Palm Beach is famously dormant in the summer, so much so that, in 1946, The New Yorker printed a poem about it (“Palm Beach Summer: the Dead Season,” by William Abrahams). But this past season has been anything but quiet for Jeffrey Cloninger, a broker at Sotheby’s International Realty. “They say that in the summer they take the stoplights down and it’s just the police and yardmen, but I’m as busy as I was in February,” Cloninger says. “I’ve been working 12-hour days.”
The Palm Beach investment market is back in a big way, brokers say, and it’s not just buyers beating the well-worn path from the Northeast. These days, they’re coming from all over. In fact, Cloninger says he’s seen a big surge of first-time Palm Beach buyers from much farther afield than New York City and Greenwich, Connecticut. “People feel that Palm Beach is a safer place to park their money than the stock market, and a lot more fun than a stock, too.”
“The investment climate from two years ago to today is like day and night,” Cloninger continues. “Eighteen months ago, we had 14 houses in town, between the Breakers and Worth Avenue, priced under $2 million. Today we have only one house priced under $2 million.” (Just under: It’s asking $1.89 million.)
Of course, this being Palm Beach things were never that dire, not even during the darkest days of the recession, when the South Florida housing market was collapsing. “Bad” in Palm Beach was Russian billionaire Dmitry Rybolovlev allegedly asking for a $25 million price reduction on the $100 million estate he was in contract to buy from Donald Trump. (Whether he asked for it or not, the deal closed for $100 million in July 2008.)
There’s always room for improvement: During the first quarter of 2014, the average sales price for a single family home was up 56 percent from the year before, jumping from $4.1 million to $6.4 million, according to a market report from Douglas Elliman. The average sales price for luxury properties, meanwhile, vaulted from $8.5 million to $14.5 million, an increase of more than 70 percent.
“The whole state has seen a tremendous turnaround in real estate, and that’s especially reflected in Palm Beach, and in particular in the very high-end properties,” says Bill Diamond, the president pro tem of the city council. “Palm Beach has always attracted very wealthy people—there are 30 billionaires who have homes on the island that we know of, and there may be more.”
Don Langdon, who manages Douglas Elliman’s Palm Beach office, said that multiple offers on properties, sometimes over ask, are increasingly common. “We’re establishing values on a quarterly basis,” he says. “You can’t really look at what something sold for a year before, you really have to look at the quarter before.”
Joy McLeary, a broker with Brown Harris Stevens, has worked with a couple who’ve bought 11 houses ranging from $2 million to $6 million since 2012, living in one and renting the others out while they wait to turn them around. They shouldn’t have any trouble. “There’s no inventory,” McLeary says. “The minute something comes on the market, it gets scooped up. People are basically paying 100 percent of asking price, and there are usually back-up offers.” To wit, last September, an unlisted 6,000-square foot house at 126 Casa Bendita sold for $7.45 million, after changing hands just a few months before for $5.37 million.
Palm Beach’s popularity is, perhaps, not so surprising given its favorable financial climate: There’s no state or city income tax, no heritage tax and easy residency requirements, which may be helping to draw buyers from new areas, McLeary says, in particular, California.
She’s also seen another big change in buyers: They’re much younger than they used to be. “During the economic downtown, families bought who hadn’t been able to afford it when prices were insane in 2006 and 2007,” McLeary says. In the years since, word seems to have gotten out that Palm Beach is an attractive investment not only for retirees. Other brokers also report seeing a big uptick in buyers in their 30s, 40s and 50s. “The younger set is definitely coming into Palm Beach,” Langdon said. “Which is nice; it really creates a particular energy on the Island.”