The Real Deal Miami

Palm Beach mansions get (relatively) cheaper

By Sally Apgar | May 19, 2009 12:10PM

A multimillion-dollar mansion sale last week brought the extent of the housing crash home to the very highest end of the South Florida market. 
 
Prices, expectations and declining property values all played a role in the 40 percent discount reached in the sale of the Palm Beach Island home of William and Sarah Farish, politically connected prominent Kentucky horse breeders, who last week accepted $8.38 million for their mansion at the southern end of the island.  
 
Some realtors gulped when they did the math on the sale. James Orthwein Jr., a trustee of the James B. Orthwein Jr. Revocable Trust and a scion of the St. Louis Busch family, paid $5.57 million less than the asking price of $13.95 million. The comments reveal as much about the alternate reality of the luxury property market as the sale itself.
 
“Basically, that house was overpriced, originally. In fact, it was off the wall overpriced,” said Charleen McManus, an appraiser with Anderson-Carr located in West Palm Beach, who was not involved in the deal.
 
McManus said the 6,701-square-foot house was originally priced at $2,081 per square foot and that the $1,251 it fetched is “more in line with the market.”
 
“There are a lot of buyers with money out there. But they are only going to buy if they think it’s a good deal and this one was,” said Richard Ely of the Corcoran Group, who listed the property.
 
The Bermuda-style house, with 177 feet of oceanfront and lush tropical gardens on 1.93 acres, was on the market for about two months before the price dropped to $11.5 million. A month or so later, the Farishes accepted the $8.38 million offer.
 
 “The seller has lots of other property and didn’t have to sell. But he didn’t want to hold onto this one for another year (for the market to come back), so he took this offer and moved on with his life,” said Ely.
 
The Farishes own Lane’s End, a 2,000-acre bluegrass thoroughbred breeding farm in Versailles, Ky., home to some of the nation’s champion horses. 
 
William Farish is president of the investment firm W.S. Farish and Co., and formerly served as chairman of Churchhill Downs Inc. He was Ambassador to the Court of St. James from 2001 until 2004. Former President George W. Bush has been a guest at the seaside estate. Queen Elizabeth has stayed with the Farish family on its Kentucky estate.
 
The Farishes bought 1.93 acres of Gulf Stream land with its 177 feet of prized ocean front in the 1980s and then built the main house and a lavish guest house.
 
Privately, several realtors sniffed that the mansion at 1777 N. Ocean Blvd. may be on Palm Beach Island but that it is located in the tiny town of Gulf Stream (pop. 716), not Palm Beach proper.
 
Gulf Stream, with one stop light and high privacy hedges, is quieter about its wealth than Palm Beach itself. Until the 1960s, it was home to the famous polo grounds of Palm Beach.
 
People typically start house hunting in Palm Beach and then migrate south to Manalapan and sometimes Gulf Stream, said McManus.
 
Posh Palm Beach has historically been resilient to real estate downturns. But this year, Wall Street wipeouts and Bernie Madoff’s scam have knocked values down at least 20 percent, according to real estate brokers and experts.
 
More than 250 mansions are now for sale, high for Palm Beach.
 
Traditionally, people house shop during the island’s charity gala season, which officially ends at Easter. Then the serious buying begins. Palm Beach realtors said offers 30 to 40 percent below asking prices are common now, an unheard of development in good years.