Mansions seen along the coast from Palm Beach, Fla.
Home sales in Palm Beach, the exclusive retreat for the president and countless billionaires on the island, tripled in the third quarter as the rich fled the higher-tax cities and states in the northeast, according to a new report.
"It may be the hottest real estate market in the world right now," said Jay Phillip Parker, CEO of Douglas Ellimans Florida Brokerage. "You just can't find houses to buy there now."
The average home price in Palm Beach was over $ 7 million for the quarter, according to a report by Douglas Elliman and Miller Samuel. The strength shows little sign of slowing as signed contracts rose 62% in September, the report said.
Major sales in Palm Beach recently included the sale of a $ 28 million teardown villa owned by telecommunications tycoon Donald Burns. Billionaire Jude Reyes sold his oceanfront mansion for $ 19 million, and pulmonologist Norman Traverse sold his seven-bedroom waterfront property for $ 51 million.
The island's inventory of homes for sale declined 79% year over year in the third quarter, according to the report. There is now less than five months of supply.
"The demand for luxury, perceived security and the pristine environment is very attractive to wealthy customers," said Parker.
The strength in Palm Beach reflects broader demand for homes – especially upper-priced homes – across South Florida as affluent residents leave behind urban density, high taxes, and colder weather in the Northeast and Midwest. Prices in Miami, Ft. Lauderdale, Boca Raton and even parts of Tampa grew double-digit for the quarter.
In Miami, luxury home prices rose 42% for the quarter, with the average sales price reaching $ 2.8 million. Average property prices in Ft. Lauderdale was up 16% and Boca Raton was up 11%.
Realtors say some of the demand is related to the coronavirus pandemic, as families have fled major cities for more tropical homes with yards near the beach, but the growth is also linked to longer-term structural changes. The rich in the northeast are getting older and wanting to retire. Others go to Florida. The pandemic has also resulted in a wave of younger families moving to Florida – initially to flee New York, but now to stay and take their children to local schools.
"At some point, your friends are all in Florida, they hear how much they like the experience, so they want to move too," said Parker. "It creates a snowball effect."
The flight in low-tax countries is also a driver. New York, New Jersey, Connecticut, and other states are facing huge budget gaps due to the pandemic, and some expect taxes for high earners to rise. Along with a possible "blue wave" with Democrats winning the White House and both houses of Congress in the upcoming election, some have concerns about the possible combination of higher federal and state taxes. In this scenario, Florida, which has no income tax, becomes more attractive.
"Whoever wins in November has to fix budget issues at the national and state levels," said Parker. "And Florida still won't have an income tax. So that's always a big plus.