October is Luxury Month on Inman. Inman Handbooks offer deep dives on luxury marketing and agent branding, luxury staging, referrals, and more. We’re thinking about what luxury means now, examining how the pandemic is reshaping the needs of luxury buyers, and talking to top luxury agents, all month long.
Palm Beach, Florida, has often been seen as a haven for snowbirds; a place to shelter during cold months to escape harsh winters elsewhere.
However, Paulette and Dana Koch of The Koch Team at The Corcoran Group told Inman that the coronavirus pandemic has fundamentally changed the buyer composition in Palm Beach. With the ability to work from home now more prevalent across most industries, younger buyers have been attracted to Palm Beach and others who once saw the city as a vacation town are reconsidering it for a more permanent living arrangement.
The mother-and-son duo thinks the shift will be long-lasting, but if buyers want a slice of Palm Beach, they’ll have to act quickly to get a piece of its limited inventory. Here’s more of what they had to tell Inman about the area’s sea change.
Inman News: How are things looking right now in your market?
Paulette Koch: It’s a ride. I’ve been doing this a very, very long time, and I’ve been in all sorts of markets. I’ve never seen a market like this … but the demand that’s been created, we’re calling it the “COVID bump,” has been extraordinary. From the moment we all knew about COVID and everyone went on lockdown in the middle of March, we have not stopped. We’ve been busy morning, noon and night, seven days a week. It’s been unrelenting, but very satisfying because the results we’ve produced have been extraordinary and the market is truly on fire and continues to be.
We’ve always been very focused, but this focus is to another level and we have more demand than supply, in general. In single-family homes, condos, rentals go without saying … we call it the COVID bump because we know that buyers are reconsidering, they’re re-prioritizing where they want to be and how they want to get there, and really just jumping in. It’s been very eye-opening for most people. In a way, it’s a good thing, I think it’s brought people together in ways that you wouldn’t expect.
Dana Koch: I like to call it controlled chaos. Ever since we were shut down in mid-March … We weren’t sure what was going to happen with our market. But we had a lot of rental requests then, it was the middle of spring break, people ended up staying down here for extended periods of time and we were in the midst of 13 deals that we were trying to salvage and hold our clients hand together, and we were very fortunate from that perspective and the results we were able to achieve from that. And come end of April, it was like all hell broke loose. And it was complete pandemonium from late April when … our governor basically opened up the state … but it was extreme controlled chaos from late April until about July 4, and then since July 4 we went from extremely busy to just very busy.
Paulette: What’s interesting, when I think seven days a week, 24/7, we’re always like that — but everybody was home … Truthfully, on Saturday nights there were times I was on the phone with a client, an architect, a contractor, all at once, and having really productive conversations, and bringing things to fruition above and beyond. It was like, every week we were like this. People were home, they were focused as well as we were on accomplishing what they may or may not want to do. So we made use of every single moment …
You mentioned experiencing low inventory — a recent report by realtor.com indicated that some sellers might be gaining more confidence to go back onto the market with home prices being so high right now. Have you experienced that with your sellers?
Paulette: In our marketplace, our sellers are concerned that they don’t have a place to go to. They usually like to identify before they sell. And so in many cases, they’re putting more aggressive prices out there to meet the market demand. But, this inventory crunch has really created an issue because it’s normally like a domino effect: one person sells, they’re buying something else, you can go down the line … Due to the low inventory, sellers are finding themselves in a quandary. So, they would love to get on the market because they know they can maximize their asset at this point in time, but where are they going? And this inventory crunch has impacted our sellers to a large extent.
Dana: And we’ve had sellers who have turned down wonderful offers because they don’t have anywhere to go. So, ultimately, as we start to get busier, our season is about to get underway as more and more people migrate down here during the colder months up North, it’s going to create, in our opinion, a larger problem. Because, like Paulette said, people want to identify where they’re going next. They don’t want to be left holding the bag without somewhere to go. And as we said from the top, demand far outstrips our supply and there’s only so much of this Palm Beach paradise that people want a piece of. So, people are forgoing their residences up North, they’re migrating and rushing down here because they’ve started to prioritize their mental and physical health above anything else. It’s become that much more important to them and they’re realizing, ‘What am I doing up North? Why don’t I enjoy my life and have wonderful quality of life where they will take advantage of being outdoors?’ And instead of holding onto every last penny, they’re looking to spend money, so it’s been very positive from that perspective.
On the one hand, I could understand people being hesitant to make a big move from the Northeast down to Florida right now, but it sounds like from what you’ve seen, people are still looking to do that.
Dana: I would tell you a majority of the buyers are coming from the Northeast, but people who have either been well-established here who have looked to upgrade their situation because they were quarantined here and people extended their stays. They normally go home end of March, end of April, end of May. People stayed here basically through July 4 before they went to their houses up North … And then, we had the people who had been contemplating a move for long periods of time, who were kind of on the fence, who are no longer on the fence anymore — they jumped off that fence. Then you have the other buyer pool, who just, the COVID effect, the light bulb went off they said, I don’t want to deal with this anymore. I don’t want to be in an urban area. I don’t want to be in such close proximity, close quarters to my neighbors … People didn’t dip their toe in the water … they dove headfirst into the shallow end because they were ready to make a commitment, they were ready to make a change. And they felt cooped up in their apartments or wherever they were …
So, very often Palm Beach was, in the past, looked at as a discretionary purchase. What’s evolved and changed over the past six months, it’s now becoming a primary residence for people. And for young families. What’s changed is that obviously people, for tax reasons, are making the move. They’re setting up their offices, they’re looking for commercial space, they’re moving their companies down here. We’re seeing more and more of that every week.
Paulette: The average age in Palm Beach has been lowered dramatically because people are seeing that they can work remotely. They have to travel a couple of times a month, or whatever it might be, back up to their other offices if they’re not moving their entire office down immediately, [but] they can do so, it’s easy to get to. But, we’re seeing a lot of people in their 40s and 50s taking a giant leap to Palm Beach.
Dana: The tax consequences that people are dealing with in these high-tax states like New York and New Jersey, Connecticut and Massachusetts — people are tired of it. So, as a result, that’s why they’re trying to make a place like Palm Beach their primary residence.
And what sorts of things are your buyers looking for in a home these days?
Dana: I would tell you they’re looking for self-containing compounds, they’re looking for just more space. They want tennis courts, they’re asking for larger pool areas. They just want larger estates that are self-contained, where if, in the case of another pandemic or another health situation where they’re isolated, they have a level of space that they feel comfortable with … I have a feeling this season we’re going to see more and more home entertaining, where people will have people over outdoors in their yards. In addition to that, people are requesting offices — not just one office, but two offices, like a his and hers situation. Home offices are very important because, like Paulette said, people are realizing they can work remotely and they can work from home. For the longest time, South Florida was viewed as a playground. But when some of the more established, more respected business people in the financial world moved down here full-time, [they] realized that this isn’t just a playground. They can come here to work, but when their day is over they can go outside, they can go for a run, they can walk, they can get on their boat …
Paulette: They can go play nine holes of golf.
Dana: Right. So they’re realizing that you have all these things at your disposal, and it doesn’t have to be concentrated into a short three-month summer period. It’s funny, every time Labor Day approaches, you hear all the Northeasterners getting depressed about ‘Oh my God, summer is over.’ That’s the time of year that we start to get really excited because we know our weather is about to turn where it becomes a little cooler, and we’re just getting started …
I’d like to shift a bit here, and just point out that you two are a mother-son real estate team. How does that impact your business? What kind of dynamic does your team have, and what kinds of strengths does it bring to your business? Do you ever wish you had freedom from each other?
Paulette: Haha, I don’t think so.
Dana: We’ve been working together for 17 years and … I think over the last 17 years, we’ve had maybe two blow-out arguments.
Paulette: I wouldn’t really call them blow-out arguments …
Dana: Whatever, disagreements. Let’s leave it at that. So, obviously, Paulette has a lot more patience that I do. But, the pros far outweigh the cons. We complement each other really well from a strengths and weaknesses perspective. I have a financial background … Paulette comes from the creative world and she’s got her masters in communications. We’re always exchanging ideas and running scenarios back and forth with each other — there’s a really wonderful synergy between us. And most importantly, we can trust each other …
I would say the only downside to working together as a family is we really can’t go on vacation at the same time or go on vacation as a family together because there’s always something to be done, and we feel like we want to service our clients accordingly …
Paulette: We always tell our clients that we have a very serious business and lots of responsibilities to our clientele, and consequently, one of us is always here. Not that the other one of us isn’t at the other end of the phone!
Dana: You were asking about as far as what we attribute to our success in the industry, especially as a team. We’re both very good listeners, we have great people skills, and that’s part of the battle here … We’ve been in Palm Beach since 1978, so we have vast market knowledge and we consider ourselves insiders. We know this market inside and out, and it’s not just the real estate market, it’s the culture that this area has to offer, it’s the restaurant scene, it’s the boutiques. People look to us as a resource … But ultimately, what we are, we’re solution-finders …