Luxury Housing Market Feeling Foreclosure Pinch

Toby’s latest real estate newsletter for Palm Coast and Flagler County.

Palm Coast, Florida – February 4, 2009 – Flushing out the inventory of distressed properties is a painful but necessary phase in the correction and ultimate recovery of the housing market. This is already apparent in the single-family residential market which has been dominated for the past 12 months by sales of lender-owned (foreclosed) homes and short sales. The first to feel the pain were those living paycheck to paycheck. The increasing number of distressed second home and investment properties signals that at least some more affluent property owners have run through their financial reserves.

Second home and investment properties

In January alone, lis pendens (foreclosure filing) were filed on several luxury, investment or second home properties in Flagler County:
  • Two condos in European Village
  • A condo in Yacht Harbor Village
  • Ten Tidelands condos
  • A Casa Bella condo in Hammock Dunes
  • A Bella Harbor condo
  • Five lots in the Conservatory
  • Three Canopy Walk condos
  • An Island Estates lot
  • A Hammock Beach condo
  • Two lots and one home in Ocean Hammock
  • Two lots in the Sancturay
  • Two homes and a lot in Grand Haven

Condominiums and luxury homes

In Flagler County, there are ten condominiums and ten homes listed for more than $500,000 in MLS as short sales. One home listed above $500,000 is lender-owned. 21 condos listed between $300,000 and $500,000 are either lender-owned (2) or short sales (19). Of homes listed in the same price range, 32 are lender-owned (1) or short sales (31). In non-MLS condominium sales, both Ginn and WCI are managing to thin their developer-owned inventory albeit at prices between 50% and 60% of the original offering.


The single-family residential market continued to show signs of strength. Echoing December results, both the number of homes sold (69) and the total dollar sales volume in January were above January ’08. Sales, however, continue to be dominated by low-priced sales of distressed properties. Again, two thirds of sales were either lender-owned (20) or short sales (26). Further strength is indicated by the reduced number of homes available at the end of the month (1804).


At the low end, residential sales will continue to bounce along the bottom, continuing the flushing of distressed properties although some strengthening is possible when the spring selling season is ushered in by the Parade of Homes. The condominium and high end residential markets will begin to find their bottom as more distressed (particularly lender-owned) properties come onto the market. Distressed property sales (the process) will become more efficient as real estate professionals, title companies, and lenders become more proficient at handling them.
I expect the currently debated stimulus package will have a greater housing component added to it before its final passage. Among these will be a broader tax credit for home purchases. Interest rates will continue to be attractively low but qualifying will not become easier soon. Mortgage companies will soon be rolling out more innovative products attractive to some buyers. One product that shows great promise in a reverse mortgage used to purchase a home. Buyers over 62 years old with sufficient cash down payments will be able to purchase a home without credit being an issue. And they won’t have to make any mortgage payments. More on this subject in a future article.
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