Builders are tearing down old homes and constructing Miami saw less growth with luxury prices tumbling 10 percent over the modernized houses, with all the bells and whistles. In Redfin’s luxury housing price index, which tracked luxury sales in more than 1,000 cities across the Unites States in the third quarter, Delray Beach in Palm Beach County capped the list.
Ivonn Goihman of the Goihman Group in the South Florida luxury real estate market, attributed growth to various factors. One driver is hedge funds that are either opening up subsidiaries in Palm Beach or transferring their offices from New York to Palm Beach.
“The benefit of being a Florida resident for tax purposes has trickled many funds to look toward Florida, since we do not pay state income tax, and the cities of choice have been Palm Beach and Miami,” Goihman says.
Average prices of luxury homes in Del- ray Beach jumped 70 percent over the past year to stand at $2.98 million. In Boca Raton, prices went up 38 percent to $2.59 million, while in West Palm Beach prices climbed 22 percent to $1.32 million.
Monica Venegas of Venegas International Group says, “I have seen Palm Beach County realize almost an 11 percent increase in median home sale prices over 2015. I am also encouraged by the sales of 89 Middle Road for $39 million and 1695 N. Ocean Way for $43.7 million.”
Both were one-of-a-kind estates with riveting ocean views and generous amenities. “Demand remains high,” she adds.
Miami saw less growth with luxury prices tumbling 10 percent over the modernized houses. Buyers in Miami have more choice, and therefore, more negotiating power than residents of Palm Beach.
According to Venegas, that matters little. “Miami will always be a global destination with investors from around the world,” she says. “Miami is still a bargain at more than $3,000 per square foot for top luxury compared to New York, London, Singapore and so forth, which go from $6,000 to $10,000 per square foot for luxury.”
She notes, “It’s a great time for buyers to buy in Miami, as they have a small window of opportunity where both developers and sellers will entertain a price reduction from list price.”
Venegas predicts that if the U.S. dollar value decreases against foreign currency, demand from overseas will sweep Miami, which has a huge overseas investor base.
As with Palm Beach, hedge funds and other developers will continue to swamp the region for tax reasons. Although Venegas considers Palm Beach “too boring” for certain investors, the region does have the scarcity of land, which attracts buyers attention, particularly so in waterfront-placed condos.
Although high-end real estate continues to falter across the country, it’s rising in Palm Beach.