associates and recorded at $41.5 million — in which Stanley and Gay Hart Gaines sold their home at 1473 N. Ocean Blvd. to a trust linked to Discount Tire magnate Bruce T. Halle. That sale marked Palm Beach’s highest-dollar residential deal since the recession hit in late 2008.

Priced to sell

Agents and brokers agree that lower-priced sales — which picked up markedly last spring, a trend that continued into the summer — helped rid the market of properties that had been on the market for a year or two, or even more, in some cases.

As a result, any properties entering the market this season are more likely to be priced “correctly” based on what the market will bear, said David Fite, principal at Fite Shavell & Associates.

The increased sales have made pricing properties easier, Fite explained. Agents have a much wider field of recently sold properties they can compare with those entering the market, weighing factors such as the size and location of the lot, along with the square footage, age and condition of the house.

And a house priced correctly, Fite and others agree, will often move more quickly because the expectations of buyer and seller are closer from the outset of the negotiations.

“We’re seeing homes going for asking [prices],” Fite said. “With lower inventories, people weren’t waiting [to make an offer] this summer.”

Broker Christian J. Angle of Christian Angle Real Estate agreed that on-target pricing will be a hallmark of this season.

“Values and price points have been reset,” Angle said. “We’re seeing homes sell at within 10 percent or 15 percent of the price.”

Bottomed out

Although prices steadily dropped over the past several years, those days are finally over, Yahn said.

“We think the wind is at our back – people have recognized that the market has bottomed out,” Yahn said. “These days, if you’re at a party, you hear, ‘Shoot, I missed the bottom.’ I hear that a lot. There’s nowhere to go but up in terms of pricing. As inventory shrinks, prices rise and we’re seeing that already. If the homes are new or newer, they’re actually trending at a little ahead of the price.”

During the recession, new and newer houses on the island became rare commodities indeed — and that situation is only beginning to ease. As land prices have dropped and credit has eased, a few “spec” houses, built without a specific buyer in mind, have begun to rise on the North End, replacing outdated houses there.

But there’s plenty of opportunity for more investment, said Linda Gary of Linda A. Gary Real Estate.

“Our inventory is low for new homes,” Gary said. “I think it would be a very good time for spec builders and investors to get back into the market.”

The lack of newly built houses also has placed a premium on older properties that have been updated by their owners.

“That’s the closest thing we have to new, now,” Fite said.

On the high end

In the same vein, Gary and her colleagues at other agencies are hoping to see more “trophy properties” enter the market — high-end homes on the water with abundant land and updated amenities.

“Right now, there are only five or six properties in Palm Beach priced at $30 million or more,” Gary said. “That’s not many.”

Owners who have hesitated to list their homes, Gary added, might be underestimating the amount their properties would fetch, now that the market has improved.

“I think they’d be pleasantly surprised, especially in the higher end. We have qualified buyers, but we don’t have the inventory. We’re very concerned about it, because in Palm Beach, sellers don’t have to sell,” Gary said.

Angle agreed: “With inventory on the decline, and demand and interest on the rise, if people are considering selling, now would be a good time to get back in the market. This is an opportunity.”

Meanwhile, agents likely will be working quietly behind the scenes, soliciting owners of properties that aren’t on the market in hopes that they will sell their homes in private deals – if the price is right and they have somewhere else to move.

Echoing her colleagues at other agencies, Van de Water of Brown Harris Stevens said she expects to see more new listings in the next few weeks, if past years are any indication.

“Many people hold out until season starts in November. That’s always been the case. And then you’ll see a rush of new listings,” Van de Water said.

With the season in view, Sotheby’s Hickman said she also expects see more properties come onto the market as fall progresses – and island agents are poised to act.

“I think we’re looking forward to a good season. Those are the indications, but then, none of us have a crystal ball,” Hickman said. “But we’re optimistic.”

 

Source: Darrell Hofheinz, October 21, 2012, Palm Beach Daily News

http://www.palmbeachdailynews.com/news/business/real-estate/house-hunters-may-have-to-hunt-harder/nSjFF/

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