Palm Beach Real Estate Never Goes Down.

I often hear people say “Palm Beach real estate never goes down.” which always triggers a gut reaction inside me that says “that can’t be true?”

I’m going to answer this question for myself….once and for all...with data.

First let’s look at the Price ($) / square foot over a 40 year time horizon.

At a high level when you look at Price ($) / Square Foot over a 40 year time span, YES that line is up and to the right. Over the last 40 year time horizon Palm Beach real estate has had a CAGR = 7.93%. For point of comparison the S&P 500 returned an average of 9.1% over the same time horizon.

But when you view this 40+ year chart you start to see that there have been periods where prices HAVE gone down and periods where prices have remained relatively flat. To be more precise there have been 9 down years in the last 40 years. Of those 9 down years 3 of them have been a decline of greater than 10%. The biggest correction we saw in the last 40 years was in 2009 during the financial crisis, prices dropped 18% off of the 2008 high.

There are several scenarios in the last 40+ years where if you bought and sold at the wrong part of an economic cycle you either lost money and/or your investment appreciated at a rate lower than inflation (you didn’t capture that 7.9% CAGR). There have ALSO been scenarios over the last 40+ years if you bought or sold at the right part of the economic cycle you maximized your CAGR. 

In Summary

• Palm Beach real estate DOES go down.

• If your intention is to buy and hold Palm Beach real estate for multiple decades your entry point matters less.

• If you are buying and/or selling with a shorter term horizon or uncertain about your holding duration, entry point matters and can dramatically impact your return.

• When considering other investment or store of value outside of the stock market Palm Beach continues to be a strong option in effort to diversify.

Data Source: All data presented in this post is from PAPA, Palm Beach County Property Appraiser public database and/or The Beaches MLS. The data used in this post represents data from our palm beach island, single family home data set.