The
island of Palm Beach began its most recent "boom" in
the fall of 1997, with sales activity and prices increasing at
a dizzying rate. This wave continued until the summer of 2000,
when new inventory began outpacing sales. The last day of 2000
Palm Beach had approximately 79 single family houses on the market
for sale. Within two years, that number had almost tripled. Some
buyers - many, it seemed at the time - were predicting a dramatic
decrease in prices on the island, and the "wait and see"
posture became quite common. Bottom line...it didn't happen.
Due to the excess inventory, we transitioned from a seller's market
to a buyer's market rather quickly. No grand 30 something per cent
annual increase for the seller these last couple of years. But,
according to statistics on actual closed sales in 2001 and 2002,
there was still double digit appreciation for those who priced their
properties correctly and accomplished a sale.
Zoom to the present. This summer we have experienced the strongest
off-season activity in memory. If you think no one's in Palm Beach
after Easter, I would point to the $20+ million in contracts I wrote
in August alone as evidence to the contrary!
What does this mean? My feeling is that we are breaking out of
the "wait and see" attitude adopted by many potential
buyers since the stock market slide in the summer of 2000. We appear
to be entering, if the present momentum continues, a dynamic, forward
moving real estate cycle once again.
As our market improves, real buyers are taking a different attitude
toward purchasing. Exit buyers wanting to find the $5 million house
for $3 million, enter buyers making realistic offers - say within
10% of a reasonable asking price. The same logic applies equally
to sellers. Palm Beach property owners had been spoiled by the rapidly
accelerating appreciation from 1997 through 2000. Admittedly, there
have been a number of properties offered these last couple of years
at prices where it's evident the seller was not in tune with current
market conditions...the market stabilized, and houses with inflated
values didn't sell. Some will point to several sales where deals
closed at 30% to 40% off asking price as evidence that Palm Beach
was overpriced and values were dropping. Nonsense! Those properties
that sold for considerably less than asking price were improperly
priced to begin with. If you ask $7 million for your $5 million
house, and it sells at $5 million, it doesn't mean the market has
slipped 28%.
Buyers waiting for a "steal"or expecting the Palm Beach
market to take a dive didn't fare too well, as many sellers decided
to hold off until the market rebounded, rather than accept a "low
ball" offer. Palm Beach is not a primary housing market, and
the sellers generally don't have to sell. He who insists on the
"steal" will usually be disappointed.
I must point out something I feel is time tested and true in the
Palm Beach real estate market. It has been my experience that now
is always the best time to buy, as he who waits will only pay more
later. The late humorist Will Rogers said it seventy five years
ago, and it is still true today... "You don't wait to buy real
estate, you buy real estate and wait!"
Keep in mind that historically in Palm Beach real estate, what
is a "retail" purchase one season looks like a "deal"
the next season!
|
Under $1 Million |
$1-4 Million |
$4-6 Million |
$6-10 Million |
Over $10 Million |
|
8 |
60 |
30 |
33 |
21 |
| Under $2 Million |
$2-4 Million |
$4-7 Million |
$7-10 Million |
Over $10 Million |
| 45 |
30 |
14 |
7 |
8 |
| Under $500K |
$500K-1 Million |
$1-2 Million |
$2-3 Million |
Over $3 Million |
| 36 |
40 |
22 |
10 |
7 |
| Under $2 Million |
$2-4 Million |
Over $4 Million |
| 5 |
18 |
2 |