Palm Beach County condo sales dropped 9 percent during the third quarter of 2013, ending a year-long streak of steady growth.
A report from the Realtors Association of the Palm Beaches released Wednesday showed 2,996 deals were closed on condominiums and townhomes between July and the end of September, down from 3,304 during the same time in 2012.
Prices, however, continued to climb at a steady clip, increasing 32 percent to a median of $115,000.
It’s the higher costs that may be to blame for the lower sales as wary investors pull out of the condo market, said Peter Zalewski, a principal with the Miami-based Condo Vultures real estate firm.
“The rapid run-up in pricing has started to make some investors pause,” Zalewski said. “It’s a period of sort of murky territory.”
Palm Beach County condo prices have risen 47 percent since the third quarter of 2011.
The condo market is coveted by investors who like it for its ease of renting. About 75 percent of the deals last quarter were paid for with cash.
Without investors buying, the market is left to the traditional homebuyer who can have a more difficult time getting a mortgage for a condominium as opposed to a single-family home. Some lenders frown on buildings with too much debt from delinquent association fees or too many rentals.
Realtor Barry Gutknecht, of the Mirsky Realty Group of Palm Beach, said he had a condo sale fall apart at the last minute recently when the bank pulled funding because the building had a high number of investor-owned units.
“The real deal seekers have been kind of left behind by the market,” Gutknecht said. “They’ve been squeezed out.”
Buyers also have fewer choices. The supply of condominiums and townhomes dropped 30 percent last quarter from the year before to 4.8 months.
“We’ve run out of inventory in my building,” said Tim Harris, president of the Realtors Association of the Palm Beaches, who lives in downtown West Palm Beach. “We had no sales through all of the downturn and this year we’ve had six.”
Zalewski said condominium buyers may be waiting to see what happens with new projects being proposed. West Palm Beach is second only to Miami for the number of proposals with 11 buildings and 1,825 new units planned, Zalewski said. That includes the six-tower joint project between Huizenga Holdings and the Related Group for the Rybovich yacht repair land.
“Some investors may throw their cash after that new construction,” he said.
The third quarter report from the Realtors Association of the Palm Beaches found single-family home sales in Palm Beach County were up nearly 20 percent from 2012. The median sale price was $250,000, a 14 percent increase over last year.
By Kimberly Miller