Palm Beach’s Luxury-Real-Estate Bonanza, According to Broker Dana Koch

Home sellers are cutting prices in cities from Nashville, Tennessee, to Phoenix, but demand for Palm Beach properties remains as hot as the Florida sun.

The county hugging the Atlantic Ocean about a 90-minute drive north of Miami has long been a popular destination for New York’s 1%. Its allure only grew during the pandemic as wealthy residents looked to escape higher taxes and embrace more relaxed COVID-19 policies.

Out of the 11% of pandemic-era Florida residents who came from New York, most moved to Palm Beach, according to driver’s license data from the Florida Department of Highway Safety and Motor Vehicles, the New York Post reported in May 2021.

This boom has been a boon for Palm Beach real-estate agents.

Dana Koch — a Corcoran broker who said he brought in $550 million in sales last year — said the Palm Beach luxury-real-estate scene has not slowed down, even as other parts of the housing market cool nationally amid rising mortgage rates.

“The reality is — not that we’re insulated from long-term mortgage interest rates, no market is — but you’re talking about high-

net-worth

individuals, the top 1% of people in this country,” he said.

“They’re not as sensitive” to fluctuations in mortgage rates, added Koch, who was the No. 2 top-selling broker in Florida and the No. 9 top-selling broker in the country in 2021, according to RealTrends.

That almost bulletproof demand pushes up prices. During the first quarter of 2022, the typical single-family home in Palm Beach sold for about $16 million, up 51.2% from $10 million in the first quarter of 2021, according to Douglas Elliman. Folks snatch up what’s available quickly: The typical property spent 60 days on the market, down 41% from last year.

Business is so busy that Koch said he’d worked from early in the morning to after 11 at night for the past two years. He shared some of his takeaways from the Palm Beach bonanza.

Why so many rich people move to Palm Beach

High taxes are the main reason people are leaving New York, a May report from the New York nonpartisan policy think tank Empire Center for Public Policy found.

Florida’s no-

income-tax

policy, Koch said, is a major reason for his clients’ moves.

“We’ve had people that have been lifelong Californians, and they’re moving here to South Florida because they’re just fed up on more than one level,” Koch said. 

Wall Street leaders are even moving their entire businesses to the Sunshine State.

Just last week, Ken Griffin — the CEO of Citadel, a hedge fund with $35 billion in its investment portfolio — announced his firm would move its headquarters from Chicago to Miami.

Citadel

Goldman Sachs also moved some of its employees to South Florida in 2020, as did the investment giant Blackstone and other finance-industry heavyweights, including Elliott Management, Millennium Management, and Point72 Asset Management.

“The difference between now versus prior run-ups in the real-estate market is that we have industry moving here,” Koch said. “People are making this their primary residence. We have young families who are moving here in droves and putting their kids in school here.”

Palm Beach County’s estimated population was 1.497 million in 2021, up from 1.492 million in 2020, according to US Census Bureau data. That’s a gain of about 5,800 residents.

Take Scott Shleifer, who paid $123 million in cash for a nine-bedroom oceanfront Palm Beach mansion in February 2021. That sum meant Shleifer, a New York founder of the storied investment firm Tiger Global, bought Florida’s most expensive home on record at the time.

Just a few weeks ago, Oracle’s Larry Ellison broke Shleifer’s Florida record when he paid $173 million for a lavish Palm Beach County oceanfront estate on 16 acres. He bought the property from Jim Clark, the billionaire cofounder of Netscape who had paid $94 million for it just 15 months earlier in March 2021. 

One hedge-fund manager bought a $40 million home sight unseen

Koch said his favorite deal of 2021 was when a client moving from the New York area heard about and decided to buy a $40 million oceanfront mansion at 37 East Inlet Drive — all within 48 hours and without ever seeing it in person. 

Koch heard about the off-market mansion and had a feeling it would be ideal for one of his clients, a hedge-fund manager moving from Greenwich, Connecticut, a suburb of New York City and another hub for the financial industry. 

The client, who Koch said he could not name because of broker-client confidentiality, was on a bike trip in California when he got Koch’s call. 

“He pulled off the side of the road, he called his wife in Greenwich, we conferenced each other, and I said, ‘I found your house,'” he said. “Within 48 hours, we put the house under contract. The following weekend they both came down to see it and fell in love with it. And the rest is history.”

People want the works: tennis courts, pools, and big backyards

What’s also shifted is what people buying in Palm Beach want in a home.

“In the last handful of years prior to the pandemic, people were trending towards smaller, easier, lock-the-door-and-you’re-done type of houses,” Koch said. “Now, it was just a polar opposite.”

People are asking for homes with tennis courts, basketball courts, pools, and big backyards, he said. 

Getty Images

Mansions with amenities like these are fetching tens of millions of dollars more than what they sold for just months prior. This month, 901 North Ocean Blvd. in Palm Beach sold for $86 million, The Real Deal reported, $22 million more than what the seller bought it for in August 2021. The massive 15,000-square-foot seven-bedroom compound on the Atlantic Ocean has an outdoor pool, a theater, a fitness center, and a guest house, according to a listing on Realtor.com. 

The area is entering a new normal, Koch said.

“The least expensive houses in Palm Beach now are like $4 million to $5 million. Pre-pandemic, those numbers were right around $2 million,” Koch said. “Looking back, I couldn’t imagine things going higher than at the beginning of 2021. I thought the same thing at the beginning of 2022 — just not in my wildest imagination.”