First-year economics students need look no further than Palm Beach’s real estate market to see how the laws of supply and demand really work.
The number of single-family sales that closed in Palm Beach during the first three months of the year paled in comparison to the same period in 2021 — and for good a reason, according to the latest round of quarterly sales reports for the island.
There just wasn’t that much to sell, thanks to the frenzied demand from buyers that has continued unabated since it began shortly after the coronavirus surfaced two years ago. That was the consistent message delivered in the first-quarter sales reports released by several agencies that do business in Palm Beach.
Year-over-year single-family transactions in the first quarter dropped nearly 60 percent, according to the analysis prepared by the Corcoran Group.
But there was other news too. The same demand for homes drove prices far higher in a year-over-year comparison, as buyers competed fiercely for what properties were available.
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“As was evident last quarter, a severe lack of inventory again led to far lower sales volume, but persistent demand from buyers resulted in tremendous price gains,” the report from Brown Harris Stevens said.
Broker Linda Olsson of Linda R. Olsson Inc. summed the situation up succinctly in the introduction to her report: “These are unprecedented times,” she wrote, in which “real estate prices have skyrocketed.”
Making apples-to-apples comparisons among the reports is difficult because some parsed only data in the multiple listing service, while others added in off-market sales recorded at the Palm Beach County Courthouse. But general trends held true across the range of analyses, especially in year-over-year comparisons.
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A report prepared by Suzanne Frisbie, who heads her own group of agents at the Corcoran Group, looked at the number of Palm Beach single-family properties for sale in the multiple listing service in a year-over-year comparison.
At the end of March, Frisbie noted, there were 59 active listings, “the second-lowest inventory on record,” trailing only the same month last year, which had “the lowest ever.”
The number of single-family properties for sale at the end of March, Frisbie added, was down 70 percent from “pre-pandemic” levels in the first quarter of 2019.
Frisbie’s report also showed the number of single-family transactions in the quarter that just ended represented a 58 percent decrease from the first quarter of 2021.
The report from Tina Fanjul Associates broke out single-family sales by area of town during the quarter that just ended. On the North End, 18 properties sold, while nine traded in Midtown and five sold in the Estate Section, the Fanjul report showed.
Just as the number of single-family transactions dropped, Frisbie wrote, so did the total dollar volume they generated. In the first quarter of last year, single-family sales generated a “record-shattering” $1.16 billion, as Frisbie described it. This year’s first quarter sales were down by 52 percent to $559 million, Frisbie’s analysis showed.
But even if the total dollar volume plummeted, the prices buyers shelled out for single-family properties rose year-over-year, according to the Corcoran Group’s report, which noted increases in both the average sales price and the median sales price. The median price — at which half the properties sold for more and half for less — jumped 44 percent, while the average price rose 11 percent, the Corcoran Report said.
Single-family listings also sold more quickly in the first quarter than they did a year ago, according to the report prepared by analyst Jonathan Miller of Miller Samuel for Douglas Elliman Real Estate. Houses spent 41 percent fewer days on the market during the first three months of this year versus the same period in 2021, the Elliman Report showed.
On the condo scene
Many of the same trends reported for single-family properties held true for condominiums and co-operative units, the analyses agreed.
In a letter accompanying the Palm Beach report issued by Sotheby’s International Realty, brokerage Manager Debra Reece noted that condo shoppers had far fewer options in January, February and March than a year ago.
“Tightening inventory was an even greater factor in Palm Beach’s condominium market, where there were only about half as many active listings as in the previous year,” Reece wrote.
And as in the single-family market, condo prices were up, especially in Midtown buildings, as compared to those on the South End’s so-called Condominium Row, the Sotheby’s report showed. The median sale price of an in-town unit, Reece wrote, nearly doubled year over year, from about $1.39 million in the first quarter last year to about $2.74 million this year.
Brown Harris Stevens’ analysis mentioned that the number of first-quarter condo sales “declined slightly” in a year-over-year comparison. But the average sale price increased 15 percent to $1.6 million, the report said.
And even though quarterly sales volume for condos saw an annual drop of 7 percent, the Corcoran Group reported, those transactions still generated a grand total of about $245 million.
The Elliman Report, meanwhile, showed that MLS-listed condominiums spent 60 percent less time on the market in the first quarter than they did a year ago.
Attracting ‘the world’s elite’
In a report released by the agency Serhant, analyst Garrett Derderian addressed the rising prices for condos and single-family properties in town, thanks to the wealth of the buyers who close deals here.
“As Palm Beach continues to attract the world’s elite, we expect the market to experience further price growth. Buyers purchasing at these price points are not influenced by rising mortgage rates as we see in other markets,” Derderian said.
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John Hackett, senior managing director of the Corcoran Group’s South Florida operations, expressed a similar view in a statement accompanying his agency’s report.
“Undeterred by higher mortgage rates, buyers continued to seek more space and second homes throughout Palm Beach and its bordering communities,” Hackett said. “With homes selling at record paces, the market is still extremely competitive and in very high demand.”
The complete first-quarter sales reports are expected to be available this week at BHSUSA.com, Inhabit.Corcoran.com, Elliman.com, FanjulRealEstate.com, FrisbiePalmBeach.com, LindaOlsson.com, Serhant.com and SothebysRealty.com.
This story was updated from a previous version.
Darrell Hofheinz is a USA TODAY Network of Florida journalist who writes about Palm Beach real estate in his weekly “Beyond the Hedges” column. He welcomes tips about real estate news on the island. Email [email protected], call (561) 820-3831 or tweet @PBDN_Hofheinz. Help support our journalism. Subscribe today.