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With fewer buyers and sellers, market loses a little sizzle

Related stories: Homes sales fetch high prices despite slowdown in volume after pandemic |Property values increase at slower rate, but still chug along

By Rich Pollack

Snowbirds Stu and Lisa Cantor enjoyed the Highland Beach condo they rented for almost a decade.

So it wasn’t surprising that when the unit in the Boca Highland Beach Club and Marina community became available, they jumped at the opportunity to buy it.

“We really liked where we were and we liked being there,” said Stu Cantor, 71, who still has a home on Long Island in New York. “We had built up friendships and we really wanted to stay.”

The Cantors are among the many luxury condo buyers who still wanted to own along Palm Beach County’s southern coast, where the market is showing signs of slowing as homes in general stay on the market a little longer and the number of months of inventory supply increases.

Despite a tightening market and factors such as higher homeowner association fees and assessments, as well as higher interest rates, condos are still selling — just not as fast — and prices for premier units in high-end buildings often continue to climb, according to local real estate agents.

“People are still coming to Florida,” says Mark Hansen, a real estate agent with Coldwell Banker who specializes in luxury condos in coastal Palm Beach County and who is on the board of the Beach Condo Association of Boca Raton, Highland Beach and Delray Beach.

In Highland Beach, for example, the number of condo and townhome sales over $1 million increased by about 8% during the first five months of 2024 compared to a year earlier, with 27 units sold, according to the Florida Realtors association.

One of the highest-priced condos in Highland Beach was a three-bedroom, 3.5-bath, 2,842-square-foot unit in the Toscana community that sold for $4 million in August 2023, according to Redfin, a Seattle-based real estate firm that tracks sales.

In Boca Raton, 95 condos and townhouses sold in the first five months of this year for over $1 million, an increase of 44% from the same time period last year, according to Florida Realtors.

A 9-bedroom, 8.5-bath condo just shy of 7,500 square feet at Boca Raton’s 1000 South Ocean sold in November for $13.6 million, according to Redfin.

In Delray Beach, condo and townhouse sales seem to have stayed flat, with the number of those over $1 million — 60 units — slipping by just under 5%, Florida Realtors said.

In May, a three-bedroom, three-bath Delray Beach condo with an Intracoastal Waterway view sold for $3.2 million, according to Redfin.

In South Palm Beach two condos sold for over $1 million in the first five months of 2024, down from five during the same period last year.

A 2,800-square-foot condo on the ocean sold in December for just over $3 million.

As the market softens, inventory is slowly increasing but remains tight in part because of uncertainty that is causing sellers to step back.
Hansen said he’s had clients — both buyers and sellers — who have been talking to him for a year and a half but have yet to make a decision on moving.

“They say they decided to stay put,” he said.

The number of baby boomers living in condos is also a factor in keeping the inventory tight.

“Baby boomers are holding tight,” says Marie Caradonna, a luxury waterfront property specialist with Coldwell Banker’s Delray Beach office. “They’re just not selling.”

In some cases, Caradonna says, condo owners are choosing to rent their units out rather than sell, with some rents going anywhere from $7,000 to $12,000 or more a month.
Jackie Feldman, a luxury estate agent with One Sotheby’s International Realty in Boca Raton, says there are three key reasons why inventory is growing.

“Properties are not moving as quickly as they were due to high interest rates, increased assessments and HOA fees, and because it’s an election year,” she said. “I’ve had so many people say they’re going to wait until after the election.”

A change in the economy, Feldman says, has a bigger impact on condo sales than on single-family home sales.

“When the economy is tight, the condo market is the first to slow down because of fees,” she said.

HOA fees and special assessments can keep buyers away, she said.

Dramatically increasing HOA fees as well as recent large assessments coming as a result of rising insurance costs and building recertifications have been a factor in a slowdown of condo sales, real estate agents say.

Assessments and condo fees are driving some condo owners to move to single-family homes, Feldman said, but at the same time there are many single-family home owners buying condos who are not put off by the fees.

“I have people who only want the concierge aspect of a condo,” she said.

While there are estimates that close to 90% of luxury condo sales are cash deals, Feldman says she is seeing more new buyers taking out loans and mortgages, especially on the higher end.

“They want their money working for them,” she said. “They’re getting a better return on their investment.”

While condos throughout Palm Beach County’s southern coast are generally staying on the market longer, some are scooped up within days of being listed.

Then there are some that are sold directly from seller to buyer and never get listed at all.

Recently completely remodeled units in higher-end buildings — those with beach clubs, for example — are at a premium, according to Caradonna.
“They fall off the market quickly,” she said.

Caradonna said she recently sold a condo in Highland Beach’s Coronado for $1.375 million in just two days to a younger couple from the Northeast.

That ninth-floor unit, she said, has a direct ocean view, was completely remodeled and had all the “bells and whistles.”

The seller of that unit actually stayed in the building, buying one of the few condos in Coronado with a double balcony directly from the seller, who moved north without the property being listed.

“It was her dream place,” Caradonna said.

That sale illustrates a scenario that plays out often in high-end condos where an older resident decides to sell in order to be closer to family — or in some cases the resident dies — and the buyer is a baby boomer within the condo building who doesn’t want to leave.

“Direct sales happen because condos are a community where word travels fast,” Feldman said.

Caradonna’s seller wanted to stay in the condo community where she was most comfortable just like the Cantors, the snowbirds who bought the condo in Boca Highland Beach Club and Marina.

“We really like it there,” Stu Cantor said.