Hottest Real Estate Market
The real estate market in Palm Beach is thriving. The number of homes sold during the third quarter of 2020 tripled, defying expectations, and setting a course of the future.
Buyers have a shift in thinking about what home means,” said Mike Pappas in late October, the CEO and president of Illustrated Properties, A Keyes Family Company. “We thought there was a bit of a surge [over the summer] and that it was all pent-up demand, but it’s still going. It’s encouraging to see the continued strength. Usually September and October are the slower months, but not this time around.”
Right now, the average price of a home in Palm Beach is more than $7 million, and houses have been known to go for as much as $51 million—in case you’re curious, that $51 million estate was sold by noted pulmonologist Norman Traverse.
Inventory of homes is expectedly falling, with inventory crashing by 79 percent in the third quarter, compared to the third quarter of 2019. There’s roughly a 5-month supply of homes available.
Why Is Palm Beach Thriving?
So what’s responsible for such a hot real estate market in Palm Beach?
There are a variety of possible explanations, including:
- Low interest rates. Many areas are seeing a surge in homebuyers because of low interest rates. The Federal Reserve is keeping interest rates near zero, so banks are incentivized to make it easier for consumers to get loans—and offer those loans at a low interest rate. This makes it much easier to get home financing, and reduces home payments for those who get a loan in this financial climate. However, this doesn’t explain the disproportionate surge that Palm Beach is experiencing.
- Low taxes. Florida is known for having no income tax, and low taxes overall. This makes it a safe haven for individuals with high salaries and high net worth, especially as major cities and heavily populated states around the country mull over the idea of raising taxes. Wealthy people tend to pay far more taxes than average earners, so when faced with the prospect of paying even more taxes, it’s not surprising that they’d consider moving somewhere with fewer requirements.
- COVID-19 influence. It’s also worth noting that this increase in home sales is unfolding in the wake of the COVID-19 pandemic. The pandemic is responsible for putting pressure on state and local governments, which in turn, is driving them to increase taxes, pushing wealthy citizens away. Thanks to COVID-19, more people are working remotely, which could allow them to consider a wider range of living options. And of course, many people are looking to get out of big cities to avoid the population density.
- The aging wealthy. The nation’s wealthiest people are getting older, and it’s not just a stereotype that many people dream of retiring in Florida. As multimillionaires wrap up the final years of their career and look for somewhere nice to settle down, Palm Beach begins to look unbeatable.
- Popularity and the snowball effect. Palm Beach may also be benefitting from a kind of snowball effect. As more people express interest in Palm Beach and move there, they build hype for the city, encouraging their friends and others to move as well. This effect compounds over time, resulting in unstoppable market momentum.
The Future Growth of Palm Beach
While these factors may weaken or subside in the coming years, the popularity of Palm Beach is unlikely to abate. That’s because Palm Beach is known for its luxury, its high security, its beautiful natural environments, and its low tax rates. These are exceptionally attractive to wealthy homebuyers, and will likely drive buyers to Palm Beach for years, if not decades to come. Accordingly, Palm Beach may remain one of the hottest real estate markets in the world indefinitely.