Brokers eye lower interest rates, presidential election as listings begin hitting MLS
With the dog days of summer in the rearview mirror, Palm Beach’s busy season is fast approaching, and real estate agents are getting ready.
The island’s residents are trickling back into town, and that means they’re house hunting.
“Oh my God, it’s busy. It’s busier than I thought [it would be] in September,” said Premier Estate Properties agent Margit Brandt. “We anticipate a very busy season.”
Agents say the market isn’t at full speed, but it’s picked up from the lull of summer. Listings are trickling into the Multiple Listing Service. The U.S. housing market, broadly, is facing headwinds, but Palm Beach real estate is a world unto itself.
It’s been four years since the pandemic put the pedal to the metal on the island’s luxury market, sending demand and prices to never-before-seen heights. While price growth has slowed, prices continue on an incline. The median sale price for single-family homes in Palm Beach is now $9.3 million, according to Redfin. Agents say the market has returned to its pre-Covid seasonal rhythm, with some adjustments.
The first half of the year saw a boom in ultra-luxury sales, led by Australian infrastructure magnate Michael Dorrell’s purchase of Tarpon Island for $152 million. According to data collected by Knight Frank, 94 homes in Palm Beach sold for $10 million or more in the first six months of the year.
Looking ahead
Rounding the corner into the fourth quarter, agents are eyeing two key elements: interest rates and the presidential election. The Federal Reserve’s announcement of a half-point rate cut earlier this month was welcome news, but the commander-in-chief question still hangs in the air.
“People don’t like uncertainty,” said Dana Koch, a top agent with the Corcoran Group. “It’s not necessarily the outcome that’s going to determine the direction they go in. People have always used the election as an excuse.”
Agents say the market is in a pre-election limbo, but they expect it to pick up — no matter which way the electorate votes.
This waiting period follows a summer of unusual activity for the island, typically a slower season. It’s when residents split to homes in cooler climates, and many houses that didn’t sell by spring are delisted. The buyers who do come to town pop in for a day or two on private jets for rapid-fire home tours, brokers say. More than a few agents took advantage of the pause this summer with trips to Europe and visits to the Hamptons.
Trophy hunting
And yet, big deals survived the Florida heat. Daren Metropoulos, the son of billionaire Dean Metropoulos, bought the historic oceanfront estate at 455 North County Road for $148 million in mid-June. Media magnate Herbert Siegel’s widow, Jeanne Siegel, sold her lakefront mansion for $51.6 million in July. The Riggio family, which made its fortune founding Barnes & Noble, listed their oceanfront estate for $96 million in June, and it was in contract by August.
Agents say deals like these help spur sales. “If other buyers see another person willing to purchase a $100 million property… that confidence trickles down into the sub-$30 million market,” said Brown Harris Stevens agent Whitney McGurk.
Palm Beach ranks as an epicenter for the ultra-luxury market of trophy homes valued at $50 million or more. The boom in eight- and nine-figure deals in recent years rocketed the island into the global spotlight, where it shares a stage with other wealth hubs like Hong Kong, London and Dubai.
“I can’t think of anywhere except Dubai that’s seen the same level of transformation as the Palm Beach market,” Knight Frank Global Head of Research Liam Bailey said earlier this year.
After a flurry of trophy sales in late spring and summer, the number of listings over $50 million has dropped off. Only two homes in this price range are on the market and not in contract, the MLS shows. For the first time in years, there is no “white whale” nine-figure listing on the island. The priciest properties on the market are a pair of oceanfront vacant lots asking $88.9 million each.
Agents say the shrinking trophy property supply isn’t surprising, and eschewed any concerns. Top Corcoran agent Suzanne Frisbie pointed out that just 7 percent of Palm Beach homes are on the ocean, and 11 percent are on the Intracoastal Waterway.
“These higher price points, they’re not consistently going to be on the market,” McGurk said. “If [sellers] go to purchase something else, they’re going to have a higher tax rate.”
And often, trophy estates are one of a kind.
“That product is so rare,” Koch said. “People aren’t willing to give it up for any reason because they can’t replace it.”
Stock of homes priced at $10M to $30M
While the trophy supply is dwindling, the stock of homes listed in the $10 million to $30 million range is growing. But the pace of sales at such prices is dragging, agents say.
“That under $30 [million] market has been very slow,” Koch said. “I do think it’s going to pick up.”
Frisbie said the bulk of homes in Palm Beach actually fall in the $10 million to $30 million range, so it’s no surprise more are available. She sees plenty of activity in presales at such prices at Related Ross’ South Flagler House, a planned two-tower, 28-story, 108-unit luxury condo project across the bridge in West Palm Beach.
“We’ve had a lot of sales in that price range last season and through the summer,” said Frisbie, who is head of sales for the project. She declined to comment on exact presale figures for South Flagler House, and presales cannot be verified in records. The towers are slated for completion in 2026.
What buyers are looking for hasn’t changed much in recent years: it’s still new construction.
“New product is still selling for high dollar, what it was during Covid, if not higher,” said Compass agent Chris Deitz, pointing to the challenges of building on the island. Buyers don’t want to take on renovations or ground-up construction projects made even more costly by island bureaucracy.
“It used to be you go into [the Palm Beach Architectural Commission] with plans approved in four months,” Deitz said, pointing to now-lengthy approval processes. “It is now a three-year process to get a house.”
While new construction is still a rare commodity on the island, agents said buyers and sellers are getting more realistic with pricing. Dealmaking is becoming more doable with a market closer to equilibrium, meaning a steadier balance of power between buyers and sellers.
Plus, affluent buyers still have money to spend.
“Wall Street is thriving, people feel a little wealthier,” Koch said. “Why not take some of those profits and put them into a tangible asset like real estate and enjoy themselves?”
Source: Palm Beach Agents Anticipate Busy Market as Season Approaches (therealdeal.com)