Ultimate guide for first-time homebuyers in Palm Beach

Aerial View of Teal Ocean

Palm Beach is a vibrant, affluent community located in the heart of South Florida. It’s home to financial titans and tech corporations, beautiful seaside neighborhoods, a respectable art scene, and incredible entertainment.

Its seaside location and warm climate have made it a popular migration point for snowbirds, and its pro-business environment and strong real estate market have attracted both commercial investors and luxury homebuyers. These favorable conditions have, in many ways, cemented Palm Beach as a highly sought-after location for both residents and businesses.

For first-time homebuyers, certain things must be taken into consideration before buying a home. This article will discuss the current Palm Beach market conditions, the community lifestyle, and the local housing stock. It will likewise provide tips for beginners who aren’t sure how to start their real estate journey.

ABOUT PALM BEACH!

Palm Beach is a small oceanside town situated on a 14-mile-long barrier island. It can be found in the eastern-central portion of Palm Beach County and is bounded by water on almost all sides, namely, the Gulf Stream and Atlantic Ocean to the east and Intracoastal Waterway to the west. West Palm Beach and Lake Worth Beach are its closest neighboring communities, accessible through Flagler Memorial Bridge and Royal Park Bridge.

  • It has a population of over 8,800 in 2019 and an estimated average household income of $314,090 in 2020.
  • Bloomberg ranked it the 18th wealthiest place in the United States in 2020, and the town is known for its dense concentration of ultra-high-net-worth individuals (UHNWI).
  • At least 33 billionaires on the Forbes 400 list have strong residential ties to Palm Beach, either through a primary property or seasonal vacation homes.

The neighborhood is a financial powerhouse – though not in the same way as the fast-paced urban jungles of New York City or Brickell in Miami. A large part of Palm Beach’s appeal is its isolation from the rest of the city. Far from the bustle of the Miami Metropolitan Area, residents can put down roots in a serene, community-oriented town by the ocean.

THE PALM BEACH REAL ESTATE MARKET

Even in the face of wide-scope economic changes, the Palm Beach real estate market continues to perform relatively well.

Why?

  • According to our reports from the last quarter of 2022, the local market is partially insulated from the effects of wide-scale economic uncertainty. This is largely thanks to the town’s excellent quality of life, prime location, favorable weather, and remarkable business climate – a combination of features will always be desirable.
  • In-migration from Northeastern citizens continues to bolster the demand for housing. The numbers show a strong desire among buyers to acquire high-quality properties despite skyrocketing prices. People are still willing to pay a premium for luxury homes.

Notably, the dollar volume continued to rise with $2.25 billion recorded in the last quarter of 2022. This was the second-highest documented year-end dollar volume for Palm Beach, an impressive feat considering the drop in Q4 transactions. Overall transaction volume in 2022 fell to pre-pandemic year-end levels with only more than 125 recorded transactions.

Buying a home for the first time is a major financial decision; it’s challenging no matter the temperature of the market. However, there are certain conditions that make the process easier. Ideally, a buyer should acquire property when it’s a buyer’s market, meaning there is less competition, smaller demand, and more houses available.

Palm Beach is currently a seller’s market. The supply of houses cannot meet the current demand, driving up housing costs. Buyers are more likely to encounter bidding wars. While this poses a challenge, coming in prepared can help you navigate the market and secure a good deal for your home. Strategies like getting a mortgage pre-approval and searching for homes below-budget can give you a better chance of achieving homeownership.

PROPERTY VALUES IN PALM BEACH

Single-family homes

As of the last-quarter 2022, single-family homes in Palm Beach had a median price of $15.25 million. This amount covered properties with at least 5,000 square feet and 4 rooms or more. This price marked an impressive 65% increase compared to 2021’s median value and the highest recorded Q4 median thus far. Average home prices, meanwhile, stood at $21.3 million as of January 2023.

At the high-end, you can expect to find a $50-million gated estate with acreage. Luxury properties at this price range usually have at least 6,000 square feet of livable space and feature a private pool or spa and deeded beach access. However, prices can go as high as $100 million.

As of January 2023, the most expensive listed home is 10 Tarpon Isle, a $218 million property situated on the only private island in Palm Beach. The Todd Michael Glaser-designed legacy estate includes 11 bedrooms and 15.7 bathrooms, a clay tennis court, and a viewing pavilion, among other luxury features.

Condos and co-ops

Condos and co-op prices have hit record-breaking levels in the Midtown neighborhood with a recorded median value of $3.17 million. Meanwhile, South End condo prices have gone down to $475,000, marking a 24% decrease year-over-year.

Luxury condominiums can go as high as $18.5 million for an exclusive location like Breakers Row or Royal Poinciana Way. For a property of this class, expect at least 5 bedrooms and around 4,000 to 6,000 square feet. Upscale amenities, private and shared, are also the standard. Waterfront or properties close to the beach typically have a higher premium.

NEIGHBORHOODS IN PALM BEACH

From high-end beachfront resorts to family-friendly locales, Palm Beach has something for everyone. If you’re a first-time homebuyer looking to settle down in an exclusively residential community, here are the places you can live in.

  • The North End offers private beaches, tree-lined neighborhoods, and plenty of spacious properties. Most single-family properties in Palm Beach can be found here.
  • The Midtown neighborhood of Palm Beach is the heart of the town and home to the iconic Worth Avenue shopping district. Here you’ll see plenty of designer boutiques, art galleries, fine dining restaurants, and luxury hotels, as well as the area’s top attractions the Flagler Museum and the Breakers Hotel. Expect plenty of condominiums in this part of town.
  • The South End neighborhood is mostly condominiums.

WHY LIVE IN PALM BEACH?

For both visitors and residents, Palm Beach has plenty to offer.

  • The main shopping district is Worth Avenue, a high-end strip with stores like Tiffany, Gucci, and Chanel as well as a lineup of art galleries. There are hidden courtyards and alleyways developed by architect Addison Mizner to create an old world vibe. The Vias at the westernmost end of the avenue are where you’ll find some of the most talked-about restaurants and shops in the area. Those looking for a bargain can scour the consignment and vintage stores nearby.
  • The neighborhood is also home to a range of cultural attractions. The Henry Flagler Museum is a grand mansion that repurposes the magnate’s former winter home and displays his impressive wealth. The Norton Museum of Art displays a wide breadth of artwork from Old Masters to contemporary pieces.
  • Palm Beach has countless options for foodies. Clay Conley’s Buccan is an excellent place for farm-to-table small plates, Pizza Al Fresco for outdoor dining, and Café Boulud for lobster and foie gras.
  • Sports is also popular in this part of Florida. There are two championship golf courses nearby, and visitors can play at the ultra-exclusive Seminole Golf Course in Juno Beach. Only 30 minutes away is The International Polo Club which hosts the highest goal in polo in the world and is open to the public. Finally, there are plenty of outdoor activities like hiking the Lake Trail, paddle boarding, and exploring the pristine Indian River Lagoon.

FIRST-TIME HOMEBUYER’S GUIDE TO PALM BEACH

Important things to consider when buying a house

Buying a house is one of life’s biggest milestones. With a financial decision of this scale, it’s crucial to be aware of the factors that can impact your ability to acquire a home. Here are a few important things to bear in mind before you commit to a purchase.

Especially when it comes to buying your first home in the wealthy neighborhoods of Palm Beach, begin your real estate journey by going through the checklist below.

  • Are you financially stable?
    It goes without saying that this is key to buying a house anywhere, much less Palm Beach. Before you even begin your search for a home, assess your income and financial situation. Do you have an emergency fund with at least three months of living expenses? Are you able to live within your means? Once you’re in good financial health, you can begin looking at available homes that fit your budget.
  • What kind of property do you want?
    Do you want an apartment, condominium, single-family detached home or townhouse? If you want to live in Palm Springs, what features would you like your home to have? Think about the number of bedrooms and bathrooms, the size of the backyard, if any, and other must-have amenities. If you’re eyeing a property in Palm Beach, you may also want to factor in the home’s proximity to the shoreline and features like private docks or beach access.
  • What neighborhood would you like to settle down in?
    It’s best to explore the neighborhood in person to assess if the lifestyle is a good match. The neighborhood will also determine the majority of properties on offer. In Palm Beach, you can choose between three major neighborhoods: North End, Midtown, and South End. North End has single-family properties while Midtown and South End offer condominiums and co-ops. Prices will also vary with location.
  • How do you qualify for a mortgage?
    To obtain a mortgage loan, lenders look at various factors such as credit score, debt-to-income ratio, and down payment amount to see if the borrower is qualified. Tools like mortgage calculators will factor in your income and monthly debt obligations like student loans or car loans to determine how much of a mortgage you could potentially obtain. In general, the mortgage should not exceed 28% of your monthly income.
  • What costs should you factor in?

Property taxes, closing costs, maintenance repairs – all of these should be included in your initial budget planning. Don’t be too focused on your down payment that you neglect your emergency repair fund or property taxes.

  • Who is your real estate agent?
    The secret to success as a first-time homebuyer is having the right real estate professional on your side. Working with an experienced Realtor who can help you navigate a competitive market will eliminate most of the rookie mistakes first-time buyers tend to commit, saving time, money, and resources on your end. Frisbie Palm Beach can help you maximize your resources.

Tips for a first-time homebuyer in a competitive market

  1. Prepare an emergency fund. As a rule of thumb, you should have a reserve worth 3-6 months of living expenses. That way, lenders can see that you’re prepared in case things go awry.
  2. Get pre-approved for a mortgage. A mortgage approval letter is a crucial document and a prerequisite to homeownership. It communicates to the seller that you’re committed to making a purchase and that you’re in good financial standing.
  3. Be prepared to compete against other offers. The Palm Beach market is a hotbed of activity and the demand for exclusive luxury homes remains high, so you’ll likely come across competition. However, don’t get carried away; set a realistic limit on how much you can afford to spend on your new home.
  4. Make a large down payment, or show earnest money. Sellers are more likely to pick a buyer who’s willing to put down the largest down payment, which could range from 5% to 20% of the total housing cost. They’re also more likely to accept a cash payment. Additionally, submitting earnest money or an escrow deposit can boost your chances of securing a home. At the end of the day, it’s about walking the talk and showing the buyer that you can afford the property.

FIRST-TIME HOMEBUYER PROGRAMS

Florida has a number of financial assistance programs that first-time homebuyers can look into. These include mortgage loans, grants, and other financial boosts that can alleviate some of the housing costs and miscellaneous expenses.

A 30-year fixed rate mortgage is the most viable choice for most first-time buyers. This type of loan allows you to pay for the house over a span of 30 years with a fixed monthly payment and interest rate. They’re more affordable than shorter-term mortgages such as 15-year or 10-year rates.

  1. SHIP Purchase Assistance Program
  2. The State Housing Initiative Partnerships (SHIP) first-time home buyers’ assistance program provides funding to assist eligible applicants with down payment, closing costs, and unit rehabilitation. It caters to qualified first-time homebuyers under the Department of Housing and Urban Development (HUD) definition and has a maximum purchase price of $382,194. In addition to providing the prerequisite documents, applicants must attend a mandatory orientation session.

  3. Own a Home Opportunity Program
  4. The Own a Home Opportunity Program provides eligible first-time homebuyers in Palm Beach with a 30-year fixed rate first mortgage or a down payment assistance in the form of a 30-year deferred, 0% second mortgage. Qualified buyers can avail of loan products from USDA, FHA, and VA or Freddie Mac. A maximum purchase price of $382,195 applies.

Requirements include:

  1. Buyers and spouses must be first-time homebuyers and permanently reside in the United States.
  2. The property must be a primary residence.
  3. Buyers must occupy the home purchased within 60 days of closing.
  4. Buyers must have a FICO mid score of 640 or higher.

Palm Beach loan limits

To compensate for the above-average housing costs, loan limits in Palm Beach County are higher than the national limits. FHA loans have a limit of $557,750 for single-family homes to a maximum of $1,072,600 for 4 living-unit properties. On the other hand, conventional loans have a limit of $726,200 for single-unit homes to $1,396,800 for 4 living-unit homes.

WORK WITH THE LEADING REALTOR IN PALM BEACH, FL

Suzanne Frisbie is a certified broker-associate specializing in luxury properties in Palm Beach, Florida since 1989. She has assisted countless high-profile buyers and sellers in navigating the luxury market through her intimate knowledge of Palm Beach market conditions and trends. Known for her analytical and data-driven approach, Suzanne has earned the distinction of being the #1 Realtor in Palm Beach.

If you’re a first-time buyer, the assistance of an expert is immeasurable. With Palm Beach luxury realty at a premium, having a seasoned Realtor by your side is crucial. Get in touch with us at Frisbie Real Estate to learn more about Palm Beach real estate and first-time homeownership. Call us at 561.373.0941 or send an email here.



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