Delinquent Taxes and Foreclosures Will Spur Conservatory Lot Sales This Year

Owners of 143 lots in the Conservatory had not paid 2008 property taxes as of April 4th. Taxes became delinquent April 1st.

Palm Coast, Florida – April 7, 2009 – 2009 will be a painful year for original owners of lots in the Conservatory, a private golfing community in Palm Coast, Florida. Many lots will change hands this year at a fraction of their original acquisition price. The cumulative weight of a lousy real estate market, particularly for high value properties, the appearance of bank-owned (foreclosed) properties for sale, and short sales will now be joined with the potential for tax deed sales.
Over 42% of the lots in the Conservatory are under a cloud of financial distress. 2008 property taxes are delinquent on 143 of the 337 lots sold in 2005 by real estate developer Bobby Ginn. 2007 taxes are still owed on 73 lots and 2006 taxes are owed on 19. Owners of 2006 tax certificates can apply for a tax sale on those lots after May this year triggering a public auction. 101 lots have had foreclosure filings against them. Of 47 lots currently listed for sale on MLS, 9 are listed as "lender-owned." 23 are listed as "short sales."
Hailed as a hugely successful offer in 2005, the 337 lots in the Conservatory at Hammock Beach were oversubscribed by mostly eager investors at prices ranging from $329,900 to $529,900. The final tally for Ginn-LA (Bobby Ginn and financial partner Lubert Adler) was nearly $142 million. Many buyers planned to flip their lots, reaping a nice profit, as they had done in previous Ginn projects. But the market quickly plummeted and there were no buyers to be found.
The precipitous drop in the market surprised everyone but it was the sellers who were the last to catch on. In 2007, there were 80 lots listed for sale in MLS. The median listed price was still $40 thousand above the median acquisition cost. Two lots were listed for $599 thousand. The lowest listing price was $299.9 thousand in spite of the fact that there had been no MLS sales as of that time.
Now, less than two years later, seven lots have sold, all for well under $100 thousand. The lowest priced transaction was a recent sale at $55.3 thousand. Of 47 current MLS listings (click for report), 30 are listed below $100 thousand. The least expensive is a bank-owned lot listed for $49,900 thousand. There are no pending sales.
At the peak of the boom, properties sold at prices well above their underlying value. It was not a rational market. Likewise, properties are now selling at prices well below their underlying value; also irrational, adding another level of pain to property owners who are already taking it on the chin. On the other hand, those who are on the sidelines with cash have a unique opportunity to enter the first phase of the next cycle of wealth creation.
5 replies
  1. George Meegan
    George Meegan says:

    Just Value will have to go down

    These properties are still sitting on the tax rolls as being assessed at over one hundren thousand by the Flagler county appraiser. The many sales at lower prices proves the point that they are not worth what the Just Value states on the tax rolls. The taxable status date for next years taxes will list the appraisers new Just Values, that will be challengeable due to a change in the law that requires the appraiser to prove the Just Value is the Market ValueUntil these assesments are drop holing on to these properties will cost the owners in high taxes and fees. Until some homes are built and the area changes from a looser developement, prices will not move up.

  2. Toby
    Toby says:

    Reply to Jerry

    I believe the partners took a huge profit distribution when the lots were sold and did not leave enough to make it through the unpredicted market collapse. If the property had built out and the membership were full of real dues paying members, there would not be a problem but the current cash drain is huge.

  3. Toby
    Toby says:

    Reply to George

    The current assessments are are based on 2007 sales values. There were no sales in 2007. The low prices of the lots sold in 2008 will affect the 2009 assessments but cannot be used for 2008 true value.

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