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Smoother sailing? Housing market appears to be stabilizing after years of volatility

Posted On: 10-18-2015

By Darrell Hofheinz

Daily News Real Estate Writer

Breathe.

Or, at least, try to catch your breath.

That might be good advice for Palm Beach homebuyers and sellers this season, who will encounter a market that has steadily regained its footing in the years since the Great Recession ended. That milestone three years ago ushered in a mad flurry of sales activity driven by pent-up demand, increasingly limited housing inventory and escalating prices.

As the dust of the recovery settles, the overall sales picture is likely to be a little more stable this season, in part because homebuyers and sellers have learned what to expect in a competitive market still grappling with relatively low inventory. That theme emerged repeatedly in recent conversations with real estate brokers and agents on the island.

“I think buyers have gotten used to the fact that the bar has risen,” said Palm Beach Board of Realtors President Clive Stuart-Findlay, an agent with Fite Shavell & Associates. “They know that if they don’t ‘pull the trigger’ (by making an offer), they’re likely to miss out.”

By any measure, the number of house sales has slowed over the past year. A search of Palm Beach Board of Realtors Multiple Listing Service records, for instance, showed that between Jan. 1 and Oct. 13, the number of single-family sales dropped 23 percent from the same period in 2014.

One theory says that trend will likely continue if more buyers refuse to settle for something that isn’t exactly what they want, especially on the higher end. Many homeowners remain wary of selling, often because they are uncertain as to whether they will find a residence better than the one they own. Concerns about the global economy also might be dampening their enthusiasm for making any major change: In the wake of stock market volatility, holding on to a Palm Beach real estate investment rarely has looked so good.

It all means house hunters new to the market likely won’t have as many choices as they did before or during the recession — but there are bright spots. As of early last week, there were 124 single-family homes and townhouses listed for sale in the local multiple listing service — a few more than in 2013 — and 20 more than last year at the same time, when inventory hovered at a historical low.

Prices are up

In any event, the heated competition among buyers has driven home prices northward, with buyers last season frequently engaging in bidding wars for better-quality properties, especially for new and recently renovated houses or those with water views.

Observers agree that home values are not only back at their pre-recession 2008 levels but in many cases have exceeded them — a message reinforced by Dorothy Jacks, chief deputy property appraiser for Palm Beach County, during a luncheon speech this month to the Palm Beach Board of Realtors at The Colony.

She compared the “total market values” assigned by her office on Jan. 1 of each year for Palm Beach properties, based on sales activity during the previous 12 months. The resulting time lag means that sales prices in a given year can easily outstrip assigned values “in a fast-moving market such as what we see here,” she said.

Even so, Palm Beach’s recovery has not only outpaced the county’s overall, but almost every other single-family market in the county, Jacks said.

“Single-family homes in Palm Beach have been in the double-digit increases year over year for the last three years,” Jacks said, noting a growth rate of 10 percent for the 2013 tax rolls, a 12 percent hike for 2014 and a 14 percent increase for the current tax year.

And looking ahead to the tax roll for 2016, she noted the strong sales that have occurred in Palm Beach this year, including four sales recorded at more than $20 million.

“We’re probably looking at an increase of 12 percent (in residential market values), based on sales we’ve seen so far,” Jacks said.

‘New’ remains a draw

Buyer competition has been especially intense for the relatively small number of new houses built on speculation over the past three years by developers scrambling to keep up with demand. Less than a dozen of those entered the market last season, and most sold within a few months — and sometimes a few days — of entering the market. Expect more spec homes to come online this season, as developers struggle to meet demand from want-it-now buyers who have no interest in building anew.

As for outdated “tear-down” homes — say, North End houses built during the 1950s, ’60s or ’70s, which were particularly hard to sell during the recession — most have simply vanished from the market, scooped up by spec developers for their land or by buyers who want to build new custom homes. It’s not unusual these days for land to sell at upward of $200 per square foot — and often more, depending on its location.

Across Palm Beach, neighbors are watching new homes rise at a pace that has startled seasoned residents and newcomers alike — and building officials busy issuing permits.

Condo picture brightens

The island’s condominium picture, too, is brighter than it’s been in several years — or at least as bright as can be expected in a built-out town where no new condo building has been constructed in more than a decade and ceiling heights above 9 feet are prized finds indeed. Palm Beach condo shoppers who are looking for “new” soon learn to substitute the term “renovated” instead — or else they shop elsewhere, often looking southward. Miami, anyone?

Midtown condos, especially renovated ones facing the water, are selling at historically strong prices, although inventory continues to be a challenge. And on the South End, condo buyers have finally burned through much of the glut left behind by the recession. The result is that new listings are entering the market at higher prices, especially for apartments updated by their owners during the past two or three years.

The healthier condo market has filled a major gap in the island’s housing market, which is far different from the boom years — or the recession years, for that matter.

It’s a new season, indeed.

 

 

Source: Darrell Hofheinz, October 18, 2015, Palm Beach Daily News

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