Crash? What Crash?
In Palm Beach, there's plenty of cash. We've heard it many times before, but it's clear that Palm Beach is indeed different. One need only look at the local real estate trends to see just how true this is. Contrary to worldwide reports of a nationwide slump, Palm Beach properties are not just selling-median and average sale prices are actually up!
According to Palm Beach attorney Les Evans' latest report analyzing sales figures between January 1 and September 30, sales of single-family homes in Palm Beach rose three percent over the same period last year. In 2007, there were 114 island homes sold compared to 111 in 2006. But the bigger news has to do with the dollars being spent to live on the island. The median price of a single-family home in Palm Beach jumped a whopping 24 percent, from $3.07 million in 2006 to more than $3.8 million in 2007. And, for the first time ever, according to Evans, the average price for a home in Palm Beach has exceeded $5 million.
This figure increased from an average of $4.56 million in the first three quarters of 2006 to over $5.2 million in the same period this year. That means buyers, on average, spent $666,000 more to live in Palm Beach this year than last. Surprisingly, condominium sales prices are also up, contrary to reports that this end of the market is suffering. While actual sales were down five percent, the average sales price rose seven percent. Buyers paid $75,500 more for a Palm Beach condo in 2007 than in 2006. This year, the average condo sale price is $1.18 million and the median price was $780,000, up $5,000 from last year.
Big Deals
Contributing to the robust health of the local market were several summer deals in the $15 million-and-up range. While the rest of the nation was reading headlines about foreclosures and the credit crunch, this past August a wealthy buyer plunked down $23 million for a six-bedroom, direct oceanfront Paul Wittman-built spec mansion.
Mega-mansion developer Dan Swanson paid nearly $21 million for two acres of oceanfront land at 1220 South Ocean Boulevard (earning the seller a tidy $4 million in just over a year!). Other huge deals included the closing of the Gowdy family's landmark 15,000-square-foot, John Volk-designed mansion at 343 El Bravo Way for over $18 million, and neighboring 101 El Bravo Way, which sold to Swanson for $16.5 million. Not that he plans to keep or live in this property-it's already been knocked down to make room for another spectacular spec house sure to earn the developer a hefty profit given the continued demand for new properties in Palm Beach.
"There will always be a demand for new construction in Palm Beach, especially on the ocean," says broker Christian J. Angle, owner of Christian Angle & Associates.
"This is not an area of the market subject to radical swings." Especially not if you are Stephen Ross, owner and CEO of The Related Companies and a part-time Palm Beacher, who paid close to $32 million for the landmarked oceanfront mansion known as The Reef, located at 702 North County Road. The Maurice Fatio-designed home, which was named best modern building at the 1937 Paris Exposition, changed hands in a private sale that earned the previous owners (Stuart and Anita Subotnick) a $2 million annual profit over the past 11 years (they paid $9 million for the home in 1996).
Island Buy
Those in the market for a mega-mansion this season will find plenty to choose from. Sotheby's has no less than eight estates listed for over $20 million, including another Maurice Fatio estate, a 23,000-square-foot mansion. It was built in 1929 on 288 feet of direct ocean property, which Karen Lehrman and Cristina Condon have listed for $35 million. This five-bedroom, 11-bath estate includes a two-bedroom pool house, a 60-foot pool with original tile, a tennis court, air-conditioned beach cabana with wet bar and a four-car garage.
Prefer something brand new? The newly completed, 10,000-square-foot, six-bedroom property with incredible ocean views and deeded beach rights at 1620 South Ocean Boulevard (listed with Corcoran's Jim McCann and Stuart Wexelman) is priced to sell at $19 million. Of course, if you prefer to customize and build your very own dream house, you can purchase the oceanfront parcel of land at 111 Mirasol for $26 million from Julia Robinson of Earl Hollis Realtors. At over 44,000 total square feet, the land can easily accommodate a 17,000-square-foot estate; architectural plans available upon request. Brown Harris Stevens' Betsey Hall also has an attractive lakefront parcel on Everglades Island available for a mere $10.5 million if a smaller, custom-built home is more your style.
Trump Card
What made Donald Trump consider yanking his name off the luxury condo building he'd planned in partnership with The Related Group's Jorge Perez? While not the first West Palm Beach condo building to grind to a halt due to less-than-anticipated sales, it's the one local residents and brokers thought might actually help boost the city's condo market. With an influx of cheaper properties for sale and for rent, the luxury condominiums planned by Trump and Perez have yet to attract enough buyers willing to spend more than $1 million-at least not in West Palm, not for a condo and not right now. But it's not all bad news, as anyone in the market for a gorgeous beachfront condo will find plenty available across the bridge for the same million bucks. "Now that we've gotten through our second hurricane-free season, and sellers have gotten a bit more realistic as far as pricing, it truly is a great time to be a buyer seeking a million-dollar (give or take a few dollars) beachfront condo in Palm Beach," says Corcoran broker Donald Gorbach.
Renters Beware
In another example of how Palm Beach differs from the rest of the country, just try finding a luxury home or condo for rent this season. Brokers are not exactly sure why the inventory is lower than usual, despite demand being very high, but the consensus is that owners are either using their properties more than in the past or just do not have the desire or need to rent them out. "The luxury rental market is so tight, you have to look under every rock and call seasoned agents within the community to see if they have any pocket listings-and literally knock on doors, which I do," says Christian Angle. Corcoran's Rosalind Clarke believes the interest in rentals has been later than usual, due to the Indian summer up north, but notes that she still has the "perfect house" available for rent in-town this season. Located at 141 Seaview, the three-bedroom, three-bath, designer-furnished residence features a beautifully landscaped pool and garden, a formal dining room and an office.
Located on an ocean block right in the center of town, it's available for $18,000 a month in season or $10,000 a month annually.
Other brokers say they have plenty of rental options in West Palm, Jupiter and Wellington, including waterfront condos and beautiful luxury homes-many in golf-course communities-but if it's Palm Beach you want, perhaps it's time to invest in a home of your own rather than trying to find a seasonal rental this year. Angle suggests looking at his listing at 315 Seaspray, a totally renovated, in-town Mediterranean three-bedroom with a "Smart Home" security system, impact glass windows, a separate one-bedroom guesthouse and a new gourmet kitchen (complete with a Sub-Zero wine cooler, Thermador oven and Bosch dishwasher). There's also a master suite with steam rainfall shower and Jacuzzi tub. "This home is worth every penny of its $2.95 million asking price," says Angle. "It is one of the best deals on Palm Beach."
There may be relief on the horizon to the dearth of rental inventory that might also boost the market for buying apartments: We hear that some island co-op boards are meeting to amend the rules that forbid owners from renting (a privilege long enjoyed by condo owners). It just goes to prove that in real estate, where there's a will, there's a way.