Palm Beach’s wealthy home-sellers are scoring major profits, with some properties changing hands in recent weeks for nearly double what they went for just a year or two ago.
A five-bedroom beachfront house at 6 Via Los Incas sold for $66 million last month, an 86% gain from the $35.4 million an entity tied to billionaire Josh Harris paid for it in June 2021. Earlier in December, designer Tom Ford bought the modern 241 Jungle Road for $51 million, 42% more than Motive Partners founder Rob Heyvaert’s $35.8 million purchase price in August 2021.
Even as buyers across the US have pulled back, deep-pocketed house hunters in the posh South Florida town are paying up for its few available move-in-ready spreads as the region’s pandemic boom nears the end of its third year.
“Time is worth more than money in a lot of these instances,” said Gary Pohrer, executive director of luxury sales at Douglas Elliman Palm Beach, who represented the 2021 sellers of the Via Los Incas house. “There aren’t that many homes to choose from, and if someone wants to be in a home this season, they realize they’ll have to pay for it.”
Most people drawn to Palm Beach can afford to splurge. Take billionaire hedge fund manager Michael Steinhardt and his wife, Judith, whose purchase of a two-bedroom condo closed on Dec. 30 for $4.5 million — $1.55 million more than the unit sold for in May 2021, public records show. While many recent flips were untouched between sales, the condo in the Sun and Surf complex got some cosmetic updates, with walls repainted and dated countertops replaced.
Buyers, brokers say, are confident of the enduring value of real estate in the exclusive enclave, especially as banks and other major companies expand their office footprints across the Intracoastal Waterway in West Palm Beach. An island of less than 4 square miles (10.4 square kilometers), Palm Beach is also appealing for its private feel, famously warm climate and a social scene rivaling the lavish parties of New York’s Hamptons.
Harris, a co-founder of Apollo Global Management Inc. who announced his departure from that company in 2021, has been increasing his presence in Florida. Harris — worth an estimated $7.6 billion, according to the Bloomberg Billionaires Index — is also building out a new firm, 26North Partners.
The recent price jumps in Palm Beach reflect the scarcity of move-in-ready homes for sale. There were 48 single-family properties on the market at the end of the fourth quarter, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Of those, many have been listed for months and need extensive renovations, leaving few options for buyers looking for the quick gratification of a place they can enjoy before high season ends in April.
For the six single-family deals that closed in the quarter, the median price was $12.65 million, almost 50% higher than a year earlier, the firms said.
Many of the sales that have netted big profits happened off-market, as real estate agents turn to past clients who had compromised on their previous purchases. Some who are living in “placeholders” while still searching for their dream home may be ready to take their profits and move on, according to Corcoran Group agent Dana Koch. But those agreements don’t come cheaply.
“You have to go and convince the seller to sell,” Koch said. “It’s the ‘make me move’ price.”
Even so, said Corcoran’s Suzanne Frisbie, the pool of willing sellers is thinning as owners see few homes on the market to trade up to.
“Everybody’s been asked,” she said. “If you’re not interested in leaving Palm Beach, it’s where am I going? And if you can’t fit that component in, you can’t daisy chain these transactions together.”
Tremblant Capital Group Chief Executive Officer Brett Barakett and his wife, Meaghan, were an exception. While they sold 245 Ridgeview Drive for $15.05 million in November, they also own Palm Beach’s landmarked Southways estate, which they bought in 2019 and have been renovating. Their sale of the Ridgeview House — to investment manager Fred Alger and his wife, Veronica — was the third since the start of the pandemic. It had traded in 2020 for $7.3 million, then in 2021 for $7.6 million, according to public records.
Even if Palm Beach sellers didn’t buy with a quick profit in mind, they’re generally waiting at least a year to agree to a sale, Koch said — just long enough to benefit from long-term capital gains tax rates, which are significantly lower than what’s charged on holdings of less than 12 months.
Owners willing to put time and money into their properties are also seeing big returns. The home at 150 El Vedado Road was purchased in early 2021 for $7.9 million. After interior and exterior renovations, it found a new buyer who paid $23 million in a deal that closed last month, records show.
Frisbie said she doesn’t see the price growth stopping for homes that are in good condition and well-located.
“There is scarcity,” she said, “coupled with a drive to wanting to be here and be here now.”
--With assistance from Heather Perlberg.
This article was provided by Bloomberg News.