State of the Market
After months of doldrums, the Palm Beach market has picked up over the past few weeks, with more homes for sale and deals in the pipeline, agents say.
After months in which real estate activity in Palm Beach was as calm as the Atlantic on an early summer day — punctuated, of course, by an occasional unexpected wave — the market is once again firing up.
And that burst of action has arrived at the height of the winter season. The Presidents’ Day holiday, after all, is traditionally the busiest real estate weekend of the year.
Brokers and agents are reporting that they have been busier showing properties — and getting deals into the pipeline — over the past few weeks than they had been since the doldrums arrived in the late spring of last year. That was when a noticeable slowdown took root following two years of whirling sales, skyrocketing prices and dwindling housing inventory, all brought about by the arrival of the coronavirus pandemic in early 2020.
The recent breather was expected and even welcome, real estate professionals have said, because the pace of sales in 2021 and early 2022 — accompanied by prices that seemed to have no limit — was unsustainable.
And while many real estate pros across the country — and even right across the bridges from Palm Beach — have grown anxious about their own slowdowns, the mood in the island’s real estate community appeared by and large upbeat this week.
“We’re certainly encouraged by the level of activity we’re seeing in the market now,” said Jim McCann, an agent with Premier Estate Properties on Worth Avenue. “The market is healthy.”
Agents are especially pleased that single-family sales prices have leveled off at heights set during the boom.
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Far more choices available for Palm Beach house-hunters than last year
Like others who spoke to the Palm Beach Daily News this week, McCann has noted an increase in housing inventory that will provide more options for house-hunters over the weekend.
The number of Palm Beach single-family homes and townhouses being marketed in the multiple listing service is hovering around 75 properties — the largest number in at least three years.
In 2022 at this time there were only 41 single-family properties for sale, and the year before that, 54. However, there were 172 in February 2020, just before the coronavirus sparked a rush of buyers who decimated the island’s available inventory. Florida’s tax advantages also proved very attractive to many out-of-state buyers.
The asking prices for single-family listings this week ranged from a high of $218 million for a just-renovated-and-expanded mansion on Palm Beach’s only private island; to a low of about $4 million for a 1920s bungalow at 230 Park Ave. Just four properties are priced at less than $7 million.
In any event, price tags for properties today remain far higher than they were before the pandemic began, although price escalation has slowed considerably, agents agreed this week.
One reason? Many sellers have begun to let go of the “aspirational” pricing expectations they embraced when properties were selling at such a breakneck pace that buyer demand drove home values ever higher, said Corcoran Group agent Dana Koch.
“I feel like those days are kind of behind us,” Koch said. “The sellers who are realistic (about asking prices) are going to sell their properties, and those who aren’t, won’t. You have to price for today’s market.”
These days, sale price comparisons are easier to make
Koch also acknowledged that some properties in Palm Beach have seen price reductions of late.
“But those properties were not (necessarily) priced appropriately. They were priced for a (rapidly) appreciating market, and at this time, we’re in a market that isn’t appreciating. But we’re still at the highest level of prices that we’ve ever been at.”
With the slower pace of sales, agents also can look at sales of comparable properties to determine the right asking price. That was nearly impossible to do during the height of the boom, when values escalated almost daily, Koch said.
He added: “The market is still churning. It’s just not moving at the rapid pace that it was a year ago.”
The hottest segment of the single-family market, he added, is priced at $7 million to $15 million. Before the uptick in prices in 2020, that “bread and butter” segment would probably have been priced somewhere between $3 million and $9 million.
“Right now, there are 38 homes priced at $15 million and under,” Koch said Wednesday. “That’s a lot.”
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Palm Beach condo, co-op market also moving at a slower pace
Palm Beach’s condominium market also is adapting to new realities, according to agent Scott Gordon of Douglas Elliman Real Estate, who specializes in selling condos and cooperative units, especially on the South End.
As happened in the single-family market, condos prices rose considerably during the health crisis and then, by and large, leveled off last year. But prices remain far higher than those of the pre-pandemic years.
“The price of admission into Palm Beach is substantially higher than it has ever been,” Gordon said.
But the multi-family market is moving at a far slower pace than it was even a year ago.
“It’s still a good market — no gloom and doom. But you can’t compare it to something that was so abnormal,” Gordon said.
There are far more condos and co-ops available this weekend in Palm Beach — about 130 — than last year’s unprecedented low of 59 units. The condo with the highest price tag right now is an unfinished, two-level unit with 13,000 square feet in the Tiffany Building on Worth Avenue in Midtown. The least-expensive condo, priced at $390,000, measures 1,010 square feet at 2840 S. Ocean Blvd. on the South End.
Many of the Palm Beach condo listings are in need of renovation, because the vast majority are in buildings between 30 and 50 years old. As a result, high-quality, renovated units, Gordon said, are hard to find and in demand. And they fetch “premium prices” when they become available.
Most people, Gordon explained, just aren’t in the market for a fixer-upper — and such units are abundant on the island because buyers blew through most of the already-renovated apartments during the past two years.
He said clients often tell him: “As much as I love the location, I just can’t go through a remodeling project.”
And because people in the market for condos and co-ops are shopping in lower price ranges than single-family house-hunters, they may be more attuned to rising interest rates, fears of recession and concerns over looming condo assessments to pay for building improvements or to fund so-called “reserve” accounts. Taxes for second- and third-home condo buyers also have risen as values have increased.
Condo sellers, too, are responding to changing conditions. As in the single-family market, they are learning to adjust their pricing expectations, which Gordon says are often 10% to 20% higher than what the market will bear.
“We’re at a much more level playing field, where the buyer has a chance to negotiate a bit,” Gordon said. “There’s a better balance, I think. I think it’s a positive market.”
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Koch agreed that buyers — and many sellers — have gotten a better understanding of how Palm Beach real estate has evolved over the past year.
And some buyers who settled for less than the home of their dreams during the boom, he said, are now on the prowl for something better.
“I think there’s a comfort level and a confidence level about where we’re at in this market,” he said. “The market is in a very good spot.”
His advice to house-hunters? Be prepared to make a decision quickly if the right property comes along.
“People who think properties are waiting for them are mistaken,” Koch said. “Someone is going to gobble it up.”