Friday, December 02
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South Florida Market Remains HOT, HOT, HOT

South Florida – particularly Broward County, Miami-Dade County and Palm Beach County – has experienced explosive growth over the past few years, coupled with the market pressures caused by the COVID-19 pandemic. The market was exceptionally good for investors in 2021, but is the Florida housing market still a smart investment for 2022? 

1125 South Ocean, Palm Beach
Presented by Margit Brandt of Premier Estate Properties

Based on the most recent reports from Florida Realtors, the answer is a resounding “Yes!” with tight inventory keeping housing prices high. And especially high in places like Palm Beach Island, as reported by Margit Brandt, licensed realtor at Premier Estate Properties located on Worth Avenue in Palm Beach. “Pre-Covid, a well-renovated property or new construction on Palm Beach Island cost between $1,000 and $1,500 per square foot,” reports Ms. Brandt. “Now, the same type of properties fetch prices between $2,500 and $3,500 per square foot.” She continues to explain that this square foot pricing translates to entry level houses on Palm Beach Island costing between $10 million and $15 million. 

Ms. Brandt confirms these numbers represent close to a 400% increase in sale prices on Palm Beach Island since 2019.  “Pre-Covid,” she explains, “sales on Palm Beach Island were about $1 Billion. In 2021, sales were $4 Billion. It remains to be seen what happens in 2022.” And the pace of sales on Palm Beach Island is blistering, with time on market being days to a few weeks at most for the right properties, which see multiple bids, bids over ask and bidding wars.

Whether or not a property is renovated has an impact on marketability – especially in Palm Beach. As Dana Koch, head of The Koch Team and sales associate with Corcoran in Palm Beach comments: “There’s value in the market for unrenovated properties. Any well-renovated property or a new construction will get a premium. Many buyers don’t want to buy a property that needs renovation because of supply chain and other issues, including the length of time for the architect/permitting/construction process and the general unavailability of contractors due to demand.” 

240 Mockingbird Trail, Palm Beach
Presented by The Koch Team at Corcoran

David Hall, of Hall Luxury Homes Group, sees much the same in the areas of the Boca Raton, Highland Beach, and Delray Beach corridor with a bit of a twist: a resurgence in the condominium market. “The Boca Raton – Highland Beach – Delray Beach corridor is a micro market,” states Hall, “and it doesn’t have the same population density as Miami or Palm Beach nor does it have the same amount of existing inventory or new construction. Single family home inventory is very tight, so buyers are beginning to look at condominiums as the next step. And I’m seeing that condominiums are catching up with single family homes. Larger condos – with 3 bedrooms or more – are really catching on. Right now,” continues Hall, “family-sized condos with 3 to 5 bedrooms, are commanding premium pricing.”

South Florida remains one of the hottest real estate markets in the country – and for good reason. Margit Brandt sums it up quite succinctly: “No one wants to leave paradise, and everyone wants to arrive.” It doesn’t hurt that Palm Beach, Boca Raton and other South Florida destinations have historically been exceptional investment vehicles. While equity, crypto and tech markets are getting pounded and economic headwinds like increasing interest rates and inflation may cause a pause in other markets, South Florida has withstood most major economic cycles because owners can live in their investment vehicles while enjoying a premier quality of life. At the very least, owners will make their money back on their investments – if not in multiples. Proving out this assertion, there have been a number of flips and real estate investment trades in which sellers reaped astronomical profits. 

Recently, The Real Deal reported a number of transactions in the small town of Gulf Stream, which is north of Delray Beach and south of Manalapan. One waterfront property traded for $27.5 million, almost double what the sellers had paid for the property less than 12 months prior. Other recent sales in Gulf Stream include waterfront properties selling for $33 million, just shy of $30 million and $27.6 million.

Population growth has played a large part in the continued upward expansion and resilience of the South Florida real estate market. According to the U.S. Census Bureau, Florida has gained more than 2.7 million new residents since 2010, making the state the 3rd most populous after California and Texas. Home to over 21.5 million people, Florida’s population grew by 14.6% compared to one decade earlier. Over the next few years, Florida is projected to gain 845 new residents per day through April 2025. Much of this explosive growth is linked to quality of life, as Florida offers an almost ideal work-life balance with great job opportunities and near-perfect weather, culture, and recreation – which includes more than 1,300 golf courses, hundreds of miles of white sand beaches, countless outdoor recreation activities, world-class theme parks, international shopping venues, and plenty of sporting events. 

245 Ridgeview Drive, Palm Beach
Presented by Christian J. Angle of Christian Angle Real Estate

And let’s not forget that Florida is one of just 8 states without personal state-level income tax, according to SmartAsset, an online financial asset tool. Christian J. Angle, head of the Palm Beach luxury real estate group bearing his name, believes that the future of South Florida is especially bright, as the market continues its shift from a secondary vacation market to a primary residence market. “Historically South Florida, and especially Palm Beach, was a secondary vacation market,” shares Mr. Angle. “Long gone now are the days of boom and bust of South Florida; drawn by the quality of life, community safety and other factors, interesting people are moving to the area, putting their kids in school and taking office space – which, coincidentally, has had a very positive impact on the commercial real estate market as well.”

So, what’s on tap for the rest of 2022 in the South Florida markets? The unanimous verdict is that the market will remain strong and will continue to outpace the rest of the country. “The market is still firing on all burners,” shares David Hall. “It’s continuing on an upward trend, but without the momentum of the pricing increases we saw during the pandemic.” Dana Koch sums it all up quite nicely: “What better place to diversify one’s portfolio than to land bank in South Florida/Palm Beach real estate.”