THE POHRER REPORT Q4 2021 Inside South Florida’s most exclusive real estate market. GARY POHRER | GARYPOHRER.COM | 1
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CONTENTS 4 5 7 14 18 22 26 33
Let te r f ro m G ar y Poh rer M a c ro Tre n ds Si n g l e Fa m ily H omes: A ll N eigh borhoods Si n g l e Fa m ily H omes: Nor t h E n d Si n g l e Fa m ily H omes: I n -Tow n Si n g l e Fa m ily H omes: Estate S ect ion C o n d os & Tow n h omes: A ll Neigh b or hoods I n C l os i n g
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Letter From Gary Our team is delighted to bring you the second issue of The Pohrer Report. In this quarterly analysis, we break down current real estate trends and set them against historical activity in the most valuable real estate market in the country. Over the past two years, we have seen unprecedented growth in our market. To give our readers a simplified way to decipher the data, we focus not only on sales figures, but how they change when compared with different timeframes. It can be challenging to explain to friends and clients how drastically our market has changed, but I believe after reading this report you will understand the nuances of the Palm Beach real estate market more accurately. We hope you enjoy the read and welcome your feedback to improve future reports.
Best regards,
Gary Pohrer Executive Director of Sales Douglas Elliman 340 Royal Poinciana Way M302 Palm Beach, FL 33480 O: 561.655.8600 M: 561.262.0856 gary.pohrer@elliman.com www.garypohrer.com
REPORT CONTRIBUTORS Tammy Grimason Realtor Associate
ABOUT GARY POHRER Beth Johnson Realtor Associate
Elizabeth Vollman Tristan Realtor Associate, Market Insights Advisor
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• #1 Douglas Elliman agent nationwide for 2020* • #1 Douglas Elliman realtor in Palm Beach since 2017** • 18 years of experience • $1 Billion sold and under contract since 2020*** • Record sales include oceanfront residences from Manalapan to North Palm Beach *BY 2020 DOUGLAS ELLIMAN REAL ESTATE SALES VOLUME AND GROSS COMMISSION INCOME. **AS RECOGNIZED BY THE DOUGLAS ELLIMAN ELLIE AWARDS FROM 2017-2021. ***AS REPORTED BY DOUGLAS ELLIMAN REAL ESTATE FOR 2020-2022 TOTAL PENDING AND CLOSED SALES VOLUME.
THE BIG
PICTURE MACRO TRENDS
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Population Growth and Unemployment Rate The economy continues to recover as the pandemic eases, with Florida and Palm Beach county posting strong unemployment numbers and showing above average population growth. This is particularly notable when comparing Florida to other highly populated states California, New York, and Texas.
4.5%
**
Florida and Palm Beach County unemployment numbers continued to improve from Q3 to Q4 2021, with an 8% decrease in unemployment rate in Florida from 4.9% to 4.5%.
+1.0%
According to a recent U.S. Census report, more than 211,000 people moved to Florida between July 2020 and July 2021, a population increase of +1%. During that same period, New York saw a decline of 320,000 (-1.6%) residents and California a decline of 260,000 (-0.7%). *
Average 30-Year Fixed Mortgage Rate
INTEREST RATE (%)
Interest rates remained at historically low levels over the last ten years, despite slight upward movement in the last few months. The Federal Reserve is expected to make three to four interest rate increases over the course of 2022. ***
* Source: https://www.census.gov/newsroom/press-releases/2021/2021-population-estimates.html, U.S. Census Bureau 2020 population estimates. ** Source: BLS.gov. *** Source: https://www.rate.com/research/national-30-year-rate
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SINGLE FAMILY HOMES ALL NEIGHBORHOODS GARY POHRER | GARYPOHRER.COM | 7
Q4 Single Family Homes: All Neighborhoods After an incredible 21 months of growth in the single family home asset class, activity finally started to slow down in Q4. Transaction* volume was down year-over-year* (YOY) for the second consecutive quarter. In the fourth quarter, total sales value* was down YOY for the first time in 2021. This slow down was not due to a decrease in demand though, it was the result of supply continuing to hover at record low levels. Price per square foot* (PPSF) continued to inch up quarter over quarter* (QOQ), as buyers were willing to pay more to secure their home on the island.
Other New Insights from Q4 2021
MONTHLY CLOSED TRANSACTIONS
Although inventory remained light in Q4, transaction volume really picked up in November and December as the season approached. September and October each had a total of six transactions, whereas November and December nearly tripled that number with 16 and 17 transactions, respectively.
* 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. Quarter-over-quarter (QOQ): The measure of an investment or a company’s growth from one quarter to the next. Transaction: The process of passing the rights in a property unit from the seller to the buyer in return for an agreed upon sum. Appreciation: The rise in value of an asset. 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. GARY POHRER | GARYPOHRER.COM | 8
Other New Insights from Q4 2021 North End transactions made up roughly half of the total single family home sales value in Q4 2021.
SINGLE FAMILY HOME, TOTAL SALES VALUE, QOQ
Single family home sales value was down -10% QOQ. The North End was the only neighborhood on the island that had QOQ growth.
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Inventory: Active Listings
ACTIVE LISTINGS
The average number of single family homes listed was down from ~92 (Q4 2020) to ~41 (Q4 2021) homes — a -55% YOY decline. However, we saw an inventory increase of +28% from Q3 2021 to Q4 2021.
DAYS ON MARKET
Days On Market
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146 DAYS The average number of days single family homes stayed on the market was 146 days during Q4 2021. This marked a +5% improvement from Q3 2021, during which this asset class spent an average of 153 days on market. Homes sold +41% faster than they did during Q4 of 2020.
Sale to List Ratio
*
SALE TO LIST RATIO
In Q4 2021, single family homes sold on average -9% below the asking price, quite similar to the trends seen in the previous quarter. This marks a shift from Q4 2020, when homes sold -13% below ask.
219 The year wrapped up with 219 closed transactions for single family homes on Palm Beach Island. This was down -6% from 2020, but up significantly from the trailing 10-year average of ~135 transactions per year.
*
ANNUAL CLOSED TRANSACTIONS
Annual Closed Transactions
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.
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Total Sales Value
TOTAL ANNUAL SALES VALUE
In 2021, the total sales value for single family homes exceeded $3 billion, up +55% from 2020. Waterfront sales value increased +88% YOY and non-waterfront sales value was up +33% YOY. Sales value was mostly front loaded into the first half of 2021, as activity slowed in the second half of the year.
Price Per Square Foot
PPSF ($)
Year-over-year, PPSF was up +59% ($1,751 to $2,791), with waterfront PPSF up +37% ($3,093 to $4,238) and non-waterfront up +56% ($1,367 to $2,217).
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Average Sale Price AVERAGE SALE PRICE
+65%
The average sale price for all single family homes was up +65% YOY in Q4. The waterfront and non-waterfront average sale prices saw a boost of +24% and +55% YOY, respectively.
Compound Annual Growth Rate (CAGR) The Palm Beach single family homes asset class closed out the year with a +59% YOY price appreciation. This is the largest one year increase we’ve seen since the year 2000, when the first tech boom fueled economic growth. Over the last 40 years, Palm Beach single family homes have appreciated at an average rate of +8.17% per year.
CAGR
*
ANNUAL % RETURN
Annual Percentage Return
*
Compound Annual Growth Rate (CAGR): A performance metric that provides insight into an investment’s growth rate over a specified period of time longer than one year.
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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.
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Q4 Single Family Homes: North End • Transaction volume was down -52% YOY during the second quarter of 2021. • Sales value was down -24%, driven largely by a decline in waterfront property sales. • PPSF continued to increase in Q4, up +80% YOY on waterfront homes and +94% on non-waterfront homes. This level of appreciation was unprecedented and driven by high demand and low supply.
ANNUAL CLOSED TRANSACTIONS
Annual Closed Transactions
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96 As we forecasted in our Q3 2021 report, transaction volume for 2021 did not surpass 2020 on the North End and was down -12% YOY. Despite this fact, it was still an extremely strong year for North End sales compared to prior years.
Annual Sales Value
In 2021, more than $1.26B in sales transacted across the North End section of Palm Beach Island. Annual sales value was up +47% YOY, with waterfront sales value lifting +70% YOY, and non-waterfront up +32% YOY.
ANNUAL SALES VALUE
$1.26B
Price Per Square Foot
PPSF ($)
PPSF on the North End was up +63% YOY ($2,904 compared to $1,785). Waterfront properties saw a PPSF boost of +57% YOY ($5,045 compared to $3,204). Non-waterfront properties experienced a PPSF lift of +54% YOY ($2,103 compared to $1,364).
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Average Sale Price
AVERAGE SALE PRICE
Entry point to acquire on the North End rose tremendously in 2021, with the average price for single family homes up +58% ($5.2M to $8.2M, non-waterfront) and +36% ($29M to $40M, waterfront).
Most Recent North End Sales
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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.
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Q4 Single Family Homes: In-Town • In-Town transaction volume was down -74% YOY in Q4, the second consecutive quarter where we saw a steep decline in transaction volume compared to 2020. • Sales value was also down -58% YOY at $86M in Q4 2021, compared to $206M in Q4 2020. • Though In-Town PPSF was up +66% YOY, it has been trending down QOQ. This was the only neighborhood on the island where we did not see a PPSF increase QOQ.
ANNUAL CLOSED TRANSACTIONS
Annual Closed Transactions
*
62
2021 closed out with 62 In-Town transactions. This represented a -29% decline over 2020 transaction numbers.
Note: Reporting in this section does not break out waterfront versus non-waterfront properties, as there are limited waterfront sales in this area. In most years, zero waterfront homes sold.
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Total Annual Sales Value
$471M ANNUAL SALES VALUE
Although sales value was down -16% in 2021 on In-Town transactions, total sales value still surpassed $471M this year. This was more than double what we saw in a typical year from 2011 to 2019.
Price Per Square Foot
PPSF ($)
In Q4, PPSF was up +47% YOY for non-waterfront In-Town homes, increasing to $1,916 from $1,304 in 2020.
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Average Sale Price
AVERAGE SALE PRICE
The average sale price to acquire an In-Town, non-waterfront home rose by +38%, with the average price jumping from $5.34M in 2020 to $7.4M in 2021.
Most Recent In-Town Sales
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ESTATE
SECTION SINGLE FAMILY HOMES The Estate Section comprises all residences south of Worth Avenue to Sloans Curve. It is renowned for its opulent residencies and exclusive social clubs including The Everglades Club, Bath & Tennis Club, and Mar-a-Lago.
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Q4 Single Family Homes: Estate Section • The Estate Section is the only neighborhood where total sales value was up YOY in Q4. The +65% boost was fueled by strong waterfront sales and a modest increase in non-waterfront sales.
Annual Closed Transactions
ANNUAL CLOSED TRANSACTIONS
The Estate Section was the only neighborhood where the transaction volume went up, resulting in a +65% increase YOY.
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TOTAL ANNUAL SALES VALUE
Annual Sales Value
+136%
Annual sales value in the Estate Section was up +136%, with waterfront sales up +168% YOY and non-waterfront up +96% YOY.
Price Per Square Foot
PPSF ($)
PPSF was up +57% YOY across all transactions in the Estate Section, with waterfront up +41% and non-waterfront up +60%. The Estate Section had the highest PPSF ($2,411) for non-waterfront single family homes compared to the North End ($2,103) and In-Town ($1,916).
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Average Sale Price
AVERAGE SALE PRICE
The Estate Section continued to transact at the highest average sale price ($22M) compared to In-Town ($7.6M) and North End ($13M) homes.
Most Recent Estate Section Sales
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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. GARY POHRER | GARYPOHRER.COM | 26
Q4 Condominiums and Townhomes: All Neighborhoods • Transaction volume in Q4 was up +6% YOY, driven entirely by growth in the South End. In-Town transactions were down -30% YOY. • Total sales value was down YOY across both In-Town and South End transactions. However, we did see a nice bump up from the previous quarter in sales value, which increased from $128M (Q3 2021) to $168M (Q4 2021). • As with single family homes, PPSF for In-Town condos and townhomes continued to rise, with +39% YOY growth and +28% QOQ growth.
Inventory: Active Listings
ACTIVE LISTINGS
In Q4 2021, inventory was down -71% YOY, and December was the eighth month in a row that had inventory levels below 100 active listings per month. Q4 2020 saw ~251 active listings per month, whereas Q4 2021 averaged 73 active listings per month. Note, this is an +11% QOQ uptick in inventory from Q3 2021, which averaged 66 listings per month.
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Days On Market
The number of days on market continued to decline in Q4 2021, reaching an average of 120 days on market — a -23% decrease from Q3’s average of 156 days. This is a -52% decrease from the same period last year, when properties stayed on the market for an average of 251 days.
DAYS ON MARKET
120 DAYS
Sale to List Ratio
SALE TO LIST RATIO
94%
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The sale to list ratio for condos and townhomes sat above 94% for the last quarter, largely due to limited inventory and little room to negotiate on list prices.
Annual Closed Transactions
ANNUAL CLOSED TRANSACTIONS
The condominium and townhome asset class experienced a magnificent year, with overall transactions rising +114% (829 from 387) YOY, with South End up +178% and In-Town transactions up +38%.
Annual Sales Value
TOTAL ANNUAL SALES VALUE
Overall total annual sales value for the condominium and townhome asset class grew +96% YOY, with South End up +163% and In-Town up +53% YOY. This is the first time in the last 10-years that total annual South End sales value surpassed that of In-Town.
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Price Per Square Foot
+18% and
PPSF ($)
+7% Unlike the single family home asset class, condominiums and townhomes did not see as dramatic lifts in PPSF. South End PPSF was up +7%, and In-Town PPSF experienced appreciation in the fourth quarter, growing into the double digits at +18% YOY.
Average Sale Price
AVERAGE SALE PRICE
Average sale price for In-Town condominiums and townhomes continued to rise through the close of the year, up +11% YOY. Conversely, the South End was down slightly, at -5% YOY.
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CAGR
Compound Annual Growth Rate (CAGR)
+5.4%
CAGR for the condo and townhome In-Town asset class over the last 40 years sits at +5.4%.
+3.5%
CAGR for the condo and townhome South End asset class over the last 40 years sits at +3.5%, driven by appreciation during the last 10 to 15 years. This dipped slightly from Q3 2021 due to a decline in PPSF in the South End.
ANNUAL % RETURN
Annual Percentage Return
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+6.6%
South End price appreciation came in at +6.6% this year, falling well below both In-Town and single family home levels.
+17.7%
In-Town price appreciation rose +17.7% in Q4, nearly doubling from Q3 as a result of the price appreciation we saw on In-Town purchases.
Most Recent Condo & Townhome Sales
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In Closing We appreciate you taking the time to read our report, and hope you found our insights on the Palm Beach Island market helpful! On the front lines, I can say that while we have started to see more residences come on the market, they’re arriving at higher prices. For the first time in my career, we are able to price residences at market value and expect an offer at, or above, ask within the first month. I have waited for the market to stall, but we are still rock solid with buyers from around the country who seek to join our little oasis. Last quarter we projected sales to be down -60% in 2022, and our data shows that they are in fact down -57%. You can expect sales to continue their downward trend, but the significant increase in pricing will provide a bit of a reprieve in overall sales value. Some people test the market pricing by listing their home in hopes of cashing out at record high prices, but despite new sellers entering the market, inventory levels for listings are still very low. 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 Sales Douglas Elliman 340 Royal Poinciana Way M302 Palm Beach, FL 33480 O: 561.655.8600 M: 561.262.0856 gary.pohrer@elliman.com www.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.
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