Real Estate

Palm Beach is running out of mansions for sale

Mansions seen along the coast of Palm Beach, Fla.
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Prices in Florida’s ultra-rich Palm Beach community hit an all-time high in the second quarter, as brokers grappled with a record-low number of mansions to sell.

The average price for a single-family home in Palm Beach hit $11.7 million in the second quarter, up 38% from a year ago and marking a new high, according to Douglas Elliman and Miller Samuel. Brokers say the flow of wealthy hedge funders, private equity chiefs and other executives in finance moving from New York and other finance capitals has created a step-change in demand and prices for a market already known for its outsized wealth.

“This is a whole reset of the market,” said Jonathan Miller, CEO of Miller Samuel, the appraisal firm. “We’re now seeing $50 million transactions on almost a weekly basis. That’s a big change. And it appears to be sustainable.”

Prices in Palm Beach are now almost on-par with Manhattan, with the price-per-square-foot in Palm Beach topping $1,500 in the second quarter, close to Manhattan’s $1,545, according to Miller.

Even with record-high prices, buyers are paying up. The number of sales of single-family homes in the second quarter jumped 90% over last year — when buying in Palm Beach and Florida was already picking up due to Covid migration.

The result is what brokers are calling a mansion shortage, as demand outstrips the supply. There is now about a one-month supply of homes for sale in Palm Beach, a record low, according the Miller Samuel. As of the end of the second quarter, there were only 25 homes for sale — and the real number may be smaller due to homes already in contract or heading to contract.

Brokers say they now go door-to-door hoping to find buyers willing to sell.

Christopher Leavitt, a top broker in Palm Beach with Douglas Elliman, said he’s had to get creative by convincing estate owners to sell, helping those owners find a smaller house for them to buy and then moving the smaller-home owner to another house.

“It’s about repositioning people,” he said. “It’s no longer about just MLS listings and selling a house.”

The finance business — and its shift from New York — is the main driver of the Palm Beach boom, Leavitt said. While many hedge fund billionaires and private equity chiefs moved to Palm Beach during the pandemic, the development of large-scale office towers and amenities in nearby West Palm Beach means that many are staying and moving more of operations nearby.

“This is the tip of the iceberg,” he said.

Scott Shleifer, a partner at Tiger Global Management, bought a $122.7 million mansion in Palm Beach in February, marking the highest price ever paid for a property in Palm Beach. Hedge fund billionaire David Tepper bought a Palm Beach spec-mansion the same month for $68 million. Hedge funder Igor Tulchinsky bought a $39.5 million property in North Palm Beach.

A private island on Palm Beach just sold to a spec-developer for $85 million. The developer, Todd Michael Glaser, said he and his development partners plan to renovate the property and quickly relist it for a higher price, calling it a “once-in-a-lifetime opportunity.”