Wall Street’s move south is fueling several luxury real estate markets in South Florida
U.S. real estate agent Redfin reported this week that luxury home sales in West Palm Beach, FL increased 116% year over year in the fourth quarter of 2020.
This is a bigger gain than any other major U.S. subway, and the biggest increase since at least 2013, when Redfin started tracking that data. In comparison, affordable home sales in West Palm Beach only increased 10%.
The report is based on an analysis that divided all U.S. residential homes into five price tiers based on Redfin estimates of the homes’ market values.
The median sales price of luxury real estate in West Palm Beach rose 14% year over year to $ 1.8 million in the fourth quarter – the biggest jump since 2018. This represents a 9% growth in affordable price levels.
The high-end West Palm Beach real estate market has seen explosive growth as wealthy New Yorkers flocked to the sunny city for more space and lower taxes while working remotely during the pandemic. More than half (56.1%) of Redfin.com house searches in Palm Beach County in the fourth quarter came from outside the county – up from 50.2% last year – and Cook County, IL (Chicago) and Kings County, NY (Brooklyn) the most popular origins were outside of the state. Most house hunters in the area have been in the primary home market lately – a shift from pre-pandemic when the majority of buyers were looking for vacation homes, said Delray Valle, Redfin West Palm Beach market manager.
A handful of Wall Street financial firms have also expanded or are considering expanding their presence in the area. The list includes Goldman Sachs, Virtu Financial, and Elliott Management. Local Redfin real estate agent Andrea Duke said she has received more calls than usual from potential high-end buyers considering moving to West Palm Beach because their employers have opened offices in the area.
“Buyers come from expensive cities – New York in particular – and beat locals in bidding wars by offering all the money,” said Valle. “As a result, many people are forced to rent or buy new buildings.”
Nationwide, homes valued between $ 1 million and $ 1.5 million were most likely to be hit by bidding wars in December, with 60% of Redfin bids for homes in that segment being competitive.
In November, Duke sold a home in West Palm Beach for $ 1.1 million – $ 425,000 more than her client bought in 2017. To turn the property into a luxury home, the customer had invested in a modernized kitchen, an open floor plan. a new roof and storm window. Within 24 hours of listing the property, Duke had seven screenings scheduled, and by the second day she had three listings. The Chicago winner bought the home invisibly for $ 42,000 above the asking price.
The tough competition drives buyers to act quickly. The typical luxury home for sale in West Palm Beach in the fourth quarter was on the market 46 fewer days than the same period last year (115 days in the fourth quarter of 2020 versus 161 days in the fourth quarter of 2019). In the meantime, homes in the affordable price range were spending more time in the market than a year earlier (64 days in the fourth quarter of 2020 versus 61 days in the fourth quarter of 2019).
West Palm Beach Housing Market Summary Q4 2020
Miami Luxury Home Sales Up 55% in the Fourth Quarter
Luxury home sales in the Miami metropolitan area rose 55% year over year in the fourth quarter – far more than any other price bracket. In comparison, affordable home sales fell 3%.
The median sales price of luxury real estate in Miami rose 18% year over year to $ 1.9 million. This was the largest increase since 2017 and the third largest gain among the 50 most populous U.S. metros (only behind New Brunswick, NJ and Phoenix). That was more than double the rise in the affordable price tier.
“Miami’s high-end real estate market is taking off because everything is open here while places like California are closed due to coronavirus restrictions,” said local Redfin agent Cecilia Cordova. “Lots of people come here too to avoid taxes. I have several clients who recently bought homes here to avoid the potential Seattle capital gains tax.”
Cordova continued, “With Miami’s lower taxes, high-end buyers know they can get more home for their money. A $ 5 million home here would probably be $ 10 million in Seattle or California.”
Just over a quarter (27.7%) of Redfin.com house searches in Miami-Dade County in the fourth quarter came from users outside the county – up from 20.7% last year – as well as from Los Angeles County, California and Cook Counties , IL were the most popular nongovernmental origins. Tech and finance companies have also grown in Miami. Microsoft and Citadel are among the companies reportedly in talks to secure new office space in the Brickell neighborhood.
Much like West Palm Beach, Miami high-end homes are selling much faster than they have in the past. The typical luxury home for sale in Miami in the fourth quarter was in the market 53 days fewer than the same period last year (134 days in the fourth quarter of 2020 versus 187 days in the fourth quarter of 2019). In comparison, homes in the affordable price range spent one more day in the market than in the same period last year (64 days in the fourth quarter of 2020 versus 63 days in the fourth quarter of 2019).
An increase in market speed is an indicator that competition is intensifying. Bid wars in Miami are extremely common at all price levels, according to Cordova.
“Some of my open houses have nearly 50 people waiting outside to get in,” she said. “Sellers ask for what they want and buyers are willing to pay for anything the sellers ask for.”