Posted: 8:05 a.m. Thursday, September 21, 2017
Pending sales need to be re-inspected due to Hurricane Irma. Future sales are a question mark, experts say
An Ohio buyer was set to close on a house in Wellington. Then Hurricane Irma came along, and the buyer got cold feet and wanted out of her Florida deal.
“‘I want to move to Arizona. And I don’t care if I lose my $16,000 deposit,’” Oscar Diaz, manager of the Delray Beach office of The Mortgage Firm,recalled the buyer saying.
When Irma sideswiped Palm Beach County, the buyer calmed down and the sale was back on — until the buyer saw Hurricane Maria percolating in the Atlantic.
Once again Diaz heard from the buyer, and this time her mind was made up: “‘No way am I moving to Florida,’” Diaz said. And with that, the Wellington sale was dead.
Welcome to real estate, post-Irma, in Palm Beach County.
Residential real estate sales have been in an uproar since the storm first started creeping toward the Florida coast in early September.
Pending deals were put on hold while the storm made its way through the county on Sept. 10. Since then, things have been frenzied for all players in the county’s sizzling real estate market.
Lenders have required re-inspections on all homes to ensure that properties backing mortgages are intact, said Alex Garcia, a senior agent for Redfin real estate brokerage. Many re-inspections had to wait until the power was restored at properties, he said.
As a result, most if not all home closings pending for September are being delayed, which creates trouble for some sellers who were counting on the cash to close on other home sales, Garcia added.
And don’t even think about listing a home for sale if there’s any damage to it, Garcia said. “Somebody was going to put their property on the market with water intrusion. I said, ‘You cannot go to market with any kind of damage. It has to be corrected,’ ” Garcia said.
Buyers paying cash for homes don’t have to worry about a lender requiring a re-inspection. But Ava Van de Water, executive vice president of Brown Harris Stevens of Palm Beach, said she’s urging her agents to advise their buyers to do so anyway.
After this flurry of deals is closed, real estate agents, lenders and experts are wondering about the future of the market.
Will Hurricane Irma hurt sales or be a short-term blip on the landscape?
Up until the storm, the market remained strong: “I had six closings set for August 31,” said Sandra Milo, owner of Tamarac-based Serafina Realty Inc., which also does business in Palm Beach County.
Those sales didn’t take place that day, and now they are slated to close in the next few weeks. But Milo still is wistful: “If it wasn’t for the storm, I would have had my best August ever.”
Some think the frightening images of high winds, raging surf and damage to homes and landscaping seen on television and social media will usher in a slowdown in Florida’s boom-time real estate market.
Housing analyst Jack McCabe recalled that Hurricane Wilma in 2005 marked the beginning of the end of that decade’s real estate boom. Although Wilma quickly was followed by other global factors that tanked the economy, McCabe does see some parallels.
For instance, insurance costs will rise, both for individual property owners and homeowner and condominium associations. This, in turn, will add to the cost of owning property, said McCabe, of McCabe Research & Consulting in Deerfield Beach.
In addition, the notion that the planet is entering an era of “super storms” caused by rising sea temperatures is a factor that may figure into where people buy property, McCabe said. As a result, “I think you’re going to see a change in the market and a slowdown,” McCabe said.
Indeed, longtime Floridian Rebel Cook, president of the Economic Forumand Rebel Cook Real Estate, admitted that after the parade of powerful storms this hurricane season, she took out a U.S. map and started studying “for the states that had the least inconvenient weather situations.”
Diaz, of The Mortgage Firm, said he noticed that home sales already were slowing down because prices were higher than many buyers could afford. Going forward, he agreed that a spike in insurance premiums could dampen demand for homes, especially among buyers who already are stretching their budgets to buy houses in Palm Beach County.
But others say Florida’s busy real estate market will return to being busy after a short lull. Natural disasters happen everywhere, and buyers know Palm Beach County dodged a major bullet with Irma.
“We lucked out. I think we’ll be fine,” said John Slivon, president of the Realtors Association of the Palm Beaches and Greater Fort Lauderdale. “Even with the scare of Matthew, we didn’t miss a beat. Florida is an attractive place.”
Diaz acknowledged that people have short memories. He predicted Florida will, over the long term, remain a popular state for people relocating, especially Baby Boomers planning to retire.
Several real estate agents said people still will buy homes but will cast a much more careful eye at a property’s hurricane protection, including possibly gravitating to new homes that are built to the latest, strict codes.
For existing properties, “homes with impact windows and shutters will be at a premium,” Redfin’s Garcia said. “If you have these protections, your house is more sellable.”
However, homes without hurricane protection plus homes with older roofs will be harder to sell and more costly to insure, Garcia added.
Some observers think home buyers may take a second look at condominiums due to the ease of preparing for and cleaning up after a storm.
Tim Rener, who formerly owned a house in east Boca Raton, said he was between buying a single-family home on Singer Island and a condominium in the Intracoastal Waterway in Lake Park.
Rener ended up buying a sixth floor condo unit in Lake Park because he figured it would be easier to close up when he travels.
When Hurricane Irma arrived, Rener realized his decision to buy a condo had other benefits, such as not having to spend hours in the hot sun preparing his house for the storm.
“All we had to do was close the shutters and we were done,” Rener said. “It took 15 minutes.”
Hurricane-resistant features have always been an important sales point for VistaBlue condominium, the first luxury condo built on Singer Island in a decade.
The 19-story boutique condo is slated for completion at the end of January. About 50 percent of its 58 units are sold, including a penthouse unit priced at $7.9 million. Remaining units are priced from just under $1.46 million to $7.6 million.
In the wake of Irma, developer Randall Tuller expects buyers will become even more interested in the building’s unsexy but important hurricane-resistant construction.
Construction elements include waterproof stucco and mold-resistant drywall. Also, the condo’s interior cabling, called the bus duct, is waterproofed, a feature not even required by building codes. “It’s a solid building,” said Tuller, executive manager of Third Palm Capital in Dallas.
Not everyone is down on the weather, however.
That Wellington homeowner who lost his sale to the Ohio buyer is taking the deal’s collapse in stride, Diaz said. “He put it back on the market, and he said, ‘Mr. Diaz, I’m going to give the buyer back their money.’ “
The seller said he understands that endless television coverage, combined with the social media frenzy, scared a lot of people outside the state, Diaz said.
But the seller isn’t frightened. Diaz said the seller is buying a place on Hutchinson Island.