Lagging economy hits Palm Beach as homes languish a little longer on market

By MEGAN V. WINSLOW, Daily News Staff Writer
Saturday, November 22, 2008

Megan V. Winslow
(enlarge photo)
211 Tangier Ave.: Listed for $10.95 million, 478 days on the market. View more PB homes on market
Palm Beach has enjoyed a hearty share of eye-popping home sales figures this year, including closings of $77.5 million and $95 million.
And according to a fall 2008 residential market report from Brown Harris Stevens, those heavyweight figures have thrust the average price for Palm Beach single-family homes up 80 percent between April and September compared with the same period last year.
But like other luxury home markets across the country, Palm Beach has also seen an increase in the average number of days single-family homes sit on the market. The Brown Harris Stevens report indicates an 8 percent increase from 171 to 184 days between April and September compared with last year.
That's well above the average number of days on market for single-family homes within luxury ZIP codes across the country. According to a Nov. 16 report from the Institute for Luxury Home Marketing in Dallas, the average among 31 major U.S. metro areas is 137 days. That's up from 120 in September and about 110 in January.
Like those local record sales, the high Palm Beach average could be attributed to a few outliers.
According to Multiple Listing Service reports, one Banyan Road home has been on the market for more than 370 days. A Tangier Avenue home, priced at $10.95 million, has been on the market for more than 470 days. And one North Ocean Boulevard home listed for $9.85 million has sat idle for more than 660 days.
Gregory Heym, chief economist for Brown Harris Stevens' parent company Terra Holdings, prepared the local fall report. He said a higher average for days on market in Palm Beach is not surprising in the current economy.
"I think it's a modest increase considering everything that's gone on in the last year," Heym said. "I think it's certainly something to watch. I think you look at that and see the number of sales is down as well (and) you certainly see that there are signs of activity slowing in the market."
Compared with the April-through-September period last year, the number of single-family homes on the market decreased 17 percent from 72 properties to 60, according to the Brown Harris Stevens report.
But island broker Jeffrey A. Cloninger believes the Palm Beach real estate market is still robust — and he doesn't put much weight in days-on-market figures.
While a buyer should be wary of a home that has sat idle for long periods, days on market doesn't always paint an accurate picture, Cloninger said.
Some owners request that an agent not show their home for months so they can enjoy the local season. And with second or third homes, affluent sellers often don't need to unload a property right away and can afford to wait until they get their price, Cloninger said.
"They figure they'd rather take two years to sell a property and sell it at the price they desire than sell it in six months and take a haircut," Cloninger said.
It's also possible that a seemingly new property isn't new at all.
MLS listings can expire, and then the real estate agent or broker will re-enter the property. Doing so causes the days on market number to drop back to zero.
"It's kind of like asking a lady how old she is," Cloninger said. "Is what she says going to match up with the DMV record? Days on market is not a scientific number, because it can be manipulated."
Brown Harris Stevens Executive Vice President Ava Van de Water believes the best way to gauge the health of the local market is through median price.
Heym's report shows a 7 percent increase in median price from $3.25 million in 2007 to $3.47 million in 2008 for Palm Beach single-family homes.
The Luxury Housing Report puts the nationwide average median price this month at near $1.16 million. Ten months ago, that number was $1.18 million.
"A 7 percent increase is very, very good in this market," Van de Water said.
While Cloninger said it's never been a better time to be a buyer — especially in Palm Beach, where property has historically held its value — Heym believes it could take time before buyers creep out of a money-holding pattern and perhaps scoop up some of the properties languishing on the market.
"Like any other market, (Palm Beach is) dealing with a lot of the same uncertainty that's hitting most of the country right now, with everything that's gone on with the economy," Heym said. "I think that, so far, Palm Beach has fared better than most. And I think we'll learn a lot over the next couple of months."

source:

http://www.palmbeachdailynews.com/biz/content/business/2008/11/22/DOM1123.html

Mediators foresee gloom, doom in condo industry

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Bill and Susan Raphan.

CANDACE WEST / MIAMI HERALD STAFF

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BY MONICA HATCHER

mhatcher@MiamiHerald.com

Working for the state's Office of the Condominium Ombudsman is dirty, sometimes even ''disgusting,'' work, say Bill and Susan Raphan, who supervise the Fort Lauderdale satellite office.

The tempers, the misunderstandings, the complaining -- the slapping, the threats and, at least once, the brandishing of a firearm.

''You would not believe some of the things we see,'' said Susan Raphan, who with her husband began working, first as volunteers, for the office soon after the Florida Legislature created it in 2004.

Despite the job's tribulations, the Raphans said they know that more than 1.5 million condo owners in Florida depend on them as a resource for understanding the rights and responsibilities that come with condo living. And they find satisfaction in helping people. Of the 16,000 phone calls the office got last year, Bill Raphan said roughly 90 percent were from Miami-Dade, Broward and Palm Beach counties and handled by Fort Lauderdale's staff of seven.

Their primary duties include acting as mediator between boards and angry owners, holding classes and seminars about condo law, and monitoring elections. But as the South Florida real estate market enters another year of soaring foreclosures and sinking home values, the Raphans expect a host of new problems they do not have the power to remedy -- condo associations entering bankruptcy, buildings closing and unit owners walking away from their long-held investments because they can't afford to carry the cost of empty units.

The reason: unpaid maintenance fees.

''It's a major problem,'' Bill Raphan said.

The Miami Herald sat down with Bill Raphan to discuss the issues facing condo dwellers.

Q: What are the biggest issues facing condo owners right now?

A: The condominium market, the problems in foreclosures, obviously, liens and delinquencies are a big problem right now. That's the biggest problem at this point, and it's up to the government to try to help us. There's not a lot our office can do. This is a national problem that is happening everywhere, but we have so many condominiums here. It's just more acute in this area.

Q: What kind of complaints have you been fielding?

A: People are complaining about foreclosures and their maintenance fees. I always explain it to them this way: Your condominium has to run like a business, and the business has to collect enough income to run the business, in this case, the association or the condominium itself. In order to maintain the property, you have to take in X amount of money. [The total amount needed] is like a big pie, and each person has a slice of that pie that they have to pay. So, for every person in your condo [who] is not paying, it means the slice of your pie gets bigger. In other words, if you're paying $100 a month and some people aren't paying, you might have to pay $110 or $120. You might have to pay $200, and there are places with 50 percent or more delinquencies. That means if you are paying $100 a month, you're going to pay $200 to keep that place going. People can't afford that nowadays. People are losing their jobs.

Q: What are condos doing to deal with the problem of budget shortages?

A: Some condominiums have actually eliminated their maintenance people, and they are cleaning up and doing things themselves. They've eliminated their landscapers and are cutting lawns. They've cut down as best they can on things they buy. The situation is very difficult. The people who are getting assessed that extra money are angry. They want something done, but there is not a lot that can be done.

Q: What about accusations that lenders are stalling foreclosures to avoid paying maintenance and association fees? Is there any truth to that

A: [Lenders] are not going to say they are stalling, but what condo owners are complaining about is a Florida statute that gives lenders a cap that says they don't have to pay more than six months of assessments or 1 percent of the value of the unit [before they foreclose on it. Then they must pay full association fees like other unit owners.] That's one of the things [Florida legislators] may be looking to change this year.

Q: Do you think there is a solution to getting lenders to pony up their share of maintenance fees?

A: It has to be legislative on any level, maybe even up to the federal government, who knows? It's a major thing. This is something that needs to be looked at on even a national level.

Q: What are the consequences of association-fee problems going unaddressed?

A: I know of several condominiums that are on the brink of people just walking out. They can't afford to maintain their units anymore. Their slice of the pie has become so big that they can't afford it. They are just packing up and leaving their largest investment because it doesn't pay for them to stay. You are going to be hearing about this very soon. This is going to be a real problem.

Q: So unit owners who've been in their condos for many years, who have equity in their condos and even may have paid off their mortgages, are still having to move because they can't afford maintenance fees?

A: Yes, and some condos can't take in even enough money to pay their water bills. They're shutting off the water. They're shutting off the electricity. They can't come up with the money because there are so many delinquencies. The few who are left can't come up with enough money to pay all the bills for everybody. It's sad.

Q: How do these problems affect sales in the buildings? I've heard it described as a ``death spiral.''

A: Sales are very poor because people don't have the money to buy, No. 1. And, they don't want to take over places with debt problems. Sales are very bad. Everything is very bad. Let's face it.

source:

http://www.miamiherald.com/living/home/story/834433-p2.html

Super-yacht for sale, one formerly carefree owner

A host of boats are on the market, offered by a select group of brokers whose clients can pay £50m or more for a yacht moored in Monaco or Monte Carlo. There they entertain corporate contacts and throw parties where Hollywood actors rub shoulders with politicians and sports stars.

They include the Ultima III, owned by US investor Ron Perelman, once the world's richest man, who made much of his estimated $11.5bn fortune taking cosmetics manufacturer Revlon private in 1985 and has since bought and sold stakes in comic book publisher Marvel Entertainment Group and film-maker Technicolour.

Yacht broker Edmiston is selling the 190ft boat, which boasts eight "staterooms", accommodation for 16 guests and a Jacuzzi. Perelman has entertained actress Gina Gershon, who played fashion designer Fable in TV series Ugly Betty, and director and producer Penny Marshall on the yacht's lengthy sun deck in recent years, but like many investors, he has seen his wealth fall as the US market plunged. The Dow Jones index of leading shares fell by 33.8% in 2008, its worst performance since 1931.

The Ultima 111 is priced at over €50m (£47.7m) by Edmiston, which is also one of several brokers advertising the Lady Christine, owned by Conservative party donor Irvine Laidlaw. Laidlaw sold his conference business IIR for $1.4bn, and put the 182ft yacht named after his wife on the market last summer with a price tag of €45m. Others on the market include the Phocea, the largest sailing yacht in the world until 2004, which was bought by Mouna Ayoub, a French socialite of Lebanese origin who made a fortune from real estate. Ayoub refitted the boat with opulent oak panelling and handmade furniture from Viscount Linley's London showroom. She bought it 12 years ago from disgraced French politician Bernard Tapie, reportedly funding the $17m (£11.7m) cost by selling a 112-carat diamond bought by her ex-husband following their divorce. The yacht is for sale for an undisclosed price.

Other boats on the market include the Enterprise V, a 167ft yacht with a diving pool and fitness room, which used to be the corporate yacht at marketing company Amway and now belongs to the company's co-founder Richard De Vos, who also owns the Orlando Magic basketball team. It is on the market for $22.5m.

The Maltese Falcon, owned by American venture capitalist Tom Perkins is also for sale. One of the largest privately owned sailing yachts in the world at nearly 290ft, it can be bought for €115m. It has been on the market for months.

The Excellence III, owned by American car dealer Herb Chambers, whose leading top managers at his eponymous chain of showrooms used to be invited on board to watch films in its private cinema, is also for sale though broker Moran Yacht & Shop for an undisclosed sum.

Not every owner is selling because of falling share prices or declining profits. De Vos also owns a smaller yacht, a 130-footer, and Chambers reportedly took possession of a larger boat in July. The Excellence III may simply be surplus to requirements, but like other parts of the luxury goods market, yachts are not immune to the economic slowdown. Last month British yacht-maker Fairline revealed 275 redundancies, a few months after introducing three-day weeks for employees at its manufacturing base in Oundle, Northamptonshire, saying: "The ongoing global financial and economic conditions continue to affect demand for luxury products across many industries and regrettably, Fairline's products are not immune from these effects." It had already shed 90 jobs in September, reducing its workforce to 1,000, but its chief executive Dereck Carter managed to remain upbeat.

Carter said: "The downturn in the market will pass and we anticipate that towards the end of 2009, increased levels of activity are likely to materialise as the market begins to recover and as we bring new models in development to market."

Donald Starkey, the designer behind "giga-yacht" Everest, currently under construction in Fort Lauderdale, Florida, will be hopeful Carter is right. At 656ft, Everest will be longer than two football fields and have five decks serviced by two lifts, a helipad, a submarine and 17 apartments. It is scheduled for completion in 2010, according to the sales prospectus. By that time, the world economy may finally be emerging from a long slump. If not, Everest may be on sale at a discount, although given its $500m price tag, even a 50% reduction would prevent all but the richest buyers making an offer.

Merijn de Waard, founder of website Superyachttimes.com, said: "There are more big boats for sale now. I think there will be a price correction. That is logical because there is less demand."

He added: "In the past, very large yachts have sold quickly because there were a lot of people who wanted a yacht instantly and had the cash to buy them. But many of the shipyards that build these boats have orders until 2012, so they can afford to survive without any new orders for a few years."

They are a luxury only the wealthy can afford, but as global recession looms, some of the world's wealthiest businessmen are offloading the multi-million-pound yachts that bestow super-rich status on their owners.

source:
http://www.guardian.co.uk/business/2009/jan/04/recession-super-yachts