By: Sara Warden
2 min read December 2020 — Initially, New York City was perhaps ground zero for the COVID-19 virus in the United States. During the first wave, numbers climbed dramatically, and hospitals groaned under the capacity constraints. Not only this, but New Yorkers, who typically saw their apartments as a place to sleep and little else, became confined to these spaces to live, work and play. The moment the shelter at home order was lifted, New Yorkers, and others in densely populated cities across the Northeast, began flocking to Florida in droves, and Palm Beach was one of the biggest winners.
“Today, I see the same reasons for people wanting to live in Palm Beach County that motivated my family to move here 40 years ago, and why my wife and I choose to live and raise our family here today,” said Brian Schmier, CEO of Schmier Property Group, in an interview with Invest:. “Especially in the context of COVID, I talk to people up north who are reprioritizing their personal and professional goals, and similarly companies who are deciding to relocate or allow remote working to accommodate where people want to live.”
Palm Beach’s luxury home segment has only accelerated since the beginning of the pandemic. In the third quarter of 2020, median home prices for single-family homes increased 12.4% on the year to $399,000 and those for condos were up 10.9% year over year, to just over $200,000. Although house prices in Palm Beach are rising as inventory tightens and demand surges, the price point is still much more accessible than that for New York. According to real estate market research firm Rate.com, the average price per square foot for a house in Palm Beach County is $278 and a condo comes in at around $207 as of Dec. 4. In comparison, it costs an eye watering $1,670 per square foot for a single-family home and $1,608 per square foot for a condo or townhouse in New York City.
Adding in the sunshine, beach, lifestyle and walkability of Palm Beach, out of towners are clamoring to snap up luxury real estate. “The Palm Beach buyers that we serve are mainly from New York, Miami and Europe,” says Carol Sollak, Principal at Engel & Volkers. “Palm Beach has seen a tremendous amount of growth in the previous year. There has been an influx of people to the area, and Palm Beach provides prices that are lower than Miami and New York. The people coming to Palm Beach desire the lifestyle, which is slower than a bigger city but has many resources, such as world-class shopping, excellent beaches, fantastic restaurants and an international airport.”
As a result of the influx of Northeasterners, house sales surged in 2020. In the third quarter, Palm Beach County’s total home sales rose 15.2% on the year to 9,271. Demand for single-family homes also increased, with transactions up 17.1% year on year, to 5,498. Condo sales increased 12.7% in the third quarter of 2019 to 3,773. Single-family luxury homes during the quarter registered an 82.9% surge in transaction volumes to 598, while luxury condo transactions reached 151, up over 50% on the year. And the boom in home sales has also had a knock-on effect on the surrounding retail spaces, according to Justin Cooper, founder and CEO of Layla Capital. “COVID-related demographic booms in cities such as Boca Raton, Delray Beach and Palm Beach have pushed up home prices, bolstering a healthy market and benefiting retail as there are more consumers spending money on local goods and services,” he told Invest:.
The outlook also looks good as new supply can barely keep up with rising demand. A Juno Beach townhouse development that launched sales in October sold 60% of its units within one month. And South Florida residential developer Pulte Homes bought a tract of land in Lake Worth for $9 million to install 100 homes. Schmier Property Group is bringing online capacity just in time. “We look at opportunities outside this state, but our sweet spot is South Florida, and more specifically Palm Beach County,” Schmier says. “Currently, along with our joint venture partners, we are completing a substantial best-in-class mixed-use retail and multifamily development in Boca Raton called Uptown Boca that will open in Q4 2020.”
As the year winds down, those who are planning to buy or rent a property this year better act fast. Last year, around Thanksgiving, buyers had the choice of 145 single-family properties. This year, that dropped to just 83, according to the Palm Beach Board of Realtors. Even buildable land is scarce, with 27 single-family plots marketed over Thanksgiving last year, while this year the number dropped to just six. In-demand single-family homes in neighborhoods like Royal Palm Beach Village, The Acreage, Greenacres, Jupiter and Boynton Beach were down to between 1.5 and 1.9 months of supply.