Darrell Hofheinz, Palm Beach Daily News
Real estate pros, sales data say higher prices have become the new normal in Palm Beach.
As Palm Beach real estate agents and brokers prepare for the winter season, they appear to be resting easier with the notion that home prices generally have reached highs that won’t drop anytime soon, barring any unforeseen shake-up in the market.
To be sure, the days of the frenzied price escalation that accompanied the coronavirus pandemic sales boom of 2021 and 2022 — when a Palm Beach home’s value could sometime double within six or nine months — are over, agreed several real estate professionals who spoke to the Palm Beach Daily News last week.
But a key effect of the boom lingers: Asking and closing prices have settled into a range far higher than before the pandemic began tightening its grip on the island in the spring of 2020.
And a look at sales in the just-finished off-season — from May 1 to early last week — offers ample proof that the laws of supply and demand continue to help drive pricing in the island’s market. Several reports for the third quarter just released by real estate agencies that do business on the island show that average sale price of a single-family home in Palm Beach topped $24 million, depending on what criteria was used to prepare each analysis. In the same period a year ago, the average closed price was as much as $10 million less, reports showed.
The reason for the higher prices? There’s still a relatively limited supply of properties on the market — and there are plenty of deep-wallet buyers willing to pay what it takes to secure a piece of Palm Beach, provided they can find a suitable property, the real estate pros said.
Longtime Palm Beach broker Linda Olsson of Linda R. Olsson used the word “astounding” to describe the market in a letter to clients accompanying her new third-quarter sales report. Prices have soared in all areas of town, Olsson wrote. She added: “At this time, the new normal for an entry point (single-family) home is $10 million.”
Although Palm Beach has seen the number of homes for sale inch up over the last year, the total number of properties on the market is far lower than pre-pandemic levels, the experts agree. And that means strong competition among buyers for properties, especially newer homes in prime locations.
Buyers continue to to be drawn to Palm Beach, in many cases, by Florida’s tax advantages compared to other states. But they are also attracted by the town’s other attributes — security, natural beauty, handsome architecture, cultural venues, fine dining, high-end shopping and, more recently, the proximity to the vibrant business climate of West Palm Beach, dubbed by some observers “The Wall Street of the South.”
Palm Beach prices are up but sales are down since height of pandemic
Higher home prices in Pam Beach have certainly had a dramatic effect on the overall sales’ dollar volume, according to the new third-quarter report by the Frisbie Real Estate team headed by Corcoran Group agent Suzanne Frisbie. In the first nine months of the year, total residential sales in the Palm Beach real estate market exceeded $1.5 billion, the third-quarter report said. That’s more than the year-end totals for any pre-pandemic year recorded, according to Frisbie’s numbers.
Seasoned Palm Beach agent Jim McCann of Premier Estate Properties said he is finally accustomed to the island’s higher price scale.
“There’s a new price point for everything. It’s been established by sales data,” McCann said. “I haven’t seen one (recent) single-family home sale that was not at what I would say was a strong price. I haven’t seen anything that would make me say, ‘What a bargain for the buyer.’”
Every house is different, he added, but it’s not at all uncommon to find the value of a property has doubled — or perhaps even tripled — since the start of 2020.
Yet even if the dollar amount generated by sales is up — thanks to the higher prices — the number of transactions has dropped sharply since the height of the pandemic “to the lowest figures in over five years,” according to the just released third-quarter sales analysis from The Corcoran Group. Far more homes have left the market than have entered it, sales records show.
New York-based analyst Jonathan Miller of Miller Samuel Inc., who prepares sales reports for Douglas Elliman Real Estate, took note of pricing and inventory as he discussed his new sales analysis of Palm Beach’s third quarter with the Palm Beach Daily News. The island’s market is nowhere close to regaining the for-sale inventory that was practically “obliterated” by buyers during the boom years, he said.
“The lack of supply is going to continue to provide a firm underpinning in pricing,” Miller said about the single-family market. “The prices (recorded in July, August and September) are not all-time record highs. But this is the third time in four (consecutive) quarters that the average sale price was above $20 million. That’s never happened in any market in the country that I’m aware of,” Miller said.
The median single-family sales price in the third quarter, he said, was up 144 percent over the same period in pre-pandemic 2019, Miller added. But the number of properties listed for sale was 61 percent lower in a similar time comparison. The median is the price at which half of the properties sold for more and half for less.
With listings so limited, a full 30 percent of the properties sold in Palm Beach during July, August and September traded in private deals put together by agents, according to the new third-quarter report from Tina Fanjul Associates Real Estate.
High end of the Palm Beach market was busy this summer
Consistently this summer, real estate observers noted that sales in the Palm Beach market had returned to the slower pace typical of off-seasons before the pandemic.
But it was hard to miss the flurry of activity taking place in the higher end of the single-family market. Eight deals closed at $30 million or more between May 1 and early last week, according to courthouse records, reporting by the Palm Beach Daily News and monthly sales reports issued by the Rabideau Klein law firm.
In the same period last year, there were 10 transactions recorded above $30 million.
The list of the biggest Palm Beach sales this past summer included an unusual private one in the Estate Section: Fashion designer Tom Ford swapped his house on Jungle Road for the landmarked one owned by Brian and Andrea Kosoy in a deal said to have been valued at $100 million, although the price was never recorded at the courthouse because of the way the deal was structured.
Broker Christian Angle of Christian Angle Real Estate orchestrated the swap, according to multiple people familiar with it. But Angle has never confirmed his involvement to the Palm Beach Daily News.
In a conversation this week, Angle acknowledged that inventory was “very tight, especially if you’re looking for something on the ocean.”
But, Angle said, “we’ve been busy and had an excellent year to date. There have been starts and stops, but the market is very firm. People are making well-informed, pragmatic decisions about what they buy, and that provides a solid foundation for the market. The depth of (high-)quality clients looking to buy homes has not tapered at all.”
On the condominium scene in Palm Beach
As with single-family home sales, the summer months saw fewer listings and sales of Palm Beach condominiums and co-operative units.
At the end of September, for instance, there were 44 condominiums and co-ops listed in Midtown and on the near North End, while the South End had 69 listings, according to Frisbie’s third-quarter report. In pre-pandemic years, the total number of properties for sale could easily exceed 250.
Douglas Elliman agent Scott Gordon, who specializes in selling condos on the South End, says buildings there are often under renovation during the summer months. Their policies typically allow construction only between the end of the spring and the start of the winter season.
This year, Gordon noted, some buildings were busier than usual with construction as they carried out concrete restoration and other structural improvement projects in anticipation of tougher state inspection laws enacted after the 2021 collapse of a beachfront condo in Miami-Dade County’s Surfside community.
Once the construction scaffolding comes down, Gordon expects more units to enter the market, especially in November, December and January. “That’s when the inventory starts to build a little bit,” he said.
Updated, larger units remain prime — and increasingly rare — finds on the South End, Gordon said, with sales of those units typically closing between $2 million and $4.5 million. But the bulk of the South End’s sales, he added, are for units priced at $600,000 or less.
The third-quarter Corcoran Report showed that the number of closed condo and co-op sales on the South End totaled 32, compared to 62 for the same period last year. In the same area, the median price was down slightly, from $525,000 in last year’s third quarter to $520,000 in the quarter that just ended.
Condos and co-op in Midtown and the near North End tend to fetch much higher prices, and inventory is steadily ticking up there, according to recent sales reports. But as on the South End, third-quarter in-town multifamily transactions fell in a year-over-year comparison, from 15 last year to nine this year, according to The Corcoran Report. The in-town median price also slid, from $2.5 million in last year’s third quarter to $2.5 million in this year’s, Corcoran’s sales data showed.
Is Palm Beach real estate season off to an early start?
Discussing the single-family market, every agent and broker interviewed by the Palm Beach Daily News last week noted that activity had picked up significantly over the past three weeks, with new contracts signed and a few more properties entering the multiple listing service.
“Overall, what I’m hearing is that the season seems to be starting earlier this year,” said Ava Van de Water, whose regional duties at Brown Harris Stevens include running the Palm Beach offices.
During the first week of October, for example, Van de Water said her agency listed a home, booked nine showings in two days and shortly had a contract signed. “If it’s priced right, you’re going to get multiple offers,” she added.
Palm Beach-based Brokerage Manager Jessica Shapiro had her eye on the future in her introduction to Sotheby’s International Realty’s third-quarter sales report. “With attention turning to Palm Beach for ‘season,’ sales activity is gaining some momentum for a strong uphill climb to close out 2023,” wrote Shapiro, who holds the title of vice president.
McCann said would-be buyers and sellers are far more comfortable with what the market will bear, as far as pricing goes, than they were during the rush-a-minute days of the pandemic-fueled boom.
“The fact that there is pre-season buying activity, I think, bodes well for the season,” McCann added. “It seems to me there are sellers out there who may be prepared to list their homes in the next weeks.”