The Palm Beaches’ Real Estate Boom & The Most Electable Candidate – October 23, 2023
- Palm Beaches’ billionaire boom. When we talk about the Palm Beaches’ we’re generally talking about the Palm Beaches...as in the 67 counties that offer everything from acreage and sugar cane to the most elite communities in the country. As the second largest county in the state with just under 2000 square miles, making it also one of the largest in the country as well, the Palm Beaches really does offer just about something for everyone. That’s why our population, which is a third larger than it was just twenty years ago, continues to boom and it’s why our real-estate market, even amid greater than 40-year high inflation rates and 23-year high mortgage rates continues to defy the trends that have descended nationally (with most of the country having had a peak real-estate market in May of last year – which was something I predicted at the time – following my accurate prediction of a new housing boom in February 2020 at the onset of the pandemic). I mention that because it’s especially relevant to the real-estate conversation locally today. One that was a prominent national news story over the weekend. On May 9th of last year, I offered this in that day’s Q&A: In addition to macroeconomic conditions there’s the cyclical nature of real-estate to consider as well. The housing boom of the past couple of years as we’ve known it begins to end this month in my estimation. In another words, we’re experiencing the end of the boom right now. In the near-term, aside from what I’d expect to be growing inventory and days on market – I think we’ll begin to see a tale of two markets. A resilient luxury market driven by cash coming out of stocks and a wavering market for average homes which largely rely on buyers who’re obtaining mortgages. All which I mentioned there has proved true. Nationally, median sales prices peaked in May of 2022 at $432,000. Most recently median sales prices have come down to $412,000 - an average decline of 5% since the peak. But that hasn’t been the case in the Palm Beaches where demand and luxury properties are anything but normal. The median sales price in the Palm Beaches is 9% higher over this time a year ago fueled by cash buyers for luxury properties as I suggested would be the case. As NBC cited nationally over the weekend... The average sale price of a home in Palm Beach topped $20 million in the third quarter, making it far and away the most expensive market in the country. The average price per square foot of homes sold in Palm Beach reached $4,554, — more than 2.5 times more expensive than Manhattan. Now, there’s no doubt that personally I’m 2.5 times more desirous of living in this community (on or off the island), than Manhattan...but wow. It is somewhat remarkable to think that with all of the communities not just in Florida but across the country,
- Palm Beach specifically has essentially become 2.5 times more desirable than the next closest. Now, aside from the intrigue of the Lifestyles of the Rich and Famous kind of conversation that comes with average properties above $20 million on Palm Beach, there’s without a doubt an impact that extends across this community far more broadly. Real-estate accounts for 17% of the US economy, however in Florida that jumps to 24%. Simply put, real-estate sales are bigger here and they matter more here for the overall health of our economy. As of last year, the total economic impact of the average home sale was $112,500 to the local economy. That’s an incredible figure and that’s when we’re talking about the average price being in the vicinity of $500k. You can then get the idea of the local economic impact of a property sale that averages $20 million. And so the point is that what happens with real-estate sales on Palm Beach doesn’t stay on Palm Beach. And also, what’s happening due to pricing levels on Palm Beach is having a huge impact on the luxury markets outside of it as well. It’s one thing to be wealthy, it’s a whole other thing to be $20 million home wealthy. For that reason, more and more wealthy buyers are being pushed outside of Palm Beach which is having a huge impact on non-mortgage rate sensitive luxury properties throughout the Palm Beaches. This in turn leads to higher property values for non-luxury properties in surrounding communities. The big news story is Palm Beaches’ remarkable demand and prices. The ambient benefit is a much healthier local economy and a buoyant housing market that’s performed about 14% better than the national average over the past year and a half.
- The most electable candidate. There are 378 days until the next Presidential election (not that I’m counting them down or anything). And when you consider what’s happened over the previous 378 days, we know that a lot has and will happen between now and then. But here’s one thing that’s changed very consistently as we’ve moved close to being within a year of next year’s election. Trump’s electability – a subject we’ve discussed over the past year. Specifically, what I hypothesized might be the case is increasingly looking like it’s the case. That in the end Donald Trump, not Joe Biden, not Ron DeSantis or Nikki Haley, would be the most electable candidate. I’m not going to delve too far into the details of recent polling trends for Trump here today – but for those who’ve paid any attention to them for a while you’re aware that the trends have very much been Trump’s friend. So much so that Donald Trump is now consistently polling better against Biden than any Republican candidate in a hypothetical rematch, and most often better than Biden nationally – including crucially in pivotal swing states. And this isn’t at all a surprise, and it's not meant as a slight to other GOP candidates. Trump has something that no one else has in this race, including Biden...a highly successful track record as president. The obvious case for Trump for those in the middle is this. You know what life was like with Donald Trump as president, you know what life has been like under Joe Biden. Which would you prefer for the future? That especially simple political science analysis is responsible for Trump showing leads larger than at any point, in any prior campaign, including his successful 2016 effort.