Palm Beach home market continues to sizzle

Prices for homes in the town of Palm Beach, both single-family houses and condos, continue to soar, as wealthy Americans and foreigners remain enamored with the beachside paradise.

“People have no other place as attractive to put their money,” Les Evans, managing partner of Leslie Evans and Associates, a Palm Beach law firm, told The Real Deal.

His Evans Report, which details quarterly sales of Palm Beach homes, shows that the median price for a single-family home totaled $3.375 million in the second quarter, up 13.4 percent from $2.975 million a year earlier. In the biggest sale of the first six months of this year, hedge fund star Paul Tudor Jones bought the home at 1300 South Ocean Boulevard for $71.2 million from Dwight Schar, founder of homebuilder NVR.

In the condo markets, the median price registered $665,000 in the second quarter, up a whopping 23.1 percent from $540,000 a year ago.

Stocks haven’t performed nearly as well as Palm Beach homes, Evans noted. The S&P 500 Index climbed only 5.2 percent in the 12 months through June 30. The stock market’s recent volatility — the S&P 500 plunged 11 percent from Aug. 17 to Aug. 25 — will likely spur more interest in Palm Beach homes, local real estate professionals say.

“Homes are more stable,” Steve Davis, director of luxury sales at Douglas Elliman Real Estate in Palm Beach, told TRD. “You can hold, feel and enjoy them. They aren’t subject to daily fluctuations.”

Evans concurs. “You don’t have the fear factor like in stocks. People can control their destiny more,” he said.

Meanwhile, the number of single-family-home sales is shrinking, as inventories have dropped to what may be a record low, real estate pros say. Second-quarter sales of single-family homes totaled 50, down 21.9 percent from 64 a year earlier. To be sure, the story is a bit different for condos, where sales climbed 13.8 percent to 165 from 145 a year ago.

And why are single-family-home inventories so low? “People are holding on to their homes because they are such a good investment,” Evans said. “If you have gold and the gold market is increasing in value, you don’t sell.”

Even for condos, “there is very little inventory for three-bedroom apartments,” Dana Koch, a realtor at The Corcoran Group in Palm Beach, told TRD. “There are about a dozen available. Some people are settling for a nice two-bedroom.”

The price range for a two-bedroom is $500,000 to $3 million, while for a three-bedroom it’s $1.5 million to $20 million, he said.

When it comes to single-family homes, the entry point is now $2 to $3 million, Koch said. Davis said property is going for an average of about $1,000 per square foot.

The pros expect continued strength in the market, and Evans doubts that future interest-rate hikes by the Federal Reserve will have any impact, because 80 percent to 85 percent of home sales in Palm Beach are all cash.