Writer: Max Crampton-Thomas
2 min read July 2021 — Few real estate markets have performed as well as Palm Beach throughout the pandemic. As post-pandemic signs appear on the horizon, John Hackett, senior managing director of the Corcoran Group, shares his insights into what awaits the region’s real estate market going forward.
How would you characterize the growth in demand from a location standpoint?
Demand has been strong throughout the entire region. We focus primarily on the coastal areas of mid-southern Palm Beach County up to Jupiter Island, which is basically the northernmost border of the Palm Beach region, bleeding into Martin County. The market’s shining star has been Palm Beach. This micro-market has been getting national attention because of the big numbers that have been reported in terms of sales prices. But to be clear, other areas such as Ocean Ridge, Delray, Jupiter Island and Palm Beach Gardens have all seen tremendous sales activity.
Have you seen this demand spill over into other asset classes beyond the luxury sector?
We are focused on the residential side of real estate but there has most definitely been growth in other assets. We have several brokers who sell commercial real estate and lease space. They’ve been very busy selling a lot of commercial real estate this year. People who are relocating from the Northeast or other metropolitan markets into Palm Beach have decided on a much more long-term and global level that they are also going to move their businesses down here, which means that they are looking for office spaces, warehouses, and other freestanding commercial buildings from which to base their operations.
Do you anticipate a market correction on the horizon?
Looking at the data, two main factors keep us highly optimistic for the future. First, the lack of inventory, especially in South Florida. There is nowhere to build. We need more houses. Candidly, the land, the environment and the geography do not allow us to build more. Second, and perhaps more importantly, the number of homes that have been purchased in cash. This is not a debt bubble like what occurred during the downturn in 2008. There is a tremendous amount of legitimate equity in this market. Those two main reasons lead away from a potential bubble. Rather, they constitute the legitimate, fundamental strength in our market.
Low inventory is actually a welcome development. We all needed a break because we have been so busy. This is the time for agents to start working on obtaining new properties to sell.
How would you characterize the unique aspects of Palm Beach’s real estate market?
Palm Beach has a lot going for it. Fundamentally, the proximity to Palm Beach International Airport, access to the Atlantic Ocean, and the ability to take a boat from the Intercoastal Waterway out to the ocean through the Palm Beach Inlet make it a recreational paradise. The area has some excellent restaurants, and a tremendous amount of culture, from art museums to the Kravis Center, and live concerts. The famed South Florida lifestyle is particularly great here. COVID-19 provided an opportunity for people to reacquaint themselves with the area.
What is your take on the selling and renting side of your business?
The market is strong on both the selling and the renting side. Our rental numbers were up significantly this past year. We did a tremendous number of rentals, primarily because many of those people who would have been buyers simply could not find anything to purchase. There was a sense of urgency this year, more so than we have seen in most years. Typically, people will come down and if they do not see anything they would like to buy, they simply go back up North – or wherever their home may be. They then try to do it remotely or come back the next year and try again. This year, it seemed going back was not an option. They were compelled to make a choice between either buying or renting.
What is your near-term outlook for the real estate market?
We definitely have high hopes for the remainder of the year as we are now at the midway point of 2021. We anticipate June through August will be better than historical summer months. In addition, we expect the fall to be very strong, which will play well into 2022, when we’ll probably see more of the same. If there is a buildup of inventory over the summer, it is probably going to shrink again come fall and into the winter. From this point forward, inventory numbers will likely not fall as far as they did in 2Q21, which was probably an all-time low.
Corcoran is as well positioned right now as we have ever been. We are opening an office in southern Martin County to service Jupiter Island. We are at the forefront of what the rest of the nation is doing. When things get good, usually South Florida feels it first and when things start to turn around, we are also the first to feel it. However, we expect that the market is going to be strong here for several years.
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