Luxury housing market inspires ‘total frenzy’ in vacation boom towns
In the third quarter, luxury home sales jumped 41.5%, the biggest year-over-year shift since 2013, according to Redfin. And while real estate agents repping luxury homes aren’t seeing as many bidding wars as they did this summer, their respective housing markets are still crazy right now.
“What we’re seeing here in Palm Beach is a total frenzy,” Dana Koch, a sales associate with Corcoran Group, the Koch Team in Palm Beach, told HousingWire. “I’ve had many conversations with clients of mine from late April through early July, the market was total pandemonium. And, since early July to now, it’s just getting very busy.”
A recent report from Douglas Elliman and Miller Samuel revealed that the average Palm Beach home price in Q3 was $7 million. Contracts during this time also skyrocketed 62%.
While the Palm Beach housing market has not seen a lot of bidding wars, Koch said that a lot of the inventory has been absorbed and properties are getting multiple offers.
Since it’s a summer destination, Palm Beach’s busy season for home-buying starts on Nov. 1, and runs through May 1. Koch said that since this summer — typically the home-buying off-season — was busy for buyers, he thinks it will only get crazier.
“We normally average roughly like $200 plus million on an annual basis, and during the first three quarters, we’ve sold $350 million worth of real estate,” Koch said. “So it’s been a crazy year. It’s been a very profitable year.”
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Over where the weather is colder, Steven Shane, a Compass real estate agent in Aspen, Colorado, said that buyers are coming from all over Texas, Florida, New York and California.
Shane said that schools in Aspen have increased their enrollment, as families are putting their roots down where they can have more space.
“I think that there’s a lot of people who rented, put their kids into school, and now, interest rates are so low, if you think about it, it makes a heck of a lot more sense to buy something than to pay rent,” Shane said. “So a lot of the people who came here initially may have rented just to get a place and now are looking to buy a home.”
From hiking to skiing and fishing, Shane said that people want to be able to get out and be able to stretch their legs if they’re working from home, and they can do that in Aspen.
“People learned that they can work from anywhere,” Shane said. “For the most part, people can work remotely, and their children might be attending school remotely. So why not be in Aspen, Greenwich, Connecticut, or the Hamptons?”
Speaking of the Hamptons, as of Q3, home sales in the area have increased 51% year over year, according to another report from Douglas Elliman and Miller Samuel. Gary Depersia, a broker with the Corcoran Group in East Hampton, said that the market is extremely busy right now at all price levels.
“We’ve had quite a few deals above $10 million, above $20 million and above $40 million,” Depersia said. “So, there’s activity all over the place.”
Depersia said that there are definitely bidding wars in his housing market, especially with more people coming out from the city and trying to live in the Hamptons full time.
On the day HousingWire spoke with Depersia, he had six showings. “For a Thursday in October, that is a lot of showings.
“At this time of year we get a lot of showings on the weekend and very few during the week,” Depersia said. “Now we’re getting a lot of showings. It’s not uncommon for us to have three, four or five showings on a weekday of my various listings, or buyers coming out and looking for things with me. So that’s something that’s changed dramatically.”
DJ Grubb said he’s seeing a lot of activity in the higher end of the housing market where he is in the East Bay area in California, including all-cash buyers and buyers taking advantage of the lower mortgage rates.
“I have a lot of people moving within town, and a lot of Millennials coming out of San Francisco, that having just gone through COVID that are now coming over to the East Bay and finding the East Bay a very good buy, whether it be in the million five range or up to $5 million range,” Grubb said.
Grubb, the president of Grubb Company Realtors, said that even though people are moving into his communities, people are moving out, too. The “wealthy, wealthy” are moving to the likes of Aspen, Colorado; Jackson Hole, Wyoming; and the Tahoe area.
In the Lake Tahoe area, Amie Quirarte said that there are lots of Bay Area residents who fled to the vacation town, creating not only an increase in sales but also an increase in rentals.
“It’s been a really interesting summer, to say the least,” the agent at Tahoe Luxury Properties said.
In the past, it wasn’t unusual for houses in Quirarte’s market to sit on the market for 30 days and sometimes 60 days without much movement, causing a decrease in listing prices.
“In that respect, [it has] shifted tremendously,” Quirarte said. “Now we’re seeing nearly every offer is almost all cash, and if they’re not cash then they have at least waived their financing contingencies including their loans and they have the ability to compete with cash offers. And many people, more this summer than any other time in my career, people have waived contingencies altogether, which is very unheard of for our market. Very, very unique.”
Miami Realtor Ines Flax, with One Sotheby’s International, said her housing market is heating up this winter.
“Some houses are getting multiple offers, which [we] haven’t seen that in a while,” Flax said. “Especially in the high-end luxury market.”
Miami is another destination to benefit from the big city exodus caused by the pandemic. Flax said that she thinks her market will be busier this winter than last winter, and said both public and private schools in the Miami area have had triple the amount of students applying.
“We used to have five of the [mega mansion] sales a year in Miami Dade…and now we’ve seen 20,” Flax said. “Just five sold on Star Island within the last six months. The cheapest sale on Star Island was like $19 million, and that was a plot.”
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