Low to mid-range sales drive Palm Beach market
It’s been nearly a year since Palm Beach saw an ultra-high end residential transaction: the $25-million sale of 1472 Ocean Boulevard. And while the town’s $25-million-plus estates are beginning to see more activity, brokers said it’s the lower-priced Palm Beach properties that are keeping them busy.
“We haven’t had any really high-end sales for quite some time,” said Ava Van de Water, an executive vice president and broker at Brown Harris Stevens in Palm Beach. “But the market is on fire in the low-end and middle ranges.”
That’s borne out in newly released market data from Brown Harris Stevens. From October of 2011 to March of this year — Palm Beach’s peak season — there were only four single-family home sales in the tony Estate Section, which has the highest values on the island. That’s down from 13 in the same period of last year. By contrast, the town’s lower-priced North End and Midtown areas saw a total of 42 sales between them.
Midtown actually saw its median sales price jump 17 percent in the period covered by the report.
And the total number of single-family listings in Palm Beach fell by 15 percent from the same period 2011, according to the report.
The trend started last year, when homes priced from $1 to $2 million — the low end of the Palm Beach market — started selling “like wildfire,” Van de Water said, in part due to buyers finally beginning to move in off the sidelines.
As inventory at those prices ran out, buyers moved on to homes priced up to $10 million.
“We’re seeing it move up the chain,” she said.
The increased pace of sales is beginning to have an impact on prices, albeit at a slow pace, according to David Fite, principal at Fite Shavell & Associates in Palm Beach.
After three consecutive years of reductions in property values, Palm Beach’s market values are projected to rise by just under 1 percent this year, according to Palm Beach County Property Appraiser Gary Nikolits.
Broker Jeff Cloninger said he believes Palm Beach’s prices have already bottomed out.
“The trend seems to be that prices are stabilized,” he said.
Because of Palm Beach’s status as a second-home market, seasonal visitors — who flock to the area in the winter — are crucial to the residential sector.
Those potential buyers are showing interest in ways they hadn’t in previous years.
“I’ve got people now who say, ‘let’s make an offer before we leave this season, because this probably isn’t going to be here when we get back,'” Cloninger said. “For the last five years, people have left for the summer with the idea that whatever was here now would still be here next fall.”
Another byproduct of the continued sales activity is the return of a long-dormant sector in Palm Beach: spec homes.
Palm Beach’s Architectural Commission has seen a 12.5 percent increase in proposals for major residential projects since the beginning of the year, plus another 29 proposals for minor projects, according to ARCOM Chairman Bob Vila (of “This Old House” fame).
“Builders are definitely back in the market,” Van de Water said. “They haven’t been in the market since 2008 at least, and now they’re buying lots like crazy.”
As for Palm Beach’s ultra-luxury properties, brokers said there are signs of life that could materialize into sales, despite several so-called trophy properties receiving price cuts last month.
“There’s definitely big interest in those big trophy properties,” Fite said.