Is the Bone Store a Leading Indicator for Possible Condo Sales in 2021? Ask a 5 Year Old!

Both my kids had a fine education right here in Jupiter Florida at Jerry Thomas Elementary. They had the luck of having Mrs. Schrader as their kindergarten teacher. Mrs. Schrader had a brilliant bit of teaching for 5 year olds. The Bone Store took place every Friday. Mrs. Schrader gave away “bones” for good grades or good deeds. She could also take away a bone if a child wasn’t very nice or jump into the school custodian’s golf cart and drive away (not something our kids would ever do!). Our son Sam would spend his fortune of bones each week and buy whatever small trinket he could. Our daughter Jade was the opposite. She saved all her bones for one grand prize at the end of the year. Fast forward today and Sam has become more of a saver as the lessons of savings at the Bone Store took hold.

However, there aren’t nearly enough Mrs. Schraders around teaching about the Bone Store nationwide. And the American consumer can be short-sighted, which is why I see the condo market as potentially very undervalued. Inventory in condos in Palm Beach County is vastly different than single family homes. Townhomes and Condos are lumped together. So, figure the numbers I’m about to give are skewed much more for condos than townhomes as townhomes are more similar to single family homes in terms of sales and inventory. There were 5892 condos/townhomes for sale in December 2019 versus 5140 for sale in 2020. That drop of 12.8% is significant but a far cry from the ridiculous 42.4% drop in the single-family home market.

I attribute this to the Bone Store effect. For starters, condos are a more seasonal purchase compared to single family home.

The virus steered many people to single family homes. More space, swimming pools, larger living square feet were all reasons. And the elevator. While buildings put in place good safety strategies (one family at a time and limiting clients) in the elevator, a single-family home for the last year was a safer alternative.

So why could condos see massive price appreciation???

Then end of the virus is in sight for those 65 and over (heavy condo purchasers). In just 90 days the reality is, we as a nation will have a completely different mindsight. The lesson of the Bone Store is that the consumer is more of a short-term thinker. With the virus ending, the buyer who has been avoiding people for good reason is going to want the socialization of the Roaring 20’s.

Condos are available. The inventory situation in single family homes is at a 2.3 months supply. There is 4.6% supply in townhomes and condos.

Limited new construction. What little new construction has sold out. That is a good leading indicator as there is very little new construction. Seaglass for example in Jupiter Island is over ½ sold out with prices $6m-$11m+. Another new building not on the water in Juno Beach sold out pre-construction with starting prices over $1m!

New York City office space. We are doing more in commercial properties and on Friday I talked with CoStar who runs the MLS. In New York City there were 4114 new leases from Jan 2019 – Jan 2020. However, from Jan 2020 – Jan 2021, that number went down to 1868! Palm Beach County numbers are down (1341 versus 1115) but not by very much. The population shuffle because of low taxes, lifestyle, and ability to work from anywhere is here. A younger demographic is also moving here as with Zoom they realize they don’t have to wait for retirement. The Northern Palm Beaches checks all the boxes.

Pent up demand. People haven’t been able to get here. Some of that is domestic but our friends from Canada and Europe who buy lots of condos will be a second wave of Buyers.

Palm Beach County Market Statistics

Jeff Lichtenstein is owner and broker of Echo Fine Properties, a luxury real estate brokerage selling real estate in Jupiter and homes in Palm Beach Gardens, Florida. He has 20 years of real estate experience, has closed over a 1,000 transactions, and manages over 50 agents in a non-traditional model of real estate that mimics a traditional business model. Some publications he has been quoted in.

Feel free to ask him a question directly at jeff@EchoFineProperties.com .

Posted in Open House Blog on January 23, 2021 at 9:40 am.

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Is the Bone Store a Leading Indicator for Possible Condo Sales in 2021? Ask a 5 Year Old!