THE POHRER REPORT Q3 2021 Inside South Florida’s most exclusive real estate market.
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CONTENTS 4 5 7 13 17 21 25 31
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
LETTER FROM GARY We are delighted to welcome you to the first edition of The Pohrer Report, which details the trends and history of Palm Beach real estate. Within this report, we have broken down the market in a way that no one has done before, with various statistics showing the state of the market not only today, but over the past 40 years. The purpose of this report is to inform the local community and new potential residents. Due to the current market conditions, many of the sales that are included in this report actually occurred without properties ever hitting the market. The data we have compiled has been taken from the Palm Beach Tax Collector, and therefore includes all sales, not just sales from the local MLS. Drawing from data, our experience, and trends on the Island, we endeavor to predict what may come next in our local residential real estate market to help guide our clients in navigating these changing times. We hope you enjoy the read and look forward to your feedback so we can improve on it in the future. 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 • #1 Florida agaent 2020 • #1 Douglas Elliman Palm Beach agent since 2017 • 18 years of experience • Sales total over $800 million in the last 18 months • Record sales include oceanfront residences from Manalapan to North Palm Beach
THE BIG
PICTURE MACRO TRENDS
Population Growth and Unemployment Rate* The economy continues to recover as the pandemic eases, with Florida and Palm Beach county continuing to post 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.
+3.3%
According to estimates from the United States 2020 Census, Florida ranks #7 as one of the fastest growing populations in the country with a growth rate of 1.08%. While the U.S. average population growth sits at a rate of 0.58%, it’s estimated that Florida will grow at a rate of 3.3% in 2021. Please note, as these estimates came from the United States 2020 Census, they do not reflect the full impact that the COVID-19 pandemic had on population relocation.
+4.7%
Florida and Palm Beach County** unemployment numbers have not quite recovered to pre-pandemic levels of below 4%, but they remain strong compared to some of our highly populated comparable states. Palm Beach County’s unemployment rate is 37% lower than California, 34% lower than New York, and 16% lower than Texas.
Average 15-Year Fixed Mortgage Rate
INTEREEST RATE (%)
Interest rates remain at all time low levels, which is beneficial for investors and buyers. Low interest rates are driving up demand, purchase power, and price.
* Source: worldpopulationreview.com/state-rankings/fastest-growing-states, U.S. Census Bureau 2020 population estimates. ** Source: BLS.gov *** Source: rate.com/research/national-15-year-rate GARY POHRER | GARYPOHRER.COM | 6
SINGLE FAMILY HOMES ALL NEIGHBORHOODS SINGLE FAMILY HOMES | ALL NEIGHBORHOODS | 7
Q3 Summary
The Palm Beach real estate market is in a period of incredible growth, with single family homes making impressive strides year-over-year* (YOY). Third quarter growth across this asset class was driven by waterfront property sales (up 140% from Q3 2020 to Q3 2021), and Estate Section sales (up 156% from Q3 2020 to Q3 2021).
* Year-over-year (YOY): A method of evaluating two or more measured events, comparing the results at one period with those of a comparable period on an annualized basis. 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.
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Inventory: Active Listings
ACTIVE LISTINGS
The average number of single family homes listed is down from ~115 (Q3 2020) to ~32 (Q3 2021) homes YOY — a 73% YOY decline.
DAYS ON MARKET
Days On Market
154 DAYS The average number of days single family homes stay on the market is down by half in Q3, selling 50% faster than last year. In Q3 2020, homes spent an average of 310 days on the market.
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Sale to List Ratio*
SALES TO LIST RATIO
Similar to Q3 2020, homes are selling at ~90% of their original list price.
+26%
If you compare Q1–Q3 in 2021 to Q1–Q3 in 2020, transaction volume is currently up 26% YOY. With transaction volume slowing in Q3 and continued low inventory levels going into Q4, it’s unlikely that we will surpass last year’s total transaction volume. That said, transaction volume is forecasted to be up +100% compared to 2019, pre-COVID levels.
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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Annual Sales Volume TOTAL ANNUAL SALES VOLUME
From Q1 to Q3 2021, total sales volume is up 91% compared to the same period last year, hitting $2.48B with $1.3B in non-waterfront sales and $1.19B in waterfront sales.
Price Per Square Foot
PPSF ($)
PPSF is up 54% YOY ($1,751 to $2,693). Waterfront PPSF is up 35% ($3,093 to $4,171), and non-waterfront properties up 49% ($1,367 to $2,034), YOY.
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Average Sale Price
+63%
AVERAGE SALE PRICE
The average sale price for all single family homes is up 63% YOY. The waterfront and non-waterfront average sale prices are up 34% and 51% YOY, respectively.
2021 is proving to be the largest single year price appreciation we’ve seen in the Palm Beach single family home asset class in the last 40 years. Over the last 40 years, Palm Beach single family homes have appreciated at an average rate of 8.06% per year.
CAGR
Compound Annual Growth Rate* (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, the residencies 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 Summary: North End
• Transaction volume is down 59% YOY, largely driven by more than five consecutive months of the lowest inventory levels the area has seen in the last five years. • Sales volume was down 4%. A handful of premier waterfront sales helped to soften the hit taken from the decline in non-waterfront home sales. • We continue to see PPSF increasing, up 34% YOY on waterfront homes and 59% on non-waterfront homes in Q3. This level of appreciation is unprecedented and driven by high demand and low supply.
ANNUAL CLOSED TRANSACTIONS
Annual Closed Transactions
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+15.4% Though overall transaction volume for Q3 is down YOY, year-to-date transaction volume on the North End is up 15.4%. With transaction volume slowing in Q3 and into Q4, it’s unlikely levels will surpass 2020 numbers despite showing 90% growth since 2019.
+99%
2021 is shaping up into a record-breaking year, with single family home total sales volume from Q1–Q3 up 99% compared to the same period last year. Waterfront sales volume surpassed that of non-waterfront in Q3, a rare occurrence in the last 40 years.
ANNUAL SALES VOLUME
Annual Sales Volume
Price Per Square Foot
PPSF ($)
Waterfront properties on the North End have seen a PPSF boost of 54% YOY. Nonwaterfront properties have experienced a PPSF lift of 44% YOY.
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Average Sale Price
AVERAGE SALE PRICE
Entry point to acquire on the North End has risen tremendously this year, with the average price for single family homes up 46% and 55% respectively for non-waterfront and waterfront properties.
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.
Q3 Summary: In-Town • The sheer volume of transactions was down 44% YOY in the third quarter. • Although the volume of transactions was down, total sales still grew by almost +29%, driven by massive YOY price appreciation of 93% for In-Town homes.
+6.1%
Single family home transaction volume dramatically slowed on In-Town properties in Q3 (-44%), bringing the overall YOY growth rate to single digits — 6.1% — YOY growth from Q1-Q3 2021. It’s unlikely that transaction volume will surpass 2020 levels, but we estimate that 2021 will surpass 2019 levels by more than 60% growth.
ANNUAL CLOSED TRANSACTIONS
Annual Closed Transactions
* Note: Reporting in this section does not break out waterfront vs. non-waterfront properties, as there are so few waterfront sales in this area. In most years, zero waterfront homes sold.
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Annual Sales Volume
+9%
ANNUAL SALES VOLUME
Though single family home sales volume is up 9% YOY from Q1–Q3, unless inventory picks up in Q4 and/or we see record breaking InTown transactions, we project that 2021 sales volume will not surpass 2020. This is the only Island neighborhood where we will see a decrease in sales volume, YOY.
Price Per Square Foot
PPSF ($)
PPSF is up 48% YOY for non-waterfront In-Town homes, now at $1,925 vs. $1,304 in 2020.
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Average Sale Price
AVERAGE SALE PRICE
Entry point to acquire an In-Town, non-waterfront home has risen by 39% with 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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Q3 Summary: Estate Section • The Estate Section is the only neighborhood where transaction volume is up YOY in Q3, increasing 43% from Q3 2020 to Q3 2021. • The non-waterfront PPSF has a small sample size and is an outlier when compared to previous quarters. Looking at this number from the 2021 YTD (+49%) perspective offers a more telling representation of true PPSF for non-waterfront Estate Section properties. • Average sales price was up overall YOY but down for waterfront properties, the result of a small sample size of only two sales in Q3 2020 (one of which was a $50M+ transaction that raised the average for that quarter).
Annual Closed Transactions ANNUAL CLOSED TRANSACTIONS
The Estate Section is the only neighborhood where the transaction volume from Q1-Q3 2021 surpassed the total volume for the previous year, with a quarter left in the year for more opportunities. Q1–Q3 2021 is up 85%, compared to Q1–Q3 2020.
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Annual Sales Volume
+148%
TOTAL ANNUAL SALES VOLUME
The Estate Section is breaking more records in the single family homes sales volume category, up 148% from Q1–Q3 in 2021 compared to the same period last year. With a quarter left in the year, sales volume is already up 97%.
Price Per Square Foot
PPSF ($)
PPSF is up 49% YOY across all transactions in the Estate Section, with waterfront up 38% and non-waterfront up 49%.
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Average Sale Price
AVERAGE SALE PRICE
The Estate Section continues to transact at the highest average sale price ($21M) compared to In-Town ($12M) and North End ($17M) homes.
Most Recent Estate Section
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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, the 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. CONDOMINIUMS & TOWNHOMES | ALL NEIGHBORHOODS | 25
Q3 Summary: Condominiums and Townhomes • Transaction volume in Q3 was up 46% YOY driven entirely by growth in the South End. In-Town transactions were down 20% YOY. • Total sales volume was up 16% YOY in Q3, also largely due to South End activity. In-Town sales volume was down 14% YOY for the quarter. • PPSF and average sale price continue to grow quarter over quarter across In-Town transactions, going up 33% and 8% respectively. On the other hand, South End average sale price was down 18% quarter over quarter, and PPSF was flat.
Inventory: Active Listings ACTIVE LISTINGS
Inventory is down 74% YOY, and we’ve seen 5 months in a row this year with inventory levels well below 100 active listings per month. Throughout 2020, there were 250+ active listings per month.
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Days On Market Condo and townhomes are moving more quickly in 2021, with an average of 142 days on the market. This is a 39% decrease from the same period last year, when they sat on the market for an average of 232 days.
DAYS ON MARKET
142 DAYS
Sale to List Ratio SALE TO LIST RATIO
90%
The sale to list ratio for condos and townhomes has been sitting above 90% for the last few months, largely due to limited inventory and little room to negotiate on list prices.
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Annual Closed Transactions ANNUAL CLOSED TRANSACTIONS
The number of transactions has hit record levels: South End transactions are up 130% and In-Town transactions up 16% YOY, with still a quarter left in the year to go.
Annual Sales Volume ANNUAL SALES VOLUME
Overall total annual sales volume for the condo and townhome asset class is up 61% YTD, with South End up 127% and In-Town up 19% YOY with still a quarter left to go in the year.
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Price Per Square Foot +8.3% and
+9.8% PPSF ($)
Unlike the single family home asset class, condominiums and townhomes — while up — are not seeing dramatic increases in PPSF. South End PPSF is up 8.3%, and In-town is up 9.8% YOY.
Average Sale Price
AVERAGE SALE PRICE
Year-to-date average sale prices are relatively flat YOY, with a slight lift of 2.4% on In-Town condos and townhomes, and a minor decrease of 1.5% YOY in South End.
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Compound Annual Growth Rate (CAGR) CAGR
+5.2%
CAGR for the condo and townhome In-Town asset class over the last 40 years sits at 5.2%.
+3.6%
CAGR for the condo and townhome South End asset class over the last 40 years sits at 3.6%, driven by the appreciation we’ve seen in the last 10 to 15 years.
ANNUAL % RETURN
Annual Percentage Return
Most Recent Condo & Townhome Sales
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In Closing I appreciate you taking the time to read our report. It has been an incredible opportunity for us to dive into the nuts and bolts of the Palm Beach real estate market, providing deep insight into the current market as well as a glimpse into the Island’s future. I’m so happy that this special place has finally received the attention it deserves as a destination that is not only a seasonal retreat, but a thriving community where people can build their homes and careers. Although the past 20 months have been a boom for real estate on the Island, and across most of the world, they have been absolutely life-altering and terrifying for many. COVID-19 has changed the way many of us live, reminding us to focus on finding happiness at home and in our outdoor spaces. While most markets in the nation have seen significant growth, none have seen such growth as Palm Beach. Before the pandemic people talked about taxes and weather; now, there is so much more to the conversation. People are now discussing jobs and the exciting changes on the island: how beautiful the Island becomes as power lines move underground and sweeping vistas open up, how we have added more and more restaurants and fine dining opportunities outdoors. The one constant is Palm Beach Island is a 10 out of 10 destination. The future looks extremely bright for those who are lucky to already own a residence on the Island. For those entering the market, it can be a bit intimidating with high prices and low inventory levels. Buyers today will likely have to pay more for a home that isn’t ideal due to inventory constraints that will take years to build up (if they ever do again). We are seeing many clients get their foot in the door by simply buying what they can, and then continuing to look for their longer term solution. We expect to continue to see this behavior continue into 2022. And as 2021 comes to a close, we will likely see sales volume and the number of transactions go down sharply, perhaps as much as 60%. This will lead to fewer overall sales, but at increased prices due to supply and demand. Thank you again for taking the time and please reach out with any comments or additions you would like to see in future reports. Additionally, if you’re interested in buying a property or entertaining selling your property we would welcome the opportunity to serve you. 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. IN CLOSING | 31
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