Frustrated homebuyer Pablo Nunez lost one house when he was outbid. Another deal died after a low appraisal.
Nunez, a business owner who rents a home in West Palm Beach with his wife, is learning the agony of hunting for homes in a price range where demand outstrips supply.
“We’re trying to keep it under $200,000, but it’s kind of difficult, so we’d be willing to go up to the $220 to $230 range,” Nunez said.
Reflecting tight inventory for entry-level homes, the typical Palm Beach County house priced at $100,000 to $250,000 sold in just 25 days in July, according to the Realtors Association of the Palm Beaches. That’s less than half the time needed to sell a house priced at $400,000 to $600,000.
Nunez is one of many Palm Beach County buyers frustrated by a dearth of homes for sale. Squeezed by a lack of construction and competing with acquisitive investors, these would-be homeowners scramble to make offers on the small number of homes that hit the market.
“Poor Pablo is looking for a price point below $300,000,” said John Mike, an agent at RE/MAX Prestige Realty who represents Nunez. “People who can buy above $300,000 are finding properties, but people who can’t are finding a challenge, especially if they have any qualms about location and neighborhood.”
Well-priced homes move quickly. Bob Graeve, an agent at Illustrated Properties Real Estate, recently listed that rarest of commodities — a $128,000 house in Palm Beach Gardens.
“Within two days, I had three offers at or above list price,” Graeve said. “Under $200,000, you put it on the market, and it’s gone within a week.”
Multiple offers and aggressive bids bring back memories of the housing bubble of 2004 to 2006. Back then, public officials fretted that middle-income buyers might no longer be able to afford home ownership in Palm Beach County.
But buyers are diving into a market that has shifted sharply from a decade ago. In one change, affordable new homes have all but disappeared from Palm Beach County’s housing market.
Construction of entry-level homes ground to a halt during the Great Recession, and homebuilders have yet to resume the sort of large-scale building that drove Palm Beach County’s housing market for decades. New homes account for only 3 percent of home sales in Palm Beach County, and the average price of those homes is $650,000, said David Cobb of housing research firm Metrostudy.
In other words, builders aren’t aiming for the lower end of the market — and it seems unlikely that they’ll ramp up production.
“We have a shortage of vacant, buildable lots in Palm Beach County,” Cobb said.
In the cases where builders are putting up homes in reach of middle-class buyers, the developments are niche projects rather than the sprawling subdivisions of yesteryear.
DR Horton, for instance, is selling new homes at its Emerald Cove project for $300,000 to $350,000. But the development in Haverhill, a hamlet just west of Palm Beach International Airport, includes only 22 houses.
“It’s not a big project,” Cobb said. “You’re just not seeing the 200-unit projects coming on line at those prices.”
Buyers also face competition from investors, who have been snapping up houses as they bet that people who once owned homes now would prefer to rent.
Invitation Homes of Dallas has been the most prolific buyer, amassing 1,300 houses in Palm Beach County since early 2013 at an average price of $250,000. Other landlords are buying, too – without the financial limits faced by middle-class buyers.
“They’re competing against investors,” said Eugene Kozlowski of Kozlowski Executive Properties in Jupiter. “Investors have cash, and regular people who are just trying to buy a house need a mortgage.”
Even some buyers with cash face a lack of choices. Ernie Small has spent months looking for a two-bedroom house, with no luck — even though he doesn’t need a mortgage and is willing to spend $300,000.
“I’m 70 years old and sizing down,” Small said. “You would think if you had the money, you could get what you want, but that ain’t always the case.”
For now, Small rents an apartment in Palm Beach Gardens.
When a buyer finds a home in the right price range, the race is on. Because offers flood in for moderately priced homes, buyers feel pressure to make an offer fast.
“They are so frustrated,” said Ben Schachter, president of Signature Real Estate Cos. in Boca Raton. “Not only is the inventory low, they’ve got so little time frame to make an informed decision.”
Schachter urges buyers to line up lenders, home inspectors and contractors before they even make an offer. And, he said, buyers shouldn’t be afraid to bump up their budget by $5,000 or $10,000.
But Nunez isn’t keen on that advice. He doesn’t want to take on too much debt at the moment.
“We’re in our mid-50s, so I’m looking to pay this off in 15 years,” he said. “I don’t want to be in retirement age paying for a mortgage.”
As home prices have bounced back in recent years, Realtors say buyers need to adjust their expectations about Palm Beach County home prices.
“A lot of people,” Mike said, “are going to have to start making some difficult decisions.”
Get the latest news in Palm Beach County real estate at The Post’s Real Time blog.