The Palm Beach real estate boom that began three years ago may be over, but second-quarter sales reports show market is still outperforming 2019 metrics.
It seems to be official.
The real estate boom in Palm Beach that launched during the summer of 2020 following the arrival of the coronavirus pandemic has waned nearly as much as the intensity of the health crisis itself.
The overall number of sales on the island — and the resulting dollar volume — fell sharply in the second quarter from the same period in 2022, according to a consensus of sales reports issued by real estate agencies that do business on the island.
The Corcoran Group’s report, for instance, showed a 35% decrease in the number of single-family sales and a 31% drop in transactions for condominiums and cooperative units in the second quarter, compared to April, May and June of last year.
Not surprisingly, the total dollar volume of sales fell, too, during the second quarter. According to the Corcoran Report, sales volume dropped 47% to $546 million in a year-over-year comparison.
But there was some good news, too, especially for the highest end of the town’s single-family market.
Despite the decline in sales, the second quarter saw more than double the number of closings this quarter at prices above $20 million compared to the first quarter of the year, The Corcoran Report showed.
And on the condo scene, the median and average prices of units set new record highs in the second quarter, “primarily due to a decline in the market share of sales under $1 million compared to the previous year,” Corcoran’s report said.
The median is the price at which half of the homes sold for more and half for less during any period.
READ ABOUT LAST YEAR’S SECOND QUARTER Palm Beach property prices soared, sales dropped amid fierce competition in Q2
The just-issued sales reports use different criteria and analytics to measure sales, so apples-to-apples comparisons among the reports can be difficult. But the overall trends are similar.
And here’s another caveat: The reports likely don’t include the most expensive home ever sold in Palm Beach, a June deal in which about $170 million is said to have changed hands. That sale was widely reported — and confirmed by the Palm Beach Daily News — to involve an oceanfront mansion at 589 S. County Road. But because of the way the sale was structured, the price remains cloaked in public records and was never recorded at the Palm Beach County Courthouse.
Palm Beach sales reports: Back to the pre-pandemic norms of 2019
There’s another key good-news takeaway from the reports, although it demands a longer-term perspective. Several of the reports showed that homes and condos sold in April, May and June fetched far higher prices than the ones in the final pre-pandemic year of 2019.
In other words, some of the pricing effects of the pandemic-related boom appear to be lasting, thanks to the laws of supply and demand: The inventory of houses available to buyers remains tighter than it was in 2019, putting upward pressure on prices, the reports show.
Yet except for the top of the market, the dramatic short-term price jumps that shocked buyers and sellers — and fattened bank accounts — during 2021 and 2022 are few and far between, the new analyses suggest.
Comparing the current real estate climate to those go-go-go pandemic years inevitably reveals a market that is more stable and predictable, if a bit duller, the new second-quarter reports show.
“Prices are off and sales are off. Inventory is up (from the second quarter of 2022) but it’s significantly lower than pre-pandemic levels in 2019,” New York-based analyst Jonathan Miller said in a phone interview about Palm Beach’s second-quarter sales, referring to the report he prepared for Douglas Elliman Real Estate.
The median second-quarter sold price for single-family properties dropped 21.7% to $11.35 million from the same period last year, Miller said, citing the Elliman Report.
But then he added a kicker.
“The median price is up 122.5% percent — more than double — the pre-pandemic second quarter of 2019. It’s starting to look like a more normalized market,” he said as he looked at the recent year-over-year drops in sale prices and the number of deals that closed during the second quarter.
“This seems to be the end of — or very close to the end of — the distortion caused by the pandemic,” concluded Miller, president of Miller Samuel Real Estate Appraisers and Consutants.
Miller also compared the median sold price in the Palm Beach market to that of luxury markets he studies elsewhere in Florida.
“Most of the markets are up about 60% over pre-pandemic levels,” he said. “Palm Beach is up 122.5%.”
Report: More than 25% of Palm Beach second quarter sales were off market
Here are some other Palm Beach nuggets gleaned from the second-quarter reports:
- According to the report from Brown Harris Stevens, the average single-family sales price decreased 11% to $17.387 million over the same period last year.
“However, the average sale price was inflated in 2022 by several high-priced sales, most notably 901 N. Ocean Blvd., which sold for over $85 (million),” the Brown Harris Stevens report said. Second-quarter single-family buyers also paid a lower average price per square foot, which dropped by 4% to $3,789 per square foot, the report noted.
The same report mentioned two “notable sales this quarter,” including houses at 854 S. County Road, which sold for just over $63 million, and 1350 N. Lake Way, which sold for $66 million.
- A report released by Frisbie Real Estate, headed by Corcoran Group agent Suzanne Frisbie, discussed in detail Palm Beach’s second-quarter inventory challenges and the options would-be buyers found on the market.
More than a quarter of all single-family sales in April, May and June “occurred off market,” the Frisbie report said, “signaling the generally uninspiring supply” of homes available in the multiple listing service.
“Inventory continues to steadily increase over recent historic lows but remains well under pre-pandemic levels,” Frisbie wrote about the single-family market.
The Frisbie report added: “As (single-family) inventory remains low and lackluster, it continues to impact overall transaction volume.”
The same report noted a similar inventory rise for condominiums and co-op units across town, but the numbers are “still far below stabilized, pre-pandemic levels.”
- Single-family homes that sold during the second quarter — and were marketed in the multiple listing service — tended to be older, according to a sales report from Tina Fanjul Associates. More than 71% of the homes sold during April, May and June were built before 1997, the report showed. Such homes are often ripe for remodeling or replacement.
- Properties generally took longer to sell during the second quarter that just ended, according to several of the sales reports. The analysis by Sotheby’s International Realty shows that single-family homes, condos and co-ops spent 136 days on the market before they sold, a 103% increase over the second quarter of 2022.
- Linda R. Olsson Inc.’s report broke down sales of single-family properties by category and area on the island. In all, the North End saw $167.23 million worth of houses change hands while in-town properties sold for a total of $53.83 million, Olsson’s report showed. In the Estate Section south of Worth Avenue, $139.3 million worth of homes sold in the second quarter. In addition, two in-town townhomes sold for $16 million. And two properties sold for their land value, including a $23-million deal for a 1960s-era house at 1330 N. Ocean Blvd. on the North End.
- In an emailed statement accompanying The Corcoran Report, company President and CEO Pamela Liebman noted the slowdown in sales but said the Palm Beach market “continues to showcase its resilience and allure.” She pointed out, in particular, the appeal of condos and co-ops and “ultra-luxury-priced” single-family homes “because of the unwavering appeal of this coastal paradise.”
- The complete second-quarter sales reports are expected to be available this week at BHSUSA.com, Inhabit.Corcoran.com, Elliman.com, FanjulRealEstate.com, FrisbiePalmBeach.com, LindaOlsson.com and SothebysRealty.com.