A close examination of the numbers year-over-year (Y-O-Y) shows that luxury sales over $2 million in the cities that make up the Northern Palm Beaches were down 8% in the late twelve months when compared to the same category of sales in the prior twelve months. Shrinking supply, global economic instability, buyer resistance to increased pricing, and the consumer’s shift to more conservative lifestyle choices have all led to this decline.
A Closer Look At Luxury Transactions In Excess Of $2 Million
From July 22, 2014 to July 23, 2015 (two years ago) there were 144 total sales over $2 million in the combined cities of Palm Beach Gardens, Jupiter, Juno Beach, North Palm Beach, Tequesta, and Hobe Sound in Palm Beach County, Florida (those towns make up what is widely known at the “Northern Palm Beaches”). Over that same period last year, 132 properties sold in that region and at that price point. That’s an 8% decrease in sales. More surprisingly, sales over $5 million dropped from 29 two years ago to just 8 last year. That’s a 72% drop in sales. Sales over $4 million dropped from 35 to 21 which is a 40% decline, and sales above $3 million dropped from 69 to 46 which equals a 33% reduction Y-O-Y.
In other words, total luxury sales in the area dropped year-over-year by a minimum of 1/3 and a maximum of almost 3/4 in each price point at the super high-end of the luxury market in the Northern Palm Beaches. Decreases in sales actually grew more severe as the numbers approached high price points.
How Supply Could Be Causing The Drop In Sales
Clearly, a lack of supply has hurt these numbers. A few ultra-luxury communities like Old Palm and The Bear’s Club have recently matured as they’ve built-out with limited new construction, which has slowed sales. Others like Jupiter Island, Jupiter Inlet Colony, Lost Tree Village, Seminole Landing, and deep water properties in the Intracoastal Waterway and Loxahatchee River simply have a limited available inventory at this time.
What's Holding Buyers Back From Buying Florida Real Estate?
Certainly, many buyers are sitting on the sidelines while looking for global economic stability and world order related to fears of terrorism. Trouble with the EU, uncertainty about U.S. politics, fears of ISIS and gun violence around the world all lead to many consumers taking a “wait and see” attitude. Remember, most purchasers of a $2 million property are not first time buyers in the Florida market, so they really don’t need to make a move if they have uncertainly. They simply stay where they are currently until they feel more comfortable about the future.
Buyers also have short memories and do not forget the sharp price deflation what was felt here after the housing market bubble burst here in 2008. Therefore, some buyers are concerned about the 8% to 12% inflation in prices that our market has enjoyed in each of the past few years. Many areas are seeing prices near the all-time record highs of 2005 and 2006, and that makes conservative investors take pause.
Lastly, some buyers have adjusted their mindset to a more conservative lifestyle since the great recession. Many aging Baby Boomers are finding they need less square footage in their homes as children leave the nest and they approach retirement.
To learn more about the ultra-luxury market in the Northern Palm Beaches, contact Vince Marotta at 561-847-5700. His detailed knowledge and sales experience in all of the communities in this area provides consumers with a wealth of information about the pros and cons of each development and area.