South Florida home prices are coming back strong, but they remain well below boomtime levels, according to the widely watched S&P/Case-Shiller index.
As of September, home prices in Palm Beach, Broward and Miami-Dade counties posted a 6.7 percent gain over the past year. South Florida values remain 23 percent below their 2006 peak, however.
In one bit of hopeful news, the S&P/Case-Shiller index said Tuesday that, by one of its measures of national home values, prices reached a new record in September, eclipsing the previous high set in 2007. On further review, says Trulia Chief Economist Ralph McLaughlin, the new record isn’t especially exciting.
“Crossing this threshold is largely symbolic,” he said. “After controlling for inflation, home prices in the U.S. are still about 20 percent below the peak.”
Prices hold steady. The median price of a single-family house sold in September was $316,000, up slightly from $315,000 in August and up 10.9 percent from a year ago, the Realtors Association of the Palm Beaches said Thursday.
It’s still a seller’s market. The typical house sold for 95 percent of asking price in September, down from 95.1 percent a year ago. The inventory of houses for sale rose to 7,056, up 9 percent from a year ago.
For condos, cash is king. Fully 58 percent of condos and townhouses sold last month went to buyers who didn’t need a mortgage.
Nationally, for owners who move every seven years and can afford to put 20 percent down, it’s 37.7 percent cheaper to buy this year. In Palm Beach County, it’s 53.2 percent cheaper to own.
The arithmetic gets complicated, but here’s one way to look at it: Say you buy a $250,000 house with $50,000 down and take out a $200,000 mortgage with a fixed rate of 4 percent for 30 years. Your monthly payment is $955. Add $500 a month for insurance and taxes, and your tab is $1,455, for a seven-year total of $122,220.
Or you could rent a place for $1,950 a month. Assuming rents stay the same (an unlikely scenario), your seven-year total would sum up to $163,800.
They addressed a crowd assembled at Morton’s Steak House for the aptly-named Real Estate Developer Power Lunch. The lunch was hosted by Green Advertising and chairman Phyllis Green, in celebration of the company’s 30th anniversary representing a range of businesses, especially developers.
Although the real estate developers were enthusiastic about their own projects, they candidly voiced concerns about housing affordability, demand for rental apartments and the future of new projects proposed in the county.
And, in a one-on-one interview with a reporter, one developer dropped a bombshell.
Here are seven takeaways:
Minto is not promising to build parks and recreational facilities at Westlake, a city created after the county gave Minto approval to develop 4,500 homes in a portion of the Acreage. “That’s up to the city (of Westlake),” Minto’s Mike Belmont told this reporter. Minto is the primary landowner in the Seminole Improvement District, whose boundaries now roughly equate those of Westlake. The project calls for 200 acres of parks and 15 miles of trails for horses, bikes and walkers. After Westlake was created, county officials worried Minto would not keep its promises and instead, punt to Westlake.
Boca Raton is about to become a hot market for apartment rentals. Altman’s soon-to-open 396-unit apartment complex, Altis Boca Raton, is expected to attract professionals working in the nearby Park at Broken Sound. Altis is under construction on Military Trail and is expected to open in March. Rents will range from $1,800 to the high $2,000s for one, two and three bedroom apartments.
West Palm Beach remains an iffy market for more new apartments. Greene said there’s a limited pool of people who can afford pricey rents. At the Strand apartment building and City Palm condos, where Greene owns bulk units and rents them out, he consistently has a 10 percent vacancy rate. “We don’t have robust demand,” Greene said.
Housing affordability is a problem. Belmont said Westlake will provide for-sale homes for working families, but other developers who build apartments acknowledged rents are starting to become too pricey. In Boca Raton, Altman said rental rate increases will soon start moderating because the supply of apartments is increasing. In West Palm Beach, Greene said rental rates increases are “constrained” because there isn’t a huge pool of renters. This means rental rates are less likely to rise in the future, he said.
Fewer condominium and apartment projects will be built, thanks to tightened lending practices. Making matters worse: Bank regulators are clamping down on banks that already have broad exposure to the housing market. Minto’s Belmont said one major bank dropped out of its lending group, but the company was able to replace it with another bank. “The (lending) pool is shrinking, and the banks participating in the pool are getting tougher,” agreed Kolter’s Vail. Kolter is building The Alexander apartments in West Palm Beach and the Water Club condominium in North Palm Beach.
West Palm Beach has a lot of proposed projects, but “of eight or 10 proposed projects, maybe one or two will get built,” Greene said. Greene said obtaining bank financing will be a problem for some developers, but not for him: He plans to self-finance construction of One West Palm, a twin-tower complex featuring office space, hotel rooms and apartments. “I’m taking a shot here, but it won’t ruin me if it doesn’t work out,” said the billionaire. Greene expects to break ground on the 30-story towers at Quadrille Boulevard within about four months.
Everybody wants the West Palm Beach condominium, The Bristol, to succeed. The ultra-luxury condo, now under construction on Flagler Drive, could provide a “viral” boost to the local real estate market, once the 25-story building is completed and word gets out, said Kolter’s Vail.
The Jefferson Palm Beach apartment complex in West Palm Beach traded hands in June for $56 million, or $198,936 a unit, according to county property records.
The new owners are Dedicated West Palm Beach LP and GP Florida LLC.
The address of Dedicated West Palm Beach is listed as the address of Brass Enterprises, based in Toronto, Canada. Brass is a real estate investor in multifamily housing in both the U.S. and Canada.
The newly built rental community was completed a year ago. It consists of 281 units. Monthly rents now range from $1,547 for a one-bedroom unit to $2,041 to a three-bedroom unit.
The Jefferson Apartments are at 300 Courtney Lakes Circle, near the Palm Beach Outlets, off of Palm Beach Lakes Blvd.
The Jefferson’s sales price was a nice premium for the apartment’s developer, JAG-Star, an affiliate of Starwood Capital of Greenwich, Ct. JAG-Star bought the 11-acre parcel of land in 2012 for $4 million.
Members of the Fountains Country Club have approved the $17 million sale of country club land to GL Homes, which plans to build 470 housing units at the suburban Lake Worth club.
The sale, first reported June 2 by the Post, includes parts of the North Golf Course, one of the club’s three courses, as well as undeveloped land on the east side of the 865-acre property, bordered by Lake Worth Road on the north and Lantana Road on the south.
Members approved the sale in a vote earlier this month.
GL Homes plans to build between 150 to 200 single-family homes. GL also will build between 250 to 300 apartments, marking the first time the Sunrise-based home builder has entered the apartment construction market, according to Larry Portnoy, GL Homes vice president.
Paul Napieralski, Fountains Country Club president, hailed the sale.He said it will allow the club to make needed upgrades so that the club “once again become one of the premier clubs in Palm Beach County.”
As part of the deal, the Fountains must build a $2.5 million resort-style pool.
The sale is a way for the club to also cope with declining membership during the past five years, Napieralski had said in a letter to club members.
Not all residents of the community were on board with the plan, however. Some opposed the sale as a short-term fix to a long-term problem, which they say is mandatory membership in the country club.
Residents of the new GL Homes will not be required to join the country club as equity members, as residents in some older Fountains communities have been required to do.
The issue has split the community and even resulted in lawsuits.
Golf clubs have been dealing with declining membership for years. The problem is particularly acute in Palm Beach County, with its plethora of clubs.
The list above, compiled by Metrostudy, shows the 10 most active single-family developments in South Florida and the Treasure Coast, ranked by housing starts in 2015.
In the top spot with 324 starts is Valencia Cove, GL Homes’ 55-and-older community in Boynton Beach. Ansca Homes’ Villaggio Reserve, a 55-and-older development in Delray Beach, was the second-busiest community in Palm Beach County.
Next up is Seven Bridges, GL Homes’ high-end development west of Delray Beach. Prices there start at $700,000. Rounding out the Palm Beach County list is GL Homes’ Tuscany, also in west Delray. Prices start at $400,000.
The median price of an existing house sold in Palm Beach County in February was $295,000. Palm Beach County’s wages, while high for Florida, remain below the national average.