MarketWatch – South Florida
South Florida Sales break all records during the pandemic, with inventories at their lowest point in years.
Though the two were quarantined away from each other for a year, the relationship between New York and Southern Florida is thriving.
That is … if New Yorkers can get into South Florida.
Due to its laidback lifestyle, especially appealing during a pandemic, combined with famously low taxes, the sunny southern market is now one of the most expensive and competitive in the country.
Since March 2020, buyers have poured billions of dollars into property sales in Palm Beach alone. Notable buyers on the island include casino mogul Steve Wynn, software billionaire Larry Ellison, designer Tommy Hilfiger and finance titans such as hedge funder David Tepper and investment-services entrepreneur Charles R. Schwab.
“We have always had a strong connection to the Northeast and the NYC, Hamptons, and South Florida triangle, but now buyers are coming from California, Illinois, and Michigan, which has created even more competition,” says Dana Koch, with Corcoran in Palm Beach. “During the pandemic, many buyers discovered what it was like to spend an extended period of time in Palm Beach and fell in love with it,” he explains.
But for agents like Chris Deitz, with William Raveis in Palm Beach, “the pandemic has definitely sped up the process of New Yorkers moving to South Florida but it’s not the driving force,” he says. “Just before COVID hit, buyers were already heading south — mainly hedge funders because of taxes.”
Holly Meyer Lucas, principal and founding agent with the Meyer Lucas Team at Compass, the attraction to South Florida is equally driven by taxes — notably the 2018 reform that limited SALT tax write off, making life more expensive in many parts of the country. “While COVID was the catalyst for a lot of families relocating to our area, the reason most are moving here is actually related to the SALT tax situation,” she says.
“Before, New Yorkers would buy a place in the Hamptons and perhaps a place in South Florida. Now New Yorkers are buying a place in South Florida and perhaps a place in the Hamptons,” adds agent Gary Pohrer, with Douglas Elliman. “What’s changed is the ability to work from anywhere, creating a huge tax savings and making the home almost free when you really analyze the numbers.”
Closed sales in the second quarter of 2021 topped $1.5 billion, breaking the record set by the first and making it the hottest quarter in Palm Beach history, according to the latest market report from Corcoran. The median and average sales price for single-family homes rose 18% and 24%, respectively, from last year, driven primarily by 15 deals that exceeded $20 million.
Notably, two sales so far in 2021 surpassed $100 million, including a 30,000-square-foot, nine-bed, 11-bath waterfront mega-mansion for $109.6 million in June and a 21,000-square-foot home for $122.7 million, the highest price ever recorded in the area, in February. This year has also seen a record of two sales reaching $95 million in two months and 22 sales for more than $40 million.
In the midst of this frenzy, inventory is decreasing rapidly, agents warn.
“Inventory is very low. It’s at critical mass. If you’re a broker and you don’t have inventory, chances are you will never get it,” Deitz says. “We are seeing a lot of off-market deals happening and by next year it will be the survival of the fittest.”
Where to look…
While searching for homes to buy, it helps to keep new developments and hidden gems in mind. Vero Beach is one of Pohrer’s favorite towns in all of Florida. “Due to the difficulty in getting there from an airport, it is less dense,” he explains. Its downtown area offers access to desirable stores, restaurants, hotels, and, importantly for summer, ice cream parlors. “It still has that small town feel and always will. ”The eastern half of West Palm Beach is a great alternative for those who are priced out of Palm Beach proper, Koch notes: “You have proximity to the island and many of the same conveniences.” Plus, some of the best restaurants in the entire area are in West Palm Beach, he says, and it’s home to the Norman Foster-designed Norton Museum along with the Kravis Center of Performing Arts.
In Miami, Coconut Grove is a “true gem,” says agent Chris Dreyfuss with Brown Harris Stevens. Perks include a sought-after school district and sailing clubs, plus condo developments like Park Grove and Grove at Grand Bay, and a burgeoning restaurant scene with names like PLANTA Queen and Bellini at Mr. C Miami.
The oft-overlooked Singer Island in Palm Beach County has plenty to offer prospective residents, too, adds Beth Butler, Director of New Development Southeast at Compass. While Jupiter Island has the more well-known name, Singer is coming into its own with luxury new developments, including Amrit Ocean Resort & Residences. “Singer Island is pedestrian friendly, offers scenic waterfront views, and is just a short drive away from the luxurious shops on Palm Beach’s iconic Worth Avenue,” Butler says.
Of course, there’s also Downtown Miami, experts say. New developments like One Thousand Museum are shaking up the skyline. Designed by the late renowned Zaha Hadid, it is South Florida’s most prestigious and coveted new residential tower and is redefining high design and luxury in Miami. Rising 62 stories above downtown, the tower offers its residents a unique design, unprecedented level of service, unrivaled amenities, and breathtaking views of Biscayne Bay and the Atlantic Ocean. With only four units remaining, it’s one of Miami’s most successful new developments.
So, what can buyers do when the busy season is fast approaching in an already tight market? Meyer Lucas recommends being open to fixer-uppers, which in South Florida are often “completely livable.” Though contractors in the area can have an ominous reputation, a local real estate agent who knows their stuff will be able to connect you with the right pros. “Lean on your representation and I promise you, the carpet in the bedrooms can be replaced right after closing,” she says.
“My advice for buyers is to ensure you have a longer runway time so you can comfortably browse and research properties without the added pressure of a tight timeline,” Butler says. “Due to the lack of inventory, there is not a lot of flexibility in pricing so it is best to come expecting to pay the most your budget can allow.”