With a new season upon us, Palm Beach’s revved-up real estate market has continued its year-long shift into higher gear, driven in no small part by affluent home buyers whose wealth has steadily increased and who increasingly view the island as a picture-postcard-perfect tax haven.
And that means the Palm Beach real estate professionals and observers interviewed by the Daily News are expecting sales over the next several months — barring anything unseen — to roll along as assuredly as a new Bentley Continental GT convertible cruising South Ocean Boulevard toward Mar-a-Lago.
Brokers point to a busier-than-usual summer in which sales have reflected the overall market resurgence that took root about a year ago. The active real estate scene that characterized the past 12 months came after a couple of start-and-stop years that bracketed the election of President Donald Trump in November 2016.
Off-season sales numbers at the very top of the market are telling. Since the start of May, 11 single-family properties have sold for $18 million or more in Palm Beach, according to courthouse records. For the same period last year, just six properties changed hands in that price category.
And condominium sales also are up markedly, according to second- and third-quarter sales reports issued by agencies that do business on the island.
“We had an excellent summer with a lot of activity. Many people came into town to look — and some purchased. I’m expecting it will be a busy fall, and we are already seeing an uptick in October,” said broker Debra Reece of Sotheby’s International Realty. “In general, Palm Beach just seems to be of general interest these days. When a president is in residence, it shines a spotlight on your community.”
Broker Christian J. Angle of Christian Angle Real Estate is likewise optimistic.
“What I’m looking at is the increasing velocity of transactions. We’ve seen a lot of sales,” Angle said. “I’m seeing buyers for primary homes — buyers who are creating a deeper, established base in the community. These buyers are doing business here and enrolling their kids in school. They love the quality of life.”
Several third-quarter sales reports released last week reflect the strength of the summer market, although the agencies’ varied sales criteria preclude apples-to-apples comparisons. The Corcoran Group’s report was especially bullish, showing a 38-percent rise, year over year, in combined sales of single-family homes and condominiums in July, August and September. The report is compiled from sales data collected from courthouse records and closed listings in the Palm Beach Board of Realtors Multiple Listing Service.
And Douglas Elliman’s third-quarter report showed the majority of price-trend indicators moved higher for Palm Beach single-family and condo sales alike.
The buyers who bought properties this year — or who will be shopping this season — likely have plenty of money to spend. Even with Wall Street’s stumbles this month, the stock market’s heady performance over the past few years fattened stock portfolios to levels that have astounded even seasoned analysts. And the recent stock market jitters may spark even more real estate investment, as people look for a different place to park their money, local real estate observers say.
In addition to the years-long stock-market boost and a bustling U.S. economy, the federal tax overhaul passed by Congress late last year has energized many in Palm Beach, brokers say. Those new tax regulations are expected to give a substantial financial boost to business and industry but also to the most affluent Americans, thanks to changes to the estate tax and the alternative minimum tax.
It all means affluent residents of higher-taxed states are giving Florida in general – and Palm Beach, in particular – a harder look as a place to limit taxes under the state’s homestead rules for primary residences. That group of buyers includes residents of the Northeast and, to a lesser degree, the Midwest and California.
Florida residents also benefit, comparatively, from the lack of a state income tax, the state’s relatively low sales tax and its limited tax on intangible property.
That favorable local tax picture and the IRS changes have been a boon to the island’s real estate market, brokers seem to agree.
“For wealth preservation, nobody wants to be in Connecticut right now,” quipped broker Linda Olsson of Linda R. Olsson Inc., Realtor. “People in high-tax states certainly see Palm Beach as an option.”
She is echoed by Corcoran Group broker John Hackett, whose regional duties at the agency include overseeing the island’s brokerage.
“I really expect sales to be strong this season,” said Hackett, who described the tax changes as “a true catalyst. Earlier this year, there was (tentative) speculation that it was one of the biggest reasons for the (recent real estate) push — and that has certainly been justified, especially in Florida.”
The busy market in Palm Beach also has contrasted sharply with some areas of the Northeast that are enduring sluggish real estate activity, particularly New York City’s high-end — and many say overbuilt — condo scene.
Inventory still tight
Palm Beach house-hunters may be ready to buy, but whether they’ll find the right property is another matter, as the number of single-family properties remains tight, reflecting increased competition. Better-quality houses and townhouses are in demand, and if they’re on the waterfront, so much the better.
The overall number of single-family properties listed for sale in Palm Beach hasn’t improved much. As of last week, the island’s MLS showed listings for 137 single-family houses, townhouses and vacant land. That’s about the same number that were for sale a year ago.
The inventory is a little looser in the condo and co-op market, where 256 units were listed last week. Last year, there were 230.
“We’ve definitely seen a lack of good (single-family) inventory, especially on the high end,” said broker Linda Gary of Linda A. Gary Real Estate. “But we’re starting to see more listings. People are making decisions.”
Reece agrees: “We know that a lot of people have been holding back listing until closer to the season.”
The island, by its very geography, is a limited housing market — and many would-be sellers are carefully monitoring selling prices before listing their properties. As brokers often say here, unless there’s a compelling reason, nobody needs to sell their home in Palm Beach, and some sellers have a hard time finding something comparable on the market.
And for those looking to buy land and build custom homes, rising prices and demand since the Great Recession ended several years ago have complicated the picture. In the North End, for example, residents on street after street have seen private buyers and developers of speculative projects snap up properties over the past few years — and what’s left is not only scarcer but more expensive.
“With these (rising) land prices, the possibility of buying land and building a house becomes a bigger number,” said Palm Beach Board of Realtors President and Corcoran agent Suzanne Frisbie, whose family company, The Frisbie Group, also is a real estate developer.
The competitive market during July, August and September kept many agents scrambling to keep up. Properties that sold, it turns out, spent far fewer days on the market, compared to the sales of a year before, according to the latest third-quarter reports.
“The pace of the market moved faster because the sales outpaced any increase in inventory,” said analyst Jonathan Miller, who prepared the Douglas Elliman Real Estate’s third-quarter report and heads New York City-based Miller Samuel Real Estate Appraisers and Consultants.
And for all single-family and condo sales, Miller said, “the nuance is that both markets saw faster marketing times and less negotiability as far as price.”
Miller also noted the busy summer season for condo sales. Condos made up the biggest share of all residential real estate sales in Palm Beach in the third quarter, the report showed. That’s the first time that’s happened, he said, since the Great Recession hit in 2008.
Condo sales this year have been notably rosier on the South End, which was hit hard by the financial crisis and was far slower to recover than the markets for apartments in Midtown and the near North End, where units have always sold for considerably more.
“We’ve definitely had very strong sales — even condos on the South End,” said broker Ava Van de Water of Brown Harris Stevens. “It’s kind of unusual to see that type of activity in late summer.”
Palm Beach’s condo market also has seen a shift in demographics toward younger buyers, often their 40s and 50s, said Scott Gordon of Scott Gordon Real Estate, whose agency has long specialized in selling apartments in the South End.
Unlike snowbirds who once spent five or six months in residence here during the winter, condo buyers today often plan shorter stays, sometimes flying in just for a weekend.
“It’s all about location,” Gordon said. “They love the beach, the amenities, the cultural events, the access to Palm Beach International Airport, and the convenience and security.”
On the South End, where most condos were built in the 1980s or before, buyers are finding more buildings that have updated their common areas, revamped swimming pools, replaced aging balcony railings and made other building improvements.
Once those buyers have closed a deal, they frequently knock down interior walls, opening up floor plans to maximize views and create a brighter, clean-lined look, Gordon said. But condo-shoppers are often frustrated by lower ceiling heights than the 9- or 10-foot versions they would prefer.
“It’s part of the compromise. Everyone comes in with a wish list,” Gordon said.
On the other side of town — and just across the Royal Park Bridge — higher ceilings are just one of the selling points at The Bristol, the ultra-luxury condominium tower expected to finish up construction this season in downtown West Palm Beach. In the works for five years, the 25-story, 700,000-square-foot building startled many real estate observers with its success. It’s nearly sold out — and many buyers are making the move directly from Palm Beach, said Al Adelson, one of the project’s developers.
Buyers who might otherwise have bought a residence on the island have instead been drawn to The Bristol’s new construction, concierge services, high-end amenities, water views and convenience to midtown Palm Beach.With an average price of about $10 million, about 60 units have sold for about $2,000 per square foot on average, Adelson said. Another five were held back but will enter the market this season at prices ranging from $7.5 million to $19 million, he added. Units could be ready for occupancy in March, with all construction complete in May, if all goes according to plan, Adelson said.
The Bristol’s success may have shaken up the market, but make no mistake. Palm Beach itself — with its storied history, fine architecture, high-end shops and plentiful restaurants — continues to draw enough buyers to keep real estate agents hopping. Home buyers on the island are sharp, savvy consumers who understand value and negotiation, said Angle, echoing other brokers.
“Our clientele is very sophisticated, and they come into the market very well prepared,” said Angle. “The look at the quality of life here, the beauty, the safety and security.”
That’s not to mention the tax advantages for homesteaders or Palm Beach’s higher media profile thanks to Trump’s visits to Mar-a-Lago. Even amid fears about the effects of rising interest rates, concerns over the outcome of the mid-term elections next month and worries about the fallout of the Trump administration’s sweeping new tariffs, Palm Beach appears to be more than holding its own.
“In the end,” Reece said, “it’s really the beauty of Palm Beach that makes it so special, that puts it on the radar of someone who may be considering buying a new home.”
Source link, By Darrell Hofheinz