The ultra-wealthy community of Palm Beach, Florida saw prices hit an all-time high in the second quarter as the number of mansions for sale fell to an all-time high.
Palm Beach saw its median price for a single-family home hit $ 11.7 million at the end of the quarter. That’s up 38% from a year ago and a record for the region, according to real estate brokers Douglas Elliman and Miller Samuel.
The skyrocketing prices in a market already known to be very expensive are driven by an influx of wealthy private equity chiefs, hedge fund managers and other financial executives who are setting up shop in the region from places like New York and other financial centers CNBC reported. This increases the demand and there are simply not enough luxury homes for everyone.
Samuel Miller CEO Jonathan Miller told CNBC it was a major reset for the Palm Beach real estate market. “We are now seeing transactions of $ 50 million on an almost weekly basis,” he said. “It’s a big change, and it seems to be lasting,” he added.
Real estate prices in Palm Beach are now almost as expensive as in Manhattan, Miller said. The price per square foot there exceeded $ 1,500 in the second quarter, approaching the price of $ 1,545 in Manhattan.
But the sky-high prices don’t deter buyers, who keep paying, he said. Data from Samuel Miller shows that sales of single-family homes in Palm Beach rose 90% in the quarter compared to the same period a year ago, when the area was already experiencing increased activity since the first human migrations in the United States. start of COVID. -19 pademic.
Palm Beach today suffers from a severe shortage of mansions for sale. Samuel told CNBC there was barely a month’s supply of homes for sale in the glitzy city, a record high. There were only 25 homes for sale at the end of the quarter, but the actual number is likely lower than that, as some are likely under contract or already close to being contracted, he said. declared.
To cope with the shortage and find homes on demand from their clients, some brokers have started going door-to-door, asking people if they would be willing to consider a sale.
This is the main tactic of Christopher Levitt, one of Douglas Elliman’s top brokers in Palm Beach. He told CNBC that just going around and asking wasn’t enough, because while the high price might be tempting, anyone who sells will always have to find another home. So Levitt explained that his job now is to help sellers find another smaller house to buy and then also help the smaller owner find new accommodation.
“It’s about repositioning people,” Levitt told CNBC. “It’s not just about MLS listings and selling a home anymore.”
It’s unlikely to be a short-term trend either, Levitt said of the hot Palm Beach market. He believes the pandemic and the trend towards remote working will result in the permanent migration of many wealthy CFOs from New York and other traditional financial centers. It should be noted that there has already been an increased development of large-scale office towers and equipment in West Palm Beach, for example.
“It’s the tip of the iceberg,” Levitt insisted.
Some examples of wealthy CFOs who already appear to have moved to Palm Beach permanently include hedge fund billionaire David Tepper, who in February distributed $ 68 million to buy a mansion in the area. That same month, Tiger Global Management partner Scott Shleifer paid a record $ 122.7 million to buy a beachfront home (pictured) in Palm Beach that was once owned by former President Donald Trump.
They are both now neighbors of Igor Tulchinsy, founder, president and CEO of the quantitative asset management company WorldQuant, which recently bought his own home for $ 39.5 million in North Palm Beach.
Some developers are also looking to take advantage of the trend. Todd Michael Glaser comes from acquired a private island off Palm Beach for $ 85 million. He said he and his partners intend to renovate the existing property on the island and sell it for a profit.