By staff writer
With foreign investment slowing and residential real estate values in Palm Beach County outpacing the region, investors, first and second homebuyers and young professionals are flocking to Palm Beach to snap up unprecedented opportunities in one of the nation’s most in-demand markets.
A 2018 South Florida Business Journal analysis of the region found that 10 of the 25 zip codes with the fastest double-digit percentage price growth were all located in Palm Beach County. Meanwhile, an analysis of Multiple Listing Service data found Palm Beach County luxury condominium home sales jumped 28 percent in December 2018 as $1-million-and-up homebuyers continued selecting Palm Beach’s incredible live, work, play lifestyle.
In December 2018 the median sale price of a single-family home in south Palm Beach County, where many of those fast-growing zip codes are located, rose 10.9 percent compared to the previous month and 8.6 percent year-over-year. The area has long boasted miles of pristine white sand beaches, luxury shopping, new construction and top-notch schools.
“We are seeing trends surrounding millennials and young professionals here in the region,” Chris Heine, Jr., president of Chris Allen Realty, told Invest: Palm Beach when he sat down with our team in December. “Young professionals in their late 20s and early 30s are renting luxury condos and buying million-dollar homes. This is something that we were not seeing a few years ago. As the Palm Beach business market grows, we are attracting younger professionals who are looking for their first homes and making investments in beautiful properties.”
The total number of year-over-year sales in December 2018 fell by 10.3 percent, which was attributed to a lack of inventory at lower price points. Helping to drive that trend was the fact that the average commitment rate for a 30-year conventional fixed-rate mortgage decreased from 4.87 percent in November to 4.64 percent in December, according to Freddie Mac. As such, it’s not only the Palm Beach lifestyle that new and second home owners are looking for but also the investment opportunity given an ongoing — though perhaps limited — low interest rate environment and current price growth trends.
“We’re seeing a movement of capital to Palm Beach,” Lee Smalley, managing director of BBG, told Invest:. “Yields and cap rate compression in South Florida are becoming tighter. Investors looking for a good rate of return are moving north of Broward and Miami-Dade counties.”
The positive investment and buying climate all point to a shrinking pool of opportunities until a wave of new inventory hits the market in 2019. The remnants of the now more-than-decade-old real estate crisis have vanished, with short-sale transactions decreasing 57.1 percent in December 2018 from 21 to nine. At the same time, cash transactions comprised 44.5 percent of all closed sales in Palm Beach in December 2018, up from 44.9 percent in 2017. Palm Beach cash transactions are more than double the nation’s average of 22 percent.
“We’re seeing a lot of domestic buyers come to the market here,” Ari Albinder, owner of Mizner Grande Realty, told Invest:. “We’re helping these individuals find a new primary residence or second and third homes. We specialize in waterfront homes, oceanfront estates, country clubs communities, condominiums and brand-new construction.”
There’s no question that Palm Beach County real estate is hot, and savvy investors from across the nation and from a younger demographic are taking note. Invest: Palm Beach will be keeping a close eye on these trends as we move into 2019.
For more information on our interviewees, visit their websites:
Chris Allen Realty: https://www.chrisallenrealestate.com/
Mizner Grande Realty: http://www.miznergranderealty.com/