Where are the Bargains?

By Kaki Holt

June 13, 2004

Great real estate bargains in this sellers' market are rare, but local REALTORS@ have a few tips for potential buyers.

"The inventory is so low, and the demand is so great, that everything is selling very quickly," said Molly Douglas, a REALTOR@ with Coldwell Banker in West Palm Beach.

She emphasized the advantages that REALTORS@ have, including 24-hour access to the Multiple Listing Service

(MI.S)."We get the newest MI.S listings on a 'hot sheet' every night, so we try to see those new properties the next day."

The average price for a single-family home in Palm Beach County in the first quarter of this year was $304,700, up from $270,600 the quarter before. Unfortunately, buyers looking for less-expensive homes don't have a large inventory to choose from.

So with a budget of $150,000 or less, should you just put off buying a house until the market cools off? Not necessarily. There just might be a pocket neighbor- hood or two that are still affordable. ..if you're willing to compromise or consider several areas.

"People who want a three-bedroom, two-bath house are often having to settle for one bathroom," Douglas said. 'They often have to take a 1itt1e less, but they still have to act quickly in this market.”

Rafael Cortes, a REALTOR@ with the Lake Worth office of Continental Proper- ties, said, "Lake Worth still has some bar- gains, particularly three-bedroom, one- bath older homes. They're good because you can really increase the value of the home by just adding a second bath."

Cortes indicated that many of the homes south of Lake Worth Road priced under $150,000 make excellent starter homes for first-time home buyers or couples downsizing after their kids are gone.

Time is of the essence in any real estate market as hot as South Florida's. During the first quarter of this year, the average home sold in just over two months. Bargain-priced properties sell much more quickly.

"W e listed a two-bedroom, one-bath home with 1,100 square feet in the 200 block of Greenwood Drive, north of Southern Boulevard, in West Palrn Beach. It sold for close to the asking price of $249,000 in one day," said Steve Hollander of the Hollander Team Inc. "People are paying full price for houses that they plan to tear down and then build a newer house."

Illustrated Properties President F.F. Chappy Adams suggests looking for property in the area extending north of down- town West Palm Beach up toward North Palm Beach for homes with good potential appreciation.

“The city of Riviera Beach has some interesting things planned for the waterfront area north of the Port of Palm Beach and south of Blue Heron Boulevard," Adams said. "There are some modest homes in that area."

By "modest," he means two- and three-bedroom homes priced under $150,000, although many of those houses might need some fixing up. Adams also has his eye on the North Flagler Drive area called Northwood Harbor.

"Just south of the Florida Power & Light power plant and north of Northwood, some condos are planned at over $1 million that will pull up the whole area," he said. "'That will definitely set a new standard there. Both of those are areas to watch."

Adams and Douglas both suggest looking in the Northwood Hills area, west of Broadway, for homes priced in the mid- $150,000s. Again, however, buyers should expect to perform some repairs, as many of those homes are listed ''as is."

"Some of the smaller homes that cost around $150,000 might be in pretty good condition, but most of the larger ones need some work," Adams said.

Some bargains can still be found in the area bordered on the north by Belve- dere Road and on the south by Forest Hill Boulevard, between Interstate 95 and South Dixie Highway.

"Homes in that area, which were priced in the $90,000s last year, are at $150,000 this year," Douglas said, who agrees with Cortes that Lake Worth also still has some affordable housing.

Modest three-bedroom houses may cost around $150,000 in Lake Worth, while similarly priced homes with "cottage" charm are usually much smaller two-bedroom, one-bath models.

"If somebody's looking for something under $150,000, we often suggest that they look at neighborhoods in St. Lucie County," Hollander said. "There's so little in this price range to show them in Palm Beach County."

Adams also suggests looking in St. Lucie County: "Just across the Martin County line, you can find new three- bedroom, two-bath homes with garages in the $170,000 range."

Condominiums are another alternative, but you have to factor the monthly maintenance fees into your budget. Adams mentioned The Grand View at Crestwood in Royal Palm Beach -two-, three- and four-bedroom town homes priced from the $150,000s to $200,000.

"Four bedrooms for under $200,000 is almost unheard of," he said. "We have just begun selling condos on St. Lucie Boulevard West in Martin County in the same price range."

Adams also suggests the western communities of Loxahatchee and The Acreage, although a recent MLS search showed only four houses available in that vicinity for under $200,000.

"In the long term, the upcoming Scripps development will create more demand for housing in the western area between PGA Boulevard and Northlake Boulevard, along Seminole Pratt-Whitney Road,” Adams said.

Finding traditional bargains -such as distressed properties or "motivated" sellers- is tough in this market. Suzi Lavati, director of Illustrated Properties' foreclosure department, handles properties that have reverted to the lenders after foreclosure. She cautions buyers to expect neither a quick move-in nor a great deal.

"Ninety percent of the time, foreclosures are such fixer- ' uppers that they'll take you months to move into," Lavati said. 'They're so few and far between that investors are fighting for them, so often they sell for list price or more."

She suggests working with a REALTOR@ to look for homes to buy on a "short sale" -homes headed to foreclosure because the owner has missed too many payments on the mortgage.

"Some of those homes will need at least $25,000 or $30,000 worth of work on them. But investors are still jumping on them because they can make $50,000 in profit," said Lavati, who found only 18 foreclosures on a recent spot-check of that market.

Even though Palm Beach County properties have been appreciating at slightly more than 10 percent a year for the past two years, Adams remains optimistic that the market has not topped out, even though no one can guarantee future profits.

"Although we've seen tremendous appreciation in our area, I don't think we've hit the ceiling yet," Adams said. 'There is economic evidence that there is still room to go."

Douglas agrees that the attraction of the South Florida lifestyle is still strong enough to support further growth in the area: 'This area has so much to offer that living here, even if it's not in your dream home, is outstanding. The price you’ll pay today might be the bad news, but the good news is the excellent appreciation n you'll probably get in a year or two."

Buyers can always hope that their home will gain in value in a couple of years so that they call sell it for a profit, enabling them to buy a larger, more ex- pensive property.

Clearly, finding a good deal on a home in South Florida won't be easy. Nevertheless, some people are doing just that. And let's face it- is "a couple of years" really that far off?