Steven Presson (right), a Realtor with the Corcoran Group, shows a property on Hypoluxo Island to Brian Mock in March as Douglas Elliman agent Tonja Garamella listens from the top of the stairs. The Mocks, from Newport Beach, California, plan to move to the area and were viewing the home with friends who recently moved to Hypoluxo Island from California. The house was listed at $4.95 million. Jerry Lower/The Coastal Star
Buying ‘frenzy’ strains supply of coastal homes
By Charles Elmore
A year after the coronavirus pandemic began to trigger lockdowns and states of emergency, what once seemed to forebode an uncertain pause in home sales has instead transformed coastal Palm Beach County into one of the hottest markets in the nation.
Corcoran Group agent Steven Presson said he cannot remember anything like it.
“It’s a frenzy at the highest level,” Presson said. “Buyers right now are scratching and clawing for inventory.”
A vast Ziff family estate on the market for six years in Manalapan sold for a reported $94 million in March, heralded as a record for the town.
Home sales doubled in Ocean Ridge in February compared to the same month a year earlier, even as the inventory of available properties dropped almost 40%, according to data cited by real estate firm Douglas Elliman.
“Homes are getting sold literally the minute somebody finds out about them,” said Val Coz, the company’s Delray Beach-based senior director of luxury sales.
Luxury home sales in Palm Beach County surged 115% in the fourth quarter of 2020 compared to the same period of 2019, the largest increase in any major U.S. market tracked by Seattle-based real estate brokerage Redfin Corp. It marked the biggest jump since Redfin began crunching such data in 2013, company officials said.
Sellers were also getting more money for their homes, with luxury home sale prices in the market rising 14% in the fourth quarter of 2020 compared to a year earlier, the report found.
The area’s “high-end housing market has experienced explosive growth” as affluent New Yorkers and others have flocked to the sunny region “in search of more space and lower taxes while working remotely during the pandemic,” according to Redfin’s report.
In this case, “luxury” means homes with market values in the top 5% of the county. They had a median sale price of $1.8 million. The fervor extends to other segments of the market as well, though with a little less intensity on each rung down the price ladder. Purchases of the least expensive homes have dropped off slightly.
Sales of “expensive” homes in the county — the 30% of homes with the next-highest market values after luxury homes — increased 38% and had a median sale price of $500,000, Redfin reported. Mid-valued home sales jumped 26% and had a median cost of $285,000. Sales of “most affordable” homes, those with market values in the bottom 5% in the county, decreased 10%, with a median cost of $56,000.
More than half of Redfin.com home searches in Palm Beach County came from outside the county during the fourth quarter, with Cook County, Illinois, and Kings County, New York, the leading places of origin.
Wall Street firms expanding their presence or considering doing so in South Florida have included Goldman Sachs, Virtu Financial and Elliott Management, Redfin noted.
Palm Beach County’s red-hot numbers continue in 2021, with January producing luxury-home sales 88% above the same month of 2020 and February 70% more, according to Redfin.
Steven Presson shows a property in March on Hypoluxo Island to Paul May, who recently moved to Lantana from California. Presson said there is such a limited inventory of homes that this home had been shown 32 times since it was listed for $4.95 million a month before. That is the typical number of showings for a two-year period. Jerry Lower/The Coastal Star
One of the few factors slowing down the pace is that the inventory of available homes near the coast is running thin.
For three recent sales in Manalapan, Hypoluxo Island and Ocean Ridge, Presson said, he never quite made it through the traditional process of putting the homes on the market and waiting for offers. Buyers were already at hand.
“Little niche beach communities like Ocean Ridge, Gulf Stream and Hypoluxo Island are in more demand than ever as many of today’s buyers are attracted to small beach communities with low density and smaller number of residents,” he said.
A buyer from Connecticut, shut out in previous deals, made an offer above the asking price in order to secure one property, Presson said.
South Florida always had weather going for it, along with no state income tax, he said. But the pandemic brought new dynamics. It pressed the fast-forward button for many wealthy buyers who had been thinking of it as some balmy destination in the future.
In addition, as working from home became increasingly common in the COVID-19 era, some executives began to see fewer reasons not to move themselves or their companies if they could.
“Instead of waiting until later, now they know there’s an urgency to get it done,” Presson said. “It’s a crazy time.”
Demand is clearly outpacing supply, said Michael Mullin III, an agent for William Raveis who specializes in luxury properties in Delray Beach, Gulf Stream, Ocean Ridge and Manalapan.
Rentals have been hard to find and prospective buyers who hoped to visit in person have often found homes snapped up before they can arrive, he said. Recent sales have included a $9.3 million property in Gulf Stream, he said.
The motivations of individual buyers can vary, but many sales seem driven by “major-city flight,” Mullin said.
All of it is pushing price tags higher. In February, the median sales price for single-family homes in South Palm Beach County increased 25% to $475,000 compared to the same month in 2020, according to Martin Group Real Estate, citing data from BeachesMLS. New listings decreased by more than 20% as inventory grew more scarce.
Look at Ocean Ridge. Coz said 10 February sales there represented a 100% increase from the same month of 2020, while March’s pending sales pointed to more in the pipeline.
“I just sold one home in Ocean Ridge to a buyer from New York who hasn’t even seen it,” Coz said.