Could any longtime Palm Beach property owners have foreseen these prices?

There’s been a lot of talk in the Palm Beach real estate community of late about the remarkable short-term returns that some sellers have achieved on properties they have owned for 18 months or fewer.

With the rapid price escalation of properties – no one seems to be using the term “inflation” these days to describe it – many buyers who bought properties in late 2020 or last year have recently sold them for far more than they paid. It hasn’t been unusual to see returns of 30 percent and sometimes far more.

But another class of seller has also benefited – homeowners who bought their residences during the years leading up to the Great Recession that hit finally Palm Beach in late 2008. The global economic crisis came to a head with the Bernie Madoff scandal, the banking crises and the burst of the real-estate bubble.

The adage that Palm Beach is always the “last in and first out" of a recession held true back then, although it took a few years for the island's market to play catch up. But even during the recession and its aftermath, the vast majority of properties in Palm Beach either held, regained or increased their value, records show.

And then the arrival of the coronavirus pandemic in early 2020 sent real estate values in Palm Beach into overdrive, driven in no small part by Florida’s favorable tax picture for out-of-state buyers who discovered they could work from anywhere.

In any event, those pre-recession buyers are now selling their homes at prices that only a psychic might have foreseen two years ago.

‘Undervalued’ no more: Palm Beach real estate prices have soared

Take, for example, a four-bedroom house – built in 1951 – with 2,277 square feet of living space, inside and out, at 232 Mockingbird Trail on the North End.

The house just sold for its asking price for a recorded $9.45 million.

The sellers, real estate agent and general contractor Donald P. McKenna and his wife, Sara, bought the house for $2 million in May 2008. That’s a 372% increase in value, based solely on the prices recorded with the deeds.

Put another way, the McKennas, 14 years ago, paid $707 per square foot for the house. The buyer in the sale that closed April 19 paid $3,343 per square foot.

That buyer was Janice Lewis as trustee of The Beach House Trust of Toronto, according to the deed recorded April 29.

The buyer’s plans for the midblock house are unclear, but the house could be a tear-down, as so many North End homes are, either targeted by developers for speculative projects or by end-users as custom homes.

Don McKenna, who is affiliated with real estate agency Bob Jackson Inc., said in his sales listing that a buyer could enjoy the Palm Beach lifestyle “in this charming home” but also mentioned its land value. A buyer, he wrote, could “start planning to building your dream home” on the lot, which measures a little less than a third of acre on a street about midway between the Palm Beach Country Club and the northern tip of the island.

The buyer also has access to “the largest private oceanfront cabana in Palm Beach, exclusively for Mockingbird (Trail) residents.”

Other details mentioned in the listing include “light-filled rooms,” mature landscaping for privacy and an expansive pool patio, a portion of which is covered for lounging and dining.

The buyer couldn’t be reached, and her agent, Douglas Elliman Real Estate’s Ashley McIntosh, declined to comment.

Another big sale: Fashion designer Maier sells for $73M redone house once owned by Ivana Trump in Palm Beach

Don McKenna listed the property at $10.5 million Jan. 12 and had dropped the price to $9.75 million by the end of January, according to the multiple listing service. The house landed under contract Feb. 10.

The McKennas sold their home as co-trustees of a land trust named after the property’s address. The couple had the house homesteaded as their primary residence, according to the Palm Beach County tax rolls. That exemption will transfer to the new owner for the rest of the current tax year.

Don McKenna declined to comment about the sale. But he did say the couple was moving off the island but would remain “close by.”

*

Darrell Hofheinz is a USA TODAY Network of Florida journalist who writes about Palm Beach real estate in his weekly “Beyond the Hedges” column. He welcomes tips about real estate news on the island. Email dhofheinz@pbdailynews.com, call (561) 820-3831 or tweet @PBDN_Hofheinz. Help support our journalism. Subscribe today.

This article originally appeared on Palm Beach Daily News: Palm Beach properties: How could owners have foreseen such prices?