COVID-19 EDITION
THE POHRER REPORT Q1 2022
Inside the pandemic’s impact on South Florida’s most exclusive real estate market. Photographed home: 860 S Ocean Boulevard. Listed by Gary Pohrer.
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CONTENTS 4 6 12 16 19 21 23 26
Let te r f ro m G ar y Poh rer A Lo o k Ba c k : Th e I mpact of C ovid-19 on Palm B each Real Estate 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 For the past two years, the entire world has felt the impact of the pandemic across all aspects of our personal and professional lives, and we will no doubt continue to adapt and learn for the foreseeable future. The economy has seen significant shifts in response to COVID-19, and in turn, so has the real estate market. Our team decided to create a special issue of The Pohrer Report, focusing on the changes that the pandemic has had on the Palm Beach market. In addition to analyzing market behavior in Q1 2022, we break down real estate trends in the two years preceding the arrival of COVID-19, and the two years since, setting these eras against historical activity in the most valuable real estate market in the country. Over the past four 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 quickly they have changed. It can be challenging to explain to friends and clients how drastically our market has shifted, 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
REPORT CONTRIBUTORS Tammy Grimason Realtor Associate
Beth Johnson Realtor Associate
Elizabeth Vollman Tristan Realtor Associate, Market Insights Advisor
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ABOUT GARY POHRER • Ranked in the Top 2 for Douglas Elliman agents nationwide 2020 and 2021* • #1 Douglas Elliman realtor in Palm Beach since 2017* *BY 2020 AND 2021 DOUGLAS ELLIMAN REAL ESTATE SALES VOLUME AND GROSS COMMISSION INCOME. **AS RECOGNIZED BY THE DOUGLAS ELLIMAN ELLIE AWARDS FROM 2017-2021.
A LOOK BACK THE IMPACT OF COVID-19 ON PALM BEACH REAL ESTATE
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The Impact of Covid-19 on Palm Beach Real Estate It has officially been two years since our world was upturned by the Covid-19 pandemic, and in this quarter’s report, we analyze how Covid-19 has impacted the Palm Beach real estate market. While we share the current real estate health metrics that are the cornerstone of previous reports, we also compare and contrast these metrics to pre-pandemic numbers to provide a snapshot of shifts in market trends from 2018 to the present.
Monthly Closed Transactions - As the pandemic spread, transaction* volume really picked up and took on a different trend than 2019’s activity for both single family homes and the condominiums and townhomes asset classes. - Beginning in May 2020, and continuing through June 2021, we saw unprecedented levels of transactions in the single family home asset class. Transaction volume was anywhere from three to seven times the pre-Covid-19 levels. Alternately, the condo and townhomes asset class lagged slightly; transaction volume began to pick up at the start of 2021, and has carried into 2022. - As inventory began to dwindle during the summer of 2021, so did the number of monthly closed transactions. Still, it’s important to note that although the number of transactions did not hold at the peak 2021 levels, it remained at or above pre-Covid levels.
MONTHLY CLOSED TRANSACTIONS
Monthly Closed Transactions: Single Family Homes
*Transaction: The process of passing the rights in a property unit from the seller to the buyer in return for an agreed upon sum.
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MONTHLY CLOSED TRANSACTIONS
Monthly Closed Transactions: Condos and Townhomes
Total Sales Value * In 2018 and 2019, before the pandemic struck, a really strong month for single family homes would see total sales value above $100M. For further context, for six months out of 2018, the Palm Beach market transacted below $50M in total sales value. Due to both an increase in transaction volume that began in 2020 and a substantial increase in price per square foot (PPSF)* that continued throughout the pandemic, a new norm in monthly sales value emerged, ranging from $200M to $400M in a single month. We saw a similar uptick in sales value in the condo and townhome asset class. Pre-Covid-19, sales value ranged from $20M to $70M during a peak month. Now, the new normal is more than double that, ranging from $40M to $170M in total sales value per month.
*Total Sales Value: The sum of all sales during a period of time. *Price Per Square Foot (PPSF): A calculation of the value of each square foot of area of a house, condo or any building. It is calculated by dividing the price by the square footage.
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TOTAL MONTHLY SALES VALUE ($)
Total Sales Value by Month: Single Family Homes
TOTAL MONTHLY SALES VALUE ($)
Total Sales Value by Month: Condominiums & Townhomes
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Price Per Square Foot (PPSF) Prior to Covid-19, the PPSF: Home Size* grew at an annual rate ranging from +7% to +11%, which was on par with the annual growth rate for the Palm Beach single family home market over the last 40 years. The rate of growth took a major step up in 2021 and 2022, increasing +59% and +27% respectively. PPSF is up +140% for single family homes since 2018. Similarly, the condo and townhome market also saw a large increase in PPSF, with 2022 proving to be the strongest year for price appreciation* in recent times. In 2021, PPSF grew +18% over the previous year; as of Q1 2022, PPSF for In-Town condos and townhomes was already up +47% YOY*. In-Town condos and townhomes PPSF was up +91% since 2018, going from $1,042 PPSF to $1,994 PPSF in 2022.
PPSF ($) - HOME SIZE
Price Per Square Foot (PPSF) Single Family Homes
*“PPSF” Home Size: Home size is based on the current under air square footage. *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. *Appreciation: The rise in the value of an asset.
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PPSF ($)
Price Per Square Foot (PPSF) Condos and Townhomes
The following sections of the report return to our regular quarterly reporting and share the quarterly summary for single family homes across Palm Beach Island’s three primary neighborhoods, as well as insights into the condo and townhome market. We have also added a new health metric, PPSF: Home Size and PPSF: Lot Size. Home size is based on the current under air square footage, whereas lot size is based on the PPSF of the total lot.
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SINGLE FAMILY HOMES ALL NEIGHBORHOODS GARY POHRER | GARYPOHRER.COM | 11
Q1 Summary: Single Family Homes: All Neighborhoods In our Q4 2021 report, we detailed how the total sales value for waterfront homes still showed YOY growth. In Q1 2022, the trend changed as waterfront transactions and sales value were down YOY, and we saw a slight +6% growth in sales value for non-waterfront homes. PPSF: Home Size and PPSF: Lot Size continued to grow YOY across both waterfront and non-waterfront homes, at a rate of +40% and +47% respectively. It’s important to note that PPSF: Lot size for non-waterfront homes was up over +100% YOY. This is largely due to the trend of turnkey inventory being sparse, resulting in buyers who paid premiums for lots they have the option to build on, maximizing the square footage footprint.
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Inventory: Active Listings
ACTIVE LISTINGS
Inventory of single family homes continued to increase quarter over quarter (QOQ*), with active listings up +22% from Q4 2021. Inventory was still down YOY by -17.5%, with 61 active listings on average per month in Q1 2021, and 50 active listings on average per month in Q1 2022.
146 DAYS Single family homes stayed on the market for an average of 146 days during Q1 2022. This is flat to the rate we saw in Q4 2021, but still a YOY improvement of +29% compared to Q1 2021, when homes took an average of 204 days to sell.
DAYS ON MARKET
Days On Market
*Quarter-over-quarter (QOQ): The measure of an investment or a company’s growth from one quarter to the next. GARY POHRER | GARYPOHRER.COM | 13
Sale to List Ratio *
SALE TO LIST RATIO
In Q1 2022, single family homes sold on average -6% below the asking price, quite similar to the trends seen in the previous quarter. Homes continued to sell very close to the asking price when listed on the market. February of Q1 2022 was a strong month with homes selling on average +5% above ask.
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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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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Q1 Single Family Homes: North End - Transaction volume was down -11% YOY for the first quarter of 2022. However, it’s important to note this was largely due to one to two sales, and thus not considered a major decline YOY. - Sales value was down -23%, driven largely by a decline in waterfront property sales. Non-waterfront sales value was up +163% YOY. - PPSF was down -3% in Q1, driven by a -10% decline in PPSF on waterfront homes. PPSF for non-waterfront homes was up +106% YOY.
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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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Q1 Summary: Single Family Homes: In-Town - In-Town transaction volume was down -55% YOY in Q1 2022, the third consecutive quarter that saw a steep decline in transaction volume. - Sales value was also down -19% YOY at $112M in Q1 2022, compared to $139M in Q1 2021. - In-Town PPSF: Home Size was up +104% YOY, whereas PPSF: Lot Size was up +153%.
Most Recent In-Town Sales
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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. GARY POHRER | GARYPOHRER.COM | 19
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.
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Q1 Summary: Single Family Homes: Estate Section Activity in the Estate Section was down significantly in Q1 of 2022. This is the first quarter we saw YOY decline in total sales value, coming in at -58%. Although sales activity was down, we still saw significant growth across average sale price and PPSF.
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 | 22
Q1 Summary: Condominiums and Townhomes - Transaction volume in Q1 was down -3% YOY, driven entirely by a decline in transactions on In-Town condos and townhomes. In-Town transactions were down -36% YOY. - Total sales value was up +6% YOY across both In-Town (+2%) and South End (+10%) transactions. . - As with single family homes, PPSF for In-Town condos and townhomes continued to rise, with +26% YOY growth largely driven by the +76% PPSF YOY growth we saw for In-Town condos and townhomes.
Inventory: Active Listings
ACTIVE LISTINGS
In Q1 2022, inventory was down -70% YOY, and downticked slightly compared to Q4 2021. Q1 2021 averaged 189 active listings per month, whereas Q1 2022 averaged 56 active listings per month.
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Days On Market
The number of days on market continued to decline in Q1 2022, reaching an average of 100 days — a -16% decrease from Q4’s average of 120 days. This is a -50% decrease from the same period last year, when properties stayed on the market for an average of 200 days.
DAYS ON MARKET
100 DAYS
Sale to List Ratio
SALE TO LIST RATIO
96%
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The sale to list ratio for condos and townhomes hovered right around 96% for Q1 2022, largely due to limited inventory and little room to negotiate on list prices.
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! While we have started to see more inventory 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. This holds true across residencies from single family homes to condominiums. In the beginning of the pandemic, buyers didn’t want to be in condos because they were concerned about proximity to others when social distancing and other factors were top of mind. In the end they didn’t have a choice, because single family home inventory on the Island became so low. By spring of 2021, I remember speaking with a client about their listing and telling them, “Be patient, we are running out of single family homes to sell. People who are not looking for condos are going to be all of a sudden looking for condos.” I could go on and on about the data demonstrating this point, but the important thing now is where we go from here. As a realtor in Palm Beach for almost 19 years, we all know the feeling we get in June when crowds subside and we all of a sudden say, “Oh my, where did everyone go? What am I going to do.” Right now, realtors and many sellers on the island feel the same way. When you look at history, the reality is that this is all normal. Going forward, I expect the sales numbers to drop back to what was considered normal a few years ago. We still live in the most amazing place in the world and no matter what shifts we see in macro markets across the economy, our inventory is finite and people are moving here for more reasons than they were before. In June of 2018, there were six single family homes sales; last year this number grew to 27. 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 may test 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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860 S Ocean Boulevard
224 Via Marila
Virtually Rendered
860 S Ocean Boulevard
All homes photographed are currently listed for sale by Gary Pohrer. GARY POHRER | GARYPOHRER.COM | 27
254 N County Road