Waterfront homes: Premium prices for priceless views

The sales center at the Water Club in North Palm Beach is vibrating.

Whipping 15 mph winds along the Intracoastal Waterway aren’t the issue. It’s workers nearby who are prepping for a 22-story tower by vibro-compacting the sandy soil — a buzzy method of creating denser dirt to build on.

The constant low shudder in the sales center mirrors the feel of a real-estate rebound years in the making.

Kolter Homes bought the more-than-7-acre waterside parcel a decade ago for $23.5 million. But then the market sunk like a paddle boat in a hurricane.

“Nothing has been built up here in 12 years,” said Stephen MarcAntonio, Water Club’s director of sales. “Now, it’s coming back.”

While all of Palm Beach County’s residential real estate has been on the rise since hitting bottom in 2011, waterfront property values fell less far and have come back faster.

According to the Palm Beach County Property Appraiser, the value of all single-family homes saw its biggest one-year increase in 2006 to $94.3 billion, a whopping 28 percent jump from the previous year. Values would grow as high as $95.1 billion in 2007 before crashing to $64.1 billion — a 32 percent drop from the peak.

At the same time, waterfront single-family homes’ biggest single-year increase was nearly 10 percentage points lower with a 19 percent hike from 2005 to 2006. The highest one-year value for waterfront homes countywide was $16.3 billion. That sunk 25 percent to a 2011 low of $12.8 billion.

But the countywide values of waterfront homes, including those on the ocean, Intracoastal Waterway and canals with Intracoastal access, are nearly back to peak levels. The current value is $15.8 billion, just 3 percent below the height of the market.

The value of all Palm Beach County single-family homes is trailing the peak by 19 percent.

“It isn’t that waterfront properties didn’t feel any pain,” said John Thomas, director of residential appraisal services for the Palm Beach County Property Appraiser. “But compared to the average or below-average properties, they were not hit as hard during the Great Recession.”

Like mangrove seedlings finding anchor on a sandy beachhead, new waterfront developments are growing from Boca Raton to Jupiter.

While most are condominium communities, their prices reflect the premium people are willing to pay for a view.

At the Water Club, with 20 villas and 73 units in each of two towers, prices range from the $700,000s to more than $1 million.

The tiered design of the towers means every residence will have a view of the Intracoastal, and from the 6th floor up, buyers will also see ocean. Add about $20,000 per floor the higher you go, MarcAntonio said.

“The view is huge, and they can get spectacular views with this product,” MarcAntonio said. “Everyone has an east view, everyone has a west view.”

Water Club began sales in October 2013 and has sold about 65 residences. It hopes to open during the second quarter of 2016.

But it has some competition. Just north of the Water Club, along the Intracoastal Waterway and south of Donald Ross Road are three waterfront developments in various stages of completion: Toll Brothers’ Frenchman’s Harbor, GrondStone’s Bay Colony and Azure by Frankel Enterprises.

Before Azure could even open its sales center on Nov. 19, people had already reserved 22 units — about half of the first of two five-story buildings. The development, which is promising 113-units total along 1,300 feet of waterfront, has a Palm Beach Gardens address off Donald Ross and Prosperity Farms roads.

Buyers get first dibs on deep water docks available at the Loggerhead Marina and large residences of between 2,600 square feet and 3,800 square feet. Prices begin in the $900s.

Allen Ball, director of Azure’s sales and marketing, said a lot of interest is coming from nearby golf and country club communities where owners are looking for a more low-maintenance lifestyle.

“That buyer has been a resident there 15 to 20 years,” Ball said. “Maybe they can’t play golf anymore, or don’t have a passion for it, and we offer an opportunity to buy something newly built, while staying in the same community.”

The five-story buildings offer no ocean views, but Ball emphasizes that a 10-minute bike ride gets you to the beach.

“If you want to live on or near the water, there’s not a lot of new stuff available now,” Ball said.

Kevin Dickenson, an agent with Berkshire Hathaway Home Services, said 95 percent of his clients want to be on the water, and agreed there is not much in the way of newly-built inventory. He said his buyers are often interested in Palm Beach, but that many of the condos on the island are decades old and have “dated designs.”

The number of Palm Beach County waterfront parcels has increased just 8 percent since 2000, while non-waterfront parcels have grown by 17 percent, according to the property appraiser.

Still, Dickenson said there is newish inventory that can be found at reasonable prices.

Dickenson represents an investor who bought multiple units at the bottom of the market in the colorful Marina Grande condominium on the Intracoastal in Riviera Beach. Built in 2007, the 349-unit development suffered with the real estate downturn, losing buyers who didn’t mind walking away from their contracts when the market crashed.

He said units can be purchased now at the Marina Grande for about $200 per square foot, $50 to $100 less than at the peak.

“That is a bargain for a building built during the boom,” Dickenson said. “My investor is starting to sell and he’ll triple his money on some units and double it on others.”

According to the Seattle-based real estate company Zillow, Riviera Beach is tops in the nation for the difference between what a waterfront property will fetch, compared to non-waterfront.

In a September report, Zillow said the median home value in Riviera Beach was $72,300, while a waterfront home’s median value was $906,700.

Lake Worth was seventh on Zillow’s top 10 list of the largest price differences between waterfront and non-waterfront. A non-waterfront home in Lake Worth had a value of $123,300, compared to a waterfront value of $830,000.

“For the most part, my clients aren’t concerned about erosion, they aren’t concerned about global warming, they just want to be right on the beach,” Dickenson said, adding that even hurricanes are not a deterrent when someone is seeking a waterfront home. “It’s all about the view.”

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