Thinking About Fleeing to Florida? Why Palm Beach Is The Place To Be
Hot…it’s a word that not only describes the weather in Palm Beach, Florida, but also the real estate market. Whether you’re weighing a relocation or just indulging in posh daydreams, its an area where Sotheby’s International Realty can help, with its team of real estate professionals who focus exclusively on elite Palm Beach real estate.
Here is everything you need to know about the Palm Beach real estate market.
“Why Palm Beach?” The More Appropriate Question: “Why Not?”
If you have visions of palm trees dancing in your head, you’re hardly alone. That’s because the entire state of Florida has a lot going for it, and nowhere is that more obvious than in Palm Beach with its desirable quality of life. “You can finish a meeting and be out playing golf or boating within minutes,” notes Tom Shaw, a real estate professional with Sotheby’s International Realty – Palm Beach Brokerage.
The year-round sunshine and outdoor lifestyle are just the beginning of its charm, however. Palm Beach boasts a wide array of upscale amenities to appeal to its affluent clientele, including high-end shopping; cultural institutions, like Sotheby’s and Pace Gallery; the nearby Kravitz Center for the Performing Arts; and renowned restaurants. “It’s an incredibly vibrant community where there’s always something going on,” says John Cregan, part of a real estate team with his wife, Lisa, at Sotheby’s International Realty – Palm Beach Brokerage.
In addition to lifestyle characteristics, many people are driven by the tax benefits unique to the state of Florida. In fact, when the federal Tax Cuts and Jobs Act of 2017 eliminated full deductibility of state and local taxes (SALT), that kicked off an influx of out-of-state residents, says Todd Peter, who also teams with his wife, Frances, at Sotheby’s International Realty – Palm Beach Brokerage. “Even before the pandemic, people were flocking here from the Tri-state area, as well as Chicago, California and other high tax areas to enjoy the advantages Florida’s tax structure offers,” Peter says.
A Refuge from the Big City
The appeal is clear. “If you’re coming from a city like New York, Chicago, or Boston and you want good weather, low taxes and a metro area that’s hopping, you can’t beat Palm Beach,” Cregan says.
And, adds Shaw, “In numerous communities, people increasingly find many in their circle have moved to Palm Beach or are thinking about it, which helps drive the appeal.”
While people are relocating from all over the United States and globally, there remains a large influx of New Yorkers. It makes sense, says Peter, given that it’s only about a two-and-a-half-hour plane ride away. The inflow has only been accelerated by the impact of the pandemic and a newfound ability to work virtually.
Before COVID-19, it was often taboo to be on a video call with dogs barking and kids running through the frame, Peter says. Now it’s an acceptable way to do business, especially in New York. They look at working from the suburbs of Connecticut, a beach house in the Hamptons or Palm Beach the same way.
In addition, financial and tech companies are establishing offices nearby, creating even more of a draw. “While many people used to consider Palm Beach a seasonal or vacation destination, now it’s becoming more of a year-round option as a primary dwelling, as they are drawn to the wonderful lifestyle it affords,” says Shaw.
And speaking of “afford,” while no one is likely to call Palm Beach “affordable,” per se, property estimates aren’t as shocking to someone attuned to New York real estate costs. “While properties have risen dramatically in the past two years since more people have relocated here due to the pandemic, they still can present a favorable value relative to New York when you consider you’re getting a single-family home with a pool and yard, coupled with all the amenities Palm Beach offers, including great schools,” says Peter. Residents also appreciate the fact that Florida has remained open for business during the pandemic, implementing practical guidelines as a way to address necessary restrictions.
While these factors are particularly appealing to New Yorkers, Cregan adds that his pool of clients is diverse, hailing from London, Asia, Washington, D.C., Atlanta and more.
Going, Going…Gone
In Florida, that might as well be the phrase to replace the stalwart real estate expression, “location, location, location.” That’s because everything in Palm Beach has the “L” word going for it, which means the market is sizzling.
It’s definitely a sellers’ paradise, given the limited supply, which means there are far more buyers than homes available. For example, Shaw says that while they used to have 150 properties listed, most days there are only about 30 – and many never hit the official market at all.
“The market changed dramatically in a way that no one could have anticipated, with a significant uptick almost immediately following lockdown,” explains Debra Reece, who leads the Palm Beach and Singer Island offices of Sotheby’s International Realty. “We saw an influx of renters in the first wave, shortly followed by a torrent of purchasers, and it has not abated.”
Cregan describes a common scenario: “When schools shut down in 2020, families realized they couldn’t have their three kids rampaging through their New York apartment, which had felt spacious until they were home all day.” Many came down and rented a place and had the best weeks of their lives, which spurred them to consider a purchase so they could enjoy life while working remotely. Today houses are almost doubled from what someone might have paid if they had bought immediately. “With this surge in prices, people love to ask if prices will go down, but I don’t see it,” he says. “We’re dealing with basic supply and demand and a finite supply of real estate.”
The low inventory is not a deterrent to the market’s velocity, Reece says. “The number of houses on the market can be deceptive because it appears there is not much to search. Instead, properties are being sold immediately; almost the moment something is available, it receives multiple bids and is put under contract.”
In other words, there remain a large number of transactions, but the inventory is more on a “just in time” model where a property doesn’t languish. “If you wait in hopes that the market will adjust, in all likelihood you will lose,” Reece says.
Shaw remembers a decade ago when he would set up showings for potential buyers who would join him on appointments, then hem and haw over the expense. “They might see 12 houses and then disappear for a while. Now when I show something that’s well priced, I suggest they do the deal today,” he says, adding that the price is less of a deterrent for many who are used to sky-high real estate in the Hamptons or Aspen, Colorado. “Their friends are here, and they already know it’s expensive,” he says.
Knowing the market is essential, as there are micro-communities in Palm Beach which means there may be a different vibe just a couple of blocks away. “We talk to our clients about what’s going to work and alert them when something comes on the market that’s a good fit,” Cregan says. “Sitting up north waiting for their dream home to pop up in a search is not likely to happen.”
On that note, the time is right for sellers who might want to realize their profits. However, Peter cautions, while their property might have doubled or tripled in value, they need to have identified their own landing spot since the price increases are across the board.
John and Lisa Cregan work with sellers who have a wide variety of circumstances. They might be interested in going upmarket and parlaying their windfall into a larger property. Or they might decide they want to monetize their estate and downsize, taking some money out and being free from the worries associated with caring for a larger property.
Any seller can be assured that brokers have a list of candidates interested in considering their property, even before it’s listed. There are two types of buyers in this market – the quick and the dead.
Finding the Right Property
While time is of the essence, it’s still important to find the right property. It might not be perfect to start with, in which case buyers might need to undertake a remodel to create something that fits their desires, says Shaw.
He and the other brokers take care to talk in-depth with buyers beforehand to find out what neighborhoods interest them and the parameters they are dealing with.
Todd Peter and his wife Frances remind buyers that there’s no perfect home – there are always pros and cons about the style, size, layout and more, and if something checks most of the boxes he encourages them to make an offer. “Then we work with them to make it more perfect,” he says. “Whether that’s tearing down and building new or making key renovations, we encourage them to see the potential. My wife has an excellent eye, and she can walk through a property and discuss modifications. It’s very helpful for buyers to understand what a property is today and what it can be with some upgrades.”
That echoes the approach taken by the Cregans, who help their buyers embrace a property’s promise. Drawing on Lisa’s previous expertise writing about luxury interior design for prestigious magazines, she is able to identify the most interesting aspects of a property and offer insight on how to highlight them.
A Trusted Real Estate Partner Can Help Make it Happen
As Cregan notes, many properties never hit the market at all, which means working with someone who’s plugged into the Palm Beach real estate scene is more important than ever.
While some prospective homeowners might worry about the lack of inventory, that’s where Sotheby’s relationships come in.
I tell buyers that if we know what they want, we can get creative and use our relationships to find out what’s coming up. If something is well priced, they aren’t going to see it on Zillow.
Everyone is trying to find inventory, which means there is a lot happening off-market. “We have excellent communication in our office but also with the larger real estate community,” he says. “You have to work with a connected broker who knows what’s on and off the market and can guide you to a solid investment. That’s where it really pays off to use an experienced broker who’s friendly with other top brokers and works the market seven days a week.”
The Sotheby’s International Realty name itself can be a benefit, points out Reece, given its worldwide reach and impeccable reputation that defines luxury, including its affiliation with an elite auction house.
“It’s in both a buyer’s and a seller’s best interest to work with a firm like Sotheby’s International Realty that has global impact,” says Cregan. “With today’s elevated prices, sellers, in particular, want to know they’re reaching a broad market of their target buyers. Sotheby’s International Realty offers us marketing support, a robust online presence and the advantage of a network of global offices.”
The internal network is equally important in a flourishing market like Palm Beach, where agents keep one another apprised of their activity so they can share leads and put together advantageous deals.
And Reece adds the agents are held in extremely high regard by colleagues outside of Sotheby’s International Realty as well. “By virtue of their relationships and respected stature within the community, they can reach out to agents in other brokerage firms and they will be trusted,” she says. “Our relationships are the most important asset we have.”
Given the caliber of their clients, Reece is proud that her team is known for their discretion. “We often work with public figures and therefore are aware of their need for privacy and confidentiality,” she says.
Reece’s final words of advice? “We might have low inventory, but don’t let that stop you from looking,” she encourages. “We are finding people’s dream properties every single day.”
Interested in knowing more about how Sotheby’s International Realty can mine its global brand, experience, and contacts in the real estate industry on your behalf? Contact the Palm Beach office today, and to find out what is happening in the luxury world globally, click here for the Sotheby’s Luxury Outlook.