As we focus back on the real estate market in Palm Beach over the winter, limited inventory continues to play a defining role in pricing dynamics and transaction velocity. With buyers facing a scarcity of available homes — particularly in key neighborhoods and higher price tiers — competition remains robust and has put upward pressure on values across much of the market. We asked busy Palm Beach agents: How is limited inventory affecting pricing and deal velocity across the Palm Beach area, and are you seeing any meaningful changes by neighborhood or price point?
Michael Costello
COMPASS
PALM BEACH
We are witnessing another significant migration to Palm Beach and the surrounding areas from ultra-high-net-worth buyers. It’s really a “perfect storm”… shrinking inventory, pent-up demand, a booming stock market, and lower interest rates. We thought the “Mamdami effect” would bring a lot of action (and it’s brought some), but the real surprise has been the number of wealthy California buyers. With the amount of new class A office space coming to market and filling up quickly, I don’t see this market slowing down anytime soon.
Gary Pohrer
EXECUTIVE DIRECTOR OF LUXURY SALES
SERHANT PALM BEACH
One challenge brokers are currently facing is that with limited inventory, we have fewer properties to show potential buyers. This makes the process a little slower. Most buyers think waiting is a better move as their first expectations are to find that perfect home. When inventory further tightens, they may be forced onto the sidelines. The smart buyers jump on things that match 70% of what they are looking for. The others end up on the sideline forever searching. I know of some buyers who have been searching for 10 years, waiting for a drop or the perfect thing. Deals are still in progress, but the tempo has relaxed. In terms of pricing, it is still too soon to tell, but if inventory continues to tighten and building costs keep rising as they have, pricing will increase. As fewer homes become available and buyer interest remains steady, this disparity could lead to more competitive conditions and upward movement in prices.
Jack Rooney
DOUGLAS ELLIMAN
PALM BEACH
From the north end of the island to the southern bridge, I consider that “Palm Beach proper.” In that stretch, you have 2,400 single-family homes and they aren’t making any more of it. When you get down to the waterfront, great streets, in town locations, finished product, your already limited supply becomes even more limited. In Palm Beach, we have three major holidays left [at press time]: Martin Luther King Day, Presidents Day and Easter. These next four months are a BIG push. Many sellers who have not seen action from Thanksgiving to the New Year are considering price reductions in the second half of the season. There is always what I call a Palm Beach Premium for finished products and in-town locations! Most of my buyers today want to walk right in with their toothbrush!
Alex and Margot Platt
THE PREMIER GROUP
COMPASS
Limited inventory is still the biggest driver of pricing and deal velocity across Palm Beach County right now. In the most desirable pockets, homes that are well located, well presented, and realistically priced are still moving fast and often with multiple offers. We continue to see strong buyer competition whenever a property truly checks the boxes. At the higher end of the market, inventory remains extremely thin, which is keeping values firm and deal velocity surprisingly quick when a home is positioned correctly. Buyers in this range are still very active, but they are selective. Turnkey and recently updated homes are getting immediate traction. Homes that need work or are priced aspirationally are sitting longer, even in great neighborhoods. Where we are seeing more of a shift is in the middle price points. Buyers now have a bit more patience and are negotiating harder on homes that are not fully updated, or that feel even slightly overpriced. That said, true value properties are still selling quickly and attracting strong interest. Zooming in on Boca Raton and Delray Beach specifically, the inventory squeeze is most pronounced in the neighborhoods everyone wants. In Boca, communities like Royal Palm Polo, The Bridges, Lotus, Seven Bridges, and other top-tier gated communities continue to see fast absorption when homes are priced right. In East Delray, anything close to Atlantic Avenue or the beach remains in very short supply, and well-priced homes there are still selling quickly, often with multiple offers. Overall, limited inventory is keeping pricing strong across South Palm Beach County, with Boca Raton and Delray Beach leading the way. The market is more segmented than it was a year ago. The gap between turnkey and dated homes, and between realistic and aggressive pricing, is wider than ever. Sellers who price correctly and present their homes well are getting fast results. Those who push pricing too far are learning quickly that today’s buyers are informed and not chasing every listing anymore.
This article appears in the January issue of Behind The Hedges in Dan’s Papers and in the February issue of Behind The Hedges inside Dan’s Papers Palm Beach. For previous Real Estate Roundtable articles, click here.
