MARKET OVERVIEW - FALL, 2003

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!