May has arrived, but the bustling Palm Beach real estate scene appears to be blithely ignoring the traditional signals that it’s time for the winter season to begin winding down.
“Oh, it’s definitely not the end of the season,” said agent Margit Brandt of Premier Estate Properties. “We have all these people flying in to see houses.”
She added: “The spring picked up significantly, and the market is really busy. We’ were overwhelmed with activity in February, March and April.”
Real estate agents and brokers who spoke to the Palm Beach Daily News say there’s been a marked change from the first five months of the season, when the island saw notably sluggish single-family sales, especially at the higher end of the market. Sales of properties priced between $30 million to $40 million or more only recently picked up momentum.
To be sure, the number of single-family properties that sold during the fourth quarter of 2023 was up, year over year. But the homes that sold didn’t fetch the sort of eye-popping prices that can grab national headlines for the island.
Consider that of the top 10 most expensive sales of 2023, all closed before the start of August, at recorded prices ranging from about $41 million to $175 million.
“As big-ticket buyers took a back seat toward the end of the year, activity in the lower end of the single-family market ticked up” in October, November and December, Sotheby’s International Realty brokerage manager Jessica Shapiro wrote in her fourth-quarter Palm Beach sales report.
Then came even slower sales in January and early February, blamed in part on unusually wet weather that dampened showings and sales.
Agent expects to end the season ‘with a bang’
By the middle of February, however, things had taken a busier turn, said agent Dana Koch of the Corcoran Group.
“It was a slow start. There was no consistency as to what was going on in the market,” Koch said. “But it looks like we’re going to be ending the season with a bang.”
Broker Christian Angle of Christian Angle Real Estate agreed.
“The season started off slow with a lot of uncertainty,” Angle said. “But in the last eight to 12 weeks, the market has been gangbusters.”
Since March 1, seven sales have closed at $28 million or more, courthouse records show, with the two biggest deals recorded at $85 million for a vacant oceanfront at 108 El Mirasol and $74.25 million for a lakefront house at 740 Hi Mount Road. But those transactions don’t tell the whole story. A number of listings in the Palm Beach Board of Realtors Multiple Listing Service right now are marked “pending,” a status that shows the property is under contract, typically with a non-refundable deposit from the buyer.
As of May 3, sales of 12 single-family properties were pending, with their asking prices topping out at $187.5 million for a renovated-and-expanded house on private Tarpon Island. April 30 alone saw two major properties land under contract with prices above $50 million, the MLS showed — a lakefront house at 200 Via Palma, listed at $57.85 million; and an oceanfront house at 200 S. Ocean Blvd. with an asking price of $59 million.
Those two estates joined other homes already under contract with top-dollar asking prices, including a lakefront house at 315 Chapel Hill Road priced at $59.5 million and a vacant lot at 940 N. Lake Way asking $55 million, down from the original price of $59 million. And those tallies don’t include several high-dollar off-market deals said to be in the works by people familiar with the properties.
Sizable condominium deals at The Breakers
Echoing the single-family market, sales of condominiums and co-operative units were also in flux at the start of the season, but activity on the higher end accelerated at the end of 2023. By early spring, overall activity had picked up substantially, said Douglas Elliman Real Estate agent Scott Gordon, who for years has specialized in selling Palm Beach condos.
Among the season’s notable condo sales were three in-town deals recorded at oceanfront 2 N. Breakers Row in late December and early January at recorded prices ranging from $10.125 million to $14.75 million. The latter, for Penthouse 4 in the North Building, was the highest price paid for an in-town apartment during the season. On the South End’s Condominium Row, by comparison, the most expensive sale was an off-market transaction recorded at $6 million for oceanfront Unit 208 in the south building of Bellaria at 3000 S. Ocean Blvd., courthouse records show.
As of May 3, buyers were waiting to close 16 pending condo and-co-op sales, with the most expensive unit asking about $3.6 million in the Sloan’s Curve development at 2000 S. Ocean Blvd.
Number of Palm Beach listings is slowly creeping up
So how did this unusual season develop — and what does it portend for sales in the weeks ahead? Here are some takeaways from a real estate season that was slow out of the gate but seems to be making up for lost time.
Shoppers in the market for single-family homes found that the inventory available for sale in Palm Beach has slowly increased during the season. There were 91 single-family houses and townhouses listed for sale in Palm Beach, according to a May 3 search of the MLS. Another 24 properties were being marketed in the MLS’ “land” category, although about half of those listings overlapped the single-family listings. A search also showed 172 condos and co-op apartments were for sale.
Even so, the number of listings remains far below the levels recorded before the coronavirus arrived in early 2020 and helped launch a three-year real estate boom. The listings in the MLS, of course, don’t include properties that are being shopped quietly off market as so-called pocket listings.
With inventory still limited — especially for better-quality houses on the water, newly built homes or recent renovations — the laws of supply and demand are working overtime, driving prices up for better-quality properties, real estate observers agree.
“Anything that’s ‘turnkey’ is moving,” Brandt said. “Anything that’s (high)-quality is moving.”
And premium properties are demanding prices that can still swivel heads, solidifying Palm Beach’s reputation as a market leader in the U.S. residential market, said real estate analyst Jonathan Miller. Miller heads New York City’s Miller Samuel Inc., which prepares sales reports for Douglas Elliman in luxury markets across the county.
“The market pricing for single-family (homes in Palm Beach) is still up quite a bit,” Miller said. “Palm Beach is more constrained by inventory quality than any other market we cover. It’s a market that has had (fewer) high-end transactions, but the market as a whole has become more expensive.”
In the first quarter of this year, in fact, Palm Beach set a new median sales price record for single-family properties. At $12.5 million, it was the highest ever recorded for January, February and March, according to Miller’s Elliman Report. The median is the price at which half the properties sold for more and half for less.
Second half of the season saw asking-price drops
But the season also saw many sellers drop their asking prices — some substantially after the New Year. The lack of sales in the early part of the year was likely a factor, as sellers reacted by reducing prices to attract buyers, Koch acknowledged. Yet he didn’t hesitate to offer another reason for the price drops: Many properties had simply been priced too high for the current market in the first place.
During the pandemic-fueled boom, it wasn’t unusual to see values of residential properties double and even triple, as out-of-state buyers scrambled for properties, spurred on by Florida’s favorable tax picture and a steady stream of corporate relocations from other parts of the country to West Palm Beach and even Palm Beach.
But that once-in-a-generation sales explosion is over — and some sellers have had a hard time letting go of so-called “aspirational” pricing for their properties, Koch said, especially if those properties need a substantial renovation. “The overpriced listings are still sitting on the market. The days of ‘vanity pricing’ are over,” he said. “And even things that are priced properly are just taking longer to sell.”
The reason? Buyers today, brokers agreed, are more cautious, taking their time to find the right property to meet their needs. That’s especially true, Brandt said, for those who may have bought something less than the home of their dreams during the mad rush of the pandemic, just to get a foot in the island’s door.
“They just have different priorities and needs now, and we’ve seen a lot of upgrading on the island,” Brandt said. “If you notice, many of the buyers (in the market today) are people who (already) live here. They’re looking to trade up and improve their situation.”
Koch added that people shouldn’t be too quick to judge what price reductions might mean in Palm Beach’s overall market. “Buyers say to me: Look at the market coming down (in price). But I say: Those properties were not priced properly in the first place. And some of them are still overpriced. They are priced for tomorrow, and we’re not there yet — and we may never be there,” Koch said.
Angle agreed that many buyers are taking longer to settle on properties and have adopted a wait-and-see attitude toward pricing. “But there are a lot of (would-be buyers) who are waiting in the wings,” he said. “And then someone makes an offer, and suddenly there are other offers coming in,” Angle said.
Broader issues may have affected the real estate season
Broader factors also may have been keeping shoppers on the fence, because “buyers dislike uncertainty,” said Corcoran Group agent Bill Yahn, echoing others in the Palm Beach real estate community.
Sales are traditionally slower in presidential election years — especially contentious ones — as would-be buyers cross their fingers and make campaign donations, waiting to see who will occupy the White House before finalizing their financial plans, Yahn said. And although the vast majority of homes in Palm Beach are paid for in cash, Koch said, higher interest rates are still on the minds of many would-be homebuyers on the island.
“I think it plays on people’s psyches,” Koch said. “There’s still a little trepidation. They were able to free up their capital to do other things when interest rates were low.”
Buyers’ sense of unease may also include concerns about the wars in Gaza and Ukraine and uncertainty about the strength of the global economy. But other agents downplay the role such factors have in influencing buyers’ decisions.
“I really think most it depends on individual circumstance,” said agent Tom Shaw of Sotheby’s International Realty. “Someone may have just closed a big business deal and they want to buy a house here. Or they just sold a big house in some other part of the country. Buying a home in Palm Beach might then become a priority.”
Condo buyers taking into account new costs, agent says
On the condo scene, asking prices came into sharper focus this season, Gordon said, and with good reason.
Condo shoppers, Gordon said, have taken note of the increasing costs of ownership — and not just because property values have increased over the past few years. Many owners are facing higher insurance costs and tougher state rules for boosting their aging buildings’ so-called “reserve” funds. Buyers also may be taking note of costs for projects that involve concrete restoration and other building-maintenance issues, Gordon added.
“People are waiting to see how all that’s going to affect pricing,” Gordon said. ““I call this the ‘blinking-yellow-light’ market. People are proceeding with a lot of caution. I’m pleasantly surprised that (the Palm Beach condo market) has done as well as it has.”
He added: “What seems to be doing very well are updated, renovated apartments, even if they are higher-priced.”
Palm Beach’s condo sellers also are facing stiff competition from newly built and planned towers in downtown West Palm Beach and vicinity.
Market is ‘strong’ because ‘people want to be here,’ broker says
Yet even with some stresses, the island’s overall real estate market continues to appeal to wealthy buyers — and that fact can’t be overstated, Angle said. The limited supply of housing here only adds to the island’s appeal.
“The market and the desire to be in Palm Beach is very strong. The interest of people who want to come into Palm Beach from other parts of the country is the strongest I have ever seen,” Angle said. “Inventory is tight. The market is strong. And people want to be here.”
He and other agents also had a word of advice for would-be buyers who see a home on the island they like.
“The longer you wait — and if you’re not the first to react — then you’re going to miss an opportunity,” Angle said. “This is a market that requires strategy and insight.”
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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.
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