South Florida is Still Bullish

After two years of a torrid market, is South Florida’s real estate too hot for its own good? 

Ascorching 2021 housing market bumped median prices of single-family homes in Palm Beach County to $475,000 — a 22% rise — and the average price to near seven figures. Bidding wars broke out that recalled the boom years of the early 2000s.

Zoning laws, a limited stock, inflation, and high demand have caused a housing shortage, as cryptocurrency investors and remote workers relocated for lower taxes and lifestyle. But, are the good times about to pop?

None of this was a surprise to local agents. 

“Palm Beach, where I focus most of my attention, has not shown any signs of cooling down, but it’s hard to say because everybody’s on vacation right now for the summer,” says Todd Peter of Sotheby’s. “We’ll see what happens when people come back to town in the fall.”

John Cregan, Peter’s colleague at Sotheby’s, concurs. “It’s summertime, but we still have way more buyers than sellers. And by all reports it still gets cold up there in the winter, and New York and Illinois don’t seem to have any intention of lowering taxes. So, we continue to have a demand driven market. The higher prices are kind of accelerating, because of things like people’s desire to downsize or move closer to grandkids.”

Other people want to give it some time. “People think the market is so slow. It’s supposed to be slow this time of year! Two years ago, pre-pandemic in June, there were six single family homes sold [in Palm Beach] in the month of June, which is normal. Last year there were 27,” points out Gary Pohrer at Douglas Elliman. “We’ve just become accustomed to this mad craze over the last couple of years where people stay here and didn’t go anywhere during the summer. This year, though, people are traveling to Europe, even more than in past years. I don’t think we’ll really know how this market is going to be until January.”

Cregan says, “I think we had two very unusual summers and that people for the most part didn’t leave. I mean, normally the restaurants all offer half-off deals, and you can lie down in the middle of the street for July, August, and September. But last year everybody was here, so the real estate market continued busy through the summer.”

Inventory remains tight throughout South Florida, and the time on the market remains blistering. In Palm Beach County, average sale time in July 2022 was 20 days. While, perhaps, the days of long lines at open houses and waiving inspections for all cash offers may be gone, there is still clearly a massive demand for little inventory. While most other American real estate markets are cooling down with inflation and higher interest rates spooking buyers, South Florida doesn’t appear to be cooling off as much as the rest of the country.

In Palm Beach, says Peter, “We typically have somewhere about 185 single-family homes for sale. We have 39 right now.” 

“I used to go on tours, a couple of tours a day, and I would show ten houses to one client and ten houses to another client,” commented Pohrer. “Now if that same client came in town and they want to be in a certain price range, you’re talking three houses.”

So, what is the future for South Florida? Will the torrid pace continue, will it ease up shortly, or will the bubble burst? Perhaps not surprisingly, all the agents are bullish on the area and the opportunities it affords. Societal changes, such as working from home culture and remote work becoming more and more accepted because of technological breakthroughs, mean that people aren’t tied to cities within commuting distance. 

“We have a lot more people, especially younger people, who might have waited till they were a little bit older to make their Florida move and all of a sudden, they can do their jobs here. Their companies are moving here. We’ve got a substantial number of Wall Street firms who have established real office presence down here. Before, just five, six years ago, there’d be a three-person private equity shop down here. Now we’re getting everybody. That’s had a knock-on effect to the lower price adjacent markets, West Palm and Jupiter and Palm Shores, places like that,” says Cregan. “Prices went up a lot, but for fairly rational reasons. Now, if you make enough money, you can move to Florida and after tax savings, the house pays for itself if you can establish residency.”

“Palm Beach is always going to be a spot where we’ve got a limited supply and a lot of people that want to be there,” Peter comments. “And Covid accelerated everything. There were a lot of people that were thinking about moving and Covid meant they made the move then. I don’t see the huge demand for properties in Palm Beach and in West Palm Beach slowing down.”

And as they say, the one thing they’re not making any more of is land and Palm Beach Island is quite small. Pohrer points out, “I recently read there’s 54 billionaires on Palm Beach. That’s got to be by far the most billionaires in one area.” No matter the vagaries of the market, there’s still only one South Florida. 

“Palm Beach, where I focus most of my attention, has not shown any signs of cooling down, but it’s hard to say because everybody’s on vacation right now for the summer,” says Todd Peter of Sotheby’s. “We’ll see what happens when people come back to town in the fall.”

John Cregan, Peter’s colleague at Sotheby’s, concurs. “It’s summertime, but we still have way more buyers than sellers. And by all reports it still gets cold up there in the winter, and New York and Illinois don’t seem to have any intention of lowering taxes. So, we continue to have a demand driven market. The higher prices are kind of accelerating, because of things like people’s desire to downsize or move closer to grandkids.”

Other people want to give it some time. “People think the market is so slow. It’s supposed to be slow this time of year! Two years ago, pre-pandemic in June, there were six single family homes sold [in Palm Beach] in the month of June, which is normal. Last year there were 27,” points out Gary Pohrer at Douglas Elliman. “We’ve just become accustomed to this mad craze over the last couple of years where people stay here and didn’t go anywhere during the summer. This year, though, people are traveling to Europe, even more than in past years. I don’t think we’ll really know how this market is going to be until January.”

Cregan says, “I think we had two very unusual summers and that people for the most part didn’t leave. I mean, normally the restaurants all offer half-off deals, and you can lie down in the middle of the street for July, August, and September. But last year everybody was here, so the real estate market continued busy through the summer.”

Inventory remains tight throughout South Florida, and the time on the market remains blistering. In Palm Beach County, average sale time in July 2022 was 20 days. While, perhaps, the days of long lines at open houses and waiving inspections for all cash offers may be gone, there is still clearly a massive demand for little inventory. While most other American real estate markets are cooling down with inflation and higher interest rates spooking buyers, South Florida doesn’t appear to be cooling off as much as the rest of the country.

In Palm Beach, says Peter, “We typically have somewhere about 185 single-family homes for sale. We have 39 right now.” 

“I used to go on tours, a couple of tours a day, and I would show ten houses to one client and ten houses to another client,” commented Pohrer. “Now if that same client came in town and they want to be in a certain price range, you’re talking three houses.”

So, what is the future for South Florida? Will the torrid pace continue, will it ease up shortly, or will the bubble burst? Perhaps not surprisingly, all the agents are bullish on the area and the opportunities it affords. Societal changes, such as working from home culture and remote work becoming more and more accepted because of technological breakthroughs, mean that people aren’t tied to cities within commuting distance. 

“We have a lot more people, especially younger people, who might have waited till they were a little bit older to make their Florida move and all of a sudden, they can do their jobs here. Their companies are moving here. We’ve got a substantial number of Wall Street firms who have established real office presence down here. Before, just five, six years ago, there’d be a three-person private equity shop down here. Now we’re getting everybody. That’s had a knock-on effect to the lower price adjacent markets, West Palm and Jupiter and Palm Shores, places like that,” says Cregan. “Prices went up a lot, but for fairly rational reasons. Now, if you make enough money, you can move to Florida and after tax savings, the house pays for itself if you can establish residency.”

“Palm Beach is always going to be a spot where we’ve got a limited supply and a lot of people that want to be there,” Peter comments. “And Covid accelerated everything. There were a lot of people that were thinking about moving and Covid meant they made the move then. I don’t see the huge demand for properties in Palm Beach and in West Palm Beach slowing down.”

And as they say, the one thing they’re not making any more of is land and Palm Beach Island is quite small. Pohrer points out, “I recently read there’s 54 billionaires on Palm Beach. That’s got to be by far the most billionaires in one area.” No matter the vagaries of the market, there’s still only one South Florida.