The Pohrer Report Q3 2022

THE POHRER REPORT

Q3 2022

Inside South Florida’s most exclusive real estate market.

Photographed home: 860 S

Boulevard.

Ocean

Listed by Gary Pohrer of Douglas Elliman Palm Beach.

Single

Single

Single

Over the past 19 years, Gary Pohrer’s record-breaking sales and unwavering work ethic have earned him impressive accolades. Over the past two years Gary has risen to one of the top two agents in Douglas Elliman Agents Nationwide, making him one of the most successful agents in Palm Beach. Palm Beach may be Gary’s niche, but he continues to prove his top-tier experience with record sales throughout Palm Beach County. Including oceanfront residences from Manalapan to Jupiter Island, exclusive homes in top Golf Club communities like Old Palm Golf Club, and oceanfront properties in Seminole Landing. Gary Pohrer has proven his ranking as one of the top agents in the area with sales totaling over $1 Billion since 2020. **

Originally from St. Louis, Missouri, Gary relocated to John’s Island in Vero Beach, Florida, to pursue a career as a professional golfer. When he moved to Jupiter two years later, he found his passion shifting from golf to real estate. An avid player since the age of three, he enjoys getting to know his clients over a round of golf in the area.

In addition to golf, Gary, his wife Kelly, and their two children love biking on the lake trail, tennis at their local club, boating, and paddle boarding. They are also involved in fund-raising for Adopt-A- Family of the Palm Beaches, a charitable organization dedicated to helping homeless families.

Gary and his family have been residents of the Town of Palm Beach since 2008. Because of his personal and professional understanding of the Town, he is keenly aware of the small island’s intricacies, along with the highlights that differentiate one neighborhood from another. Residents often see him jogging through the area as he explores each street. He finds “on the ground” insight to be the most effective research of properties. Multiple times in his career he has found an off-market property for a client while doing his daily routines in Palm Beach and delivered a contract to their door unsolicited.

Many new clients are unaware that Palm Beach is divided into three distinct areas: North End, Midtown, and Estate Section. Some boast larger lots, many enjoy access to the beach, and others include private cabanas. Gary’s approach when working with a client for the first time is to start with a private tour of the island as opposed to just viewing properties.

“I don’t only sell my clients a home, I sell them the Palm Beach lifestyle. I introduce them to their new neighbors, and the local clubs, and make them feel right at home from the start.”

Letter From Gary

If you happened to find yourself on Palm Beach Island this summer, it felt very reminiscent of Palm Beach pre-2020. You could walk in to your favorite restaurant without a reservation, traffic was minimal (with the exception of construction vehicles coming and going), and most of the private clubs returned to their off-season schedules. Local real estate returned to pre-2020 velocity as well. I’m hesitant to use the adjective ‘slow,’ because it was by no means a slow summer with nearly $300M in real estate transactions during Q3. But what we’re seeing is a major slowdown in sheer volume of transactions. In Q3 2022, only 11 single family homes sold on the island — which is even slow for a Q3 in a pre-2020 climate, when there was an average 30 transactions (see chart on page 21).

This represents a very interesting market dynamic where inventory has dried up, yet demand is still extremely high. We continue to see price per square foot (PPSF) creep up on the limited inventory, but there simply are not a lot of quality homes on the market right now. I share this because if you are preparing to sell your home or have considered selling but are getting cold feet due to the uncertain economic climate, it is actually a VERY good time to sell — even given the macro headwinds.

I hope you enjoy the read and as always, please don’t hesitate to reach out with any questions.

Best regards,

Gary Pohrer

Executive Director of Luxury Sales

Douglas Elliman 340 Royal Poinciana Way M302 Palm Beach, FL 33480 O: 561.655.8600 M: 561.262.0856 gary.pohrer@elliman.com garypohrer.com

REPORT CONTRIBUTORS

Elizabeth Vollman Tristan Sales Associate Market Insights Advisor

Tammy Bernstein Sales Associate

Beth Johnson Sales Associate

SINGLE

HOMES

Q3 Summary: Single Family Homes: All Neighborhoods

Transaction volume was down -66% year-over-year (YOY)* in Q3, largely driven by decline across both waterfront and non-waterfront properties.

Total sales value* was down -71% YOY, driven by a -45% decrease in non-waterfront sales and a -88% decrease in waterfront sales value. Price per square foot (PPSF)* across home size* continued to grow YOY, and was up slightly from the same period last year: +10% PPSF: Home Size. Price per square foot lot size (PPSF: Lot Size) declined YOY for waterfront properties, driven mostly by a single waterfront sale. However, it increased YOY by +11% in the non-waterfront category.

family homes stayed on the market for an average of 127 days during Q3 2022. This a YOY improvement of -16% compared to Q3 2021, when homes took an average of 153 days to

Sale to List Ratio

In Q3 2022, single family homes sold on average -15% below the asking price. This was a large jump down compared to the 90% to 95% sale to list ratio that had been consistent over the last several quarters.

SALE TO LIST RATIO

100

95 93

90

105 85

80

75

70

105 86 78

98 87 76

96 91 MAR -1 7 SEP -1 7 JUN17 DE C17 MAR -1 8 SEP -1 8 JUN18 DE C18 MAR -1 9 SEP -1 9 JUN19 DE C19 MAR -2 0 SE P-2 0 JUN20 JUN21 DE C20 MAR -2 1 MAR -2 2 SE P-2 1 SE P-2 2 DE C21 JUN22

FOOTER: Glossary

79

Year-over-year (YOY ): A method of evaluating two or more measured events, comparing the results of one period with those of a comparable period on an annualized basis.

Total sales value : The sum of all sales during a period of time.

Price per square foot (PPSF): A calculation of the value of each square foot of area of a house, condo or any building. It is calculated by dividing the price by the square footage.

PPSF: Home Size: Home size is based on the current under air square footage.

PPSF: Lot Size: This is based on the PPSF of the total lot.

Sale to List Ratio: The ratio of the final sale price of a home to its list, or asking, price expressed as a percentage. If the sale to list ratio is above 100%, the home sold for more than the list price. If it’s less than 100%, the home sold for less than the list price.

NORTH END

SINGLE FAMILY HOMES

Palm Beach’s North End, located north of Wells Road, is celebrated for quiet seclusion. Thanks to zoning laws that prohibit condos and commercial properties in this area, many residents enjoy private beachfront views.

Q3

IN-TOWN

SINGLE FAMILY HOMES

Nestled between Worth Avenue and Wells Road lies the energetic center of Palm Beach Island, In-Town. Packed with shops, secluded beaches, and five-star restaurants, this hub of culture and leisure lures residents with a flair for cosmopolitan life.

In-Town transaction volume was down -56% YOY in Q3 2022, the fifth consecutive quarter that saw a decline in transaction volume.

Total sales value was also down -64% YOY at $38M in Q3 2022, compared to $105M in Q3 2021.

In-Town PPSF: Home was up +26% YOY, and PPSF: Lot was up +23%. The area rebounded this quarter QOQ, and we saw a slight uptick of +4% PPSF since Q2 2022. The downward trend we saw for In-Town in Q2 did not hold.

Most

ESTATE SECTION

SINGLE FAMILY HOMES

The Estate Section comprises all residences south of Worth Avenue to Sloans Curve. It is renowned for its opulent residencies and exclusive social clubs including The Everglades Club, Bath and Tennis Club, and Mar-a-Lago.

Activity in the Estate Section continued to trend downwards significantly, YOY. In Q3 of 2022, transaction volume was down -82% and total sales value was down -78%. This is the third consecutive quarter we saw YOY decline in total sales value.

Q3 saw a weakening PPSF in the Estate section. That being said, we don’t think it’s indicative of a real trend as it only reflects a total of two sales. PPSF: Home was down -5% and PPSF: Lot was down -21% respectively, YOY. PPSF: Home for waterfront sales was up +13% YOY, thus the overall decline was really driven by a single non-waterfront home.

CONDOS & TOWN HOMES

ALL NEIGHBORHOODS

Whether you seek a large building with resort-style amenities or the boutique elegance of a small, full-service site, Palm Beach Island offers an expansive range of options just steps from shorelines, shops, restaurants and more. Palm Beach townhomes are ideal for those who seek the convenience of a condo but crave the spaciousness of a house.

Q3 Summary: Condominiums and Townhomes

Transaction volume in Q3 was down -43% YOY, due to a -50% decline in In-Town transactions and a -41% decline in South End transactions.

Total sales value was down -12% YOY. As with single family homes, PPSF for In-Town condos and townhomes continued to rise with +63% YOY growth, coming in at $2,308 PPSF. This was a -6% decline from Q2 2022, which saw a PPSF of $2,445.

In Q3 2022, inventory was up +11% YOY. The same period in 2021 averaged 66 active listings per month, whereas Q3 2022 averaged 73 active listings per month.

number of days on market continued to decline in

2022, reaching an average of 114 days. This was a -27% decrease from the same period last year, when properties stayed on the market for an average of 156 days. This was a slight uptick from Q2 2022, when properties averaged 107 days on market.

Most Recent Condo & Townhome Sales

$15,000,000 100 Royal Palm Way, PH 1 2,870 $5,226 $3,895,000 400 S Ocean Boulevard, 4190 1,716 $2,270 $3,500,000 100 Sunrise Avenue, 424 1,623 $2,157 $3,200,000 44 Cocoanut Row, 308A 1,497 $2,138 $3,150,000 100 Sunrise Avenue, 605 1,673 $1,883 $3,000,000 227 Australian Avenue, 0051 1,287 $2,331 $2,895,000 130 Sunrise Avenue, 6100 1,673 $1,730 $2,825,000 130 Sunrise Avenue, 2150 1,673 $1,689 $2,536,000 225 Everglade Avenue, 0020 1,218 $2,082 $2,500,000 240 S Country Road, 0160 968 $2,583 $2,450,000 455 Australian Avenue, 2B 1,188 $2,062 $1,875,000 325 S Lake Drive, 6 738 $2,541 $1,650,000 44 Cocoanut Row, 207A 900 $1,833 $1,500,000 220 Atlantic Avenue, 0040 646 $2,322 $650,000 455 Worth Avenue, 301 949 $685 $620,000 235 Sunrise Avenue, 1013 557 $1,113 $550,000 235 Sunrise Avenue, MZ B 1,081 $509 $460,000 235 Sunrise Avenue, 2224 389 $1,183

FEATURED INSIGHTS HOMES

ADDITIONAL DATA TO TRACK ALL THINGS REAL ESTATE

The following is an analysis of supplemental data we evaluate at to keep a pulse on all aspects of the real estate market.

Average 30-Year Fixed Mortgage Rate

Q3 10-Year Transaction Volume Trend

The average 30-year fixed mortgage rate increased in Q3 over Q2 as the Fed continued to raise interest rates. The most recent 30-year fixed mortgage rate sits right at 7%. Source: https://fred.stlouisfed.org/series/MORTGAGE30US

Transaction volume has been trending down YOY for the last several quarters, and became especially dramatic in Q3 of 2022 when we saw a dip of -66% from the previous year. For the first time transaction volume this quarter has gone below what we typically would expect in a third quarter, this quarter averaged 11 transactions, whereas in the decade preceding Covid, a typical Q3 averaged ~30 transactions. The Palm Beach market is in a very unique position where it is still a great time to sell because the continued increase in PPSF (+22% in Q3 2022) reflects high demand.

share of listings with a price cut refers to the number of unique properties with a list price at the end of the month that’s less than the list price at the beginning of the month, divided by the number of unique properties with an active listing at some point during the month.

Share of listings with a price cut continued to increase with each passing month in Q3. South Florida share of listings with a price cut hit 23% in October, and the national rate sat right at 28%. Both are record highs.

United States New Home Sales

A sale of a new house occurs with the signing of a sales contract or the acceptance of a deposit. The house can be in any stage of construction: not yet started, under construction, or already completed. New home sales account for about 10 percent of the U.S. housing market. 201 Sunset Road | West Palm Beach | $11,000,000 | www.201sunsetroad.com

POHRER Virtually Rendered

Construction spending refers to monthly estimates of the total dollar value of construction work done on new structures or improvements to existing structures for private and public sectors in the United States.

Construction spending in the U.S. unexpectedly increased +0.2% month-over-month in September of 2022, rebounding from a downwardly revised 0.6% fall in August and beating market forecasts of a -0.5% drop. Spending on private construction went up +0.4%, led by a +1% surge in investment in nonresidential structures, namely for manufacturing (+7.6%) and office (+0.1%) sites. Investment in residential construction was unchanged, with spending on single-family projects dropping -2.6% while outlays on multi-family housing projects increased +0.3%.

Housing Starts

Housing starts refer to the number of new residential construction projects that begin during any particular month. Estimates of housing starts include units in structures being totally rebuilt on an existing foundation. Source: US Census Data.

Housing starts in the U.S. declined -4.2% month-over-month to a seasonally adjusted annualized rate of 1.425M in October of 2022. Single-family housing starts dropped -6.1% to a rate of 855K while the rate for units in buildings with five units or more decreased -0.5% to 556K. Starts were down in the Northeast (-34.7% to 96K), the Midwest (-11.1% to 185K); and the West (-10.6% to 336K) while starts went up in the South (+6.7% to 808K). Compared to October 2021, housing starts fell -8.8%. The U.S. housing market has been hit by soaring materials costs and rising mortgage rates, which recently reached their highest level since 2001.

GARY

GARY

In Closing

We appreciate you taking the time to read our report, and hope you found our insights on the Palm Beach Island market interesting.

The biggest takeaway for me this quarter is that PPSF continues to grow YOY, and is inching up QOQ. This shows that buyers still see the value of owning real estate on Palm Beach Island even amid the uncertainty around the global economy. Additionally, transaction volume is lower than it’s ever been due to limited supply — therefore, it continues to be a sellers market right now on Palm Beach. If you are considering selling your property, don’t hesitate to reach out as I’d welcome the opportunity to help you achieve your real estate goals.

Thank you again for reading our report. If you have any feedback for us, we’d love to have it, as we are always looking for new ways to break down the data in more interesting or accessible ways.

Warmest wishes,

Gary Pohrer

Executive Director of Luxury Sales

Douglas Elliman

340 Royal Poinciana Way M302 Palm Beach, FL 33480 O: 561.655.8600 M: 561.262.0856 gary.pohrer@elliman.com garypohrer.com

Source: Above data is pulled from Palm Beach MLS, The Beaches MLS and the Palm Beach Property Appraisers (PAPA). Specifically, we are only looking at transactions located in the 33480 zip code.

340 ROYAL POINCIANA WAY, M302, PALM BEACH, FL 33480. 561.655.8600 © 2022 DOUGLAS ELLIMAN REAL ESTATE. ALL MATERIAL PRESENTED HEREIN IS INTENDED FOR INFORMATION PURPOSES ONLY. WHILE, THIS INFORMATION IS BELIEVED TO BE CORRECT, IT IS REPRESENTED SUBJECT TO ERRORS, OMISSIONS, CHANGES OR WITHDRAWAL WITHOUT NOTICE. ALL PROPERTY INFORMATION, INCLUDING, BUT NOT LIMITED TO SQUARE FOOTAGE, ROOM COUNT, NUMBER OF BEDROOMS AND THE SCHOOL DISTRICT IN PROPERTY LISTINGS SHOULD BE VERIFIED BY YOUR OWN ATTORNEY, ARCHITECT OR ZONING EXPERT. EQUAL HOUSING OPPORTUNITY.