Article Courtesy of The Palm
By Jeff Ostrowski
August 1, 2016
First came the dizzying boom, a bubble that bestowed
overnight riches on anyone fortunate enough to own a home in Palm Beach
Then came the wrenching crash, a collapse that snatched back the gains
and then some. Palm Beach County properties shed billions of dollars of
value in a few short years, foreclosures soared and tens of thousands of
jobs disappeared from the local economy.
Now, a decade
after its peak, Palm Beach County’s real estate market
has returned to something like normal. Prices have
bounced back, foreclosures have mostly disappeared and
mortgages have grown more available.
Reminders of the housing hangover remain, most obviously
in the harsh reality that home prices have yet to
eclipse the levels of 2005 and 2006. While national home
prices set new records month after month, Palm Beach
County values are well below their high point.
Over the past decade, Palm Beach County’s housing market
experienced a dizzying boom and a wrenching crash. Now,
it’s back to ... read more
The median price of a single-family home sold in Palm
Beach County in June was $320,000, down from the
November 2005 apex of $421,500.
“The recovery has been a little more robust than what I would have
expected,” said Gary Nikolits, Palm Beach County’s longtime property
appraiser. “But we’re probably a couple years away from what you would
call a full recovery.”
In one post-crash quirk, construction of new homes has fallen to a
fraction of historic levels. And fully 43 percent of houses and condos
sold last month went for cash, meaning the buyer didn’t take out a loan
to finance the purchase.
That’s a stark contrast to the easy money that was a hallmark of the
real estate bubble. Borrowers easily qualified for loans worth 100
percent or more of the value of their homes. Mortgage brokers collected
huge commissions for selling what became known as “NINJA loans” to
borrowers with no income, no job and no assets.
When the mortgage meltdown hit in 2007 and 2008, banks from Wall Street
to Hypoluxo Road collapsed. Among Palm Beach County’s 10 biggest banks
during the bubble were Wachovia, Ohio Savings, Washington Mutual,
BankUnited, Lydian Private Bank and BankAtlantic. All were felled by the
By the 2010, the high point in the foreclosure flood, more than 40,000
homes in Palm Beach County were in default.
The easy money went away, and in the years after the crash, qualifying
for a mortgage required near-perfect credit.
“We went from one extreme, where anybody who could fog a mirror could
get a loan, to the other, where doctors and lawyers were having a hard
time getting a loan,” said Jack McCabe, a real estate consultant in
Now, the mortgage market has returned to a halfway point. Loans are
available, but the best deals are reserved for borrowers with stellar
credit and hefty down payments.
“We are clearly making quality credit decisions now, really scrubbing
people’s finances and tax returns,” said Jim Flood, regional manager for
Supreme Lending in Delray Beach.
Through all the turmoil, one corner of Palm Beach County’s housing
market proved immune: Oceanfront mansions soared. In 2008, as the rest
of the property market imploded, Donald Trump sold a Palm Beach estate
to Russian billionaire Dmitry Rybovlev for $95 million, a record for the
The records have kept coming. Last summer, a $33 million deal in
Manalapan and a $38 million sale on Jupiter Island set new high-water
marks for oceanfront mansions in those enclaves.
This year, an oceanfront mansion in Delray Beach sold for $34 million,
shattering that city’s previous record price by $15 million. And a
mansion in Ocean Ridge sold for $13.6 million, eclipsing that town’s
previous record by a wide margin.
Nikolits cited the old saw about the law of supply and demand as it
applies to property on the beach: “They don’t make oceanfront any more.”
At the lower end of the market, rising home prices and stagnant wages
have renewed boom time concerns about housing affordability. And the
strong rebound — one recent report pegged Palm Beach County’s housing
market as the nation’s hottest — have raised concerns about a slowdown.
“People whisper about a dip, but I feel like Palm Beach County may be
somewhat insulated from that,” said Henry Kaplan, sales manager at
Century 21 Tenace Realty in Boynton Beach.
An influx of buyers from the Northeast will buoy prices, he said. Others
aren’t so sure. Lynn Szymoniak, head of The Housing Justice Foundation
in Palm Beach Gardens, said boom and bust will remain the rule for the
region’s housing market.
“I take joy in looking at neighborhoods that came back,” Szymoniak said.
“But I think the housing market is very temporarily healthy.”