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2019: 4th Quarter

Concerns over global economic weakness and geopolitical risks from Brexit and other sources had been growing, but the sharp tightening in financial conditions towards the end of 2018 generated a wave of alarm that swept into the first half of 2019. Recession fears surged and, although the Fed’s pivots provided spouts of relief, the uncertainty surrounding the U.S.-China Trade War, combined with the looming U.S. election year, kept fears alive through the majority of 2019. Consequently, the Palm Beach Real Estate market saw a less-than-robust first two quarters, with a 38% drop in transactions, equating to a 41% decline in Total Dollar Volume, when compared to the first two quarters of 2018. However, in spite of the uncertain political and economic climate at home and abroad, the equity markets anticipated a likelihood of growth, unemployment reached a 50-year low, and the longest economic expansion in American history forged on, unscathed. As if a signal was given by Adam Smith’s invisible hand itself, the Palm Beach Real Estate market began to sing a much livelier tune in the second half of the year. Q3 and Q4 witnessed a record breaking $668MM in combined Total Dollar Volume, eclipsing the second half of 2018 by 72%. Despite a stymied start to the year, the Palm Beach Real Estate market performed admirably, reaching over $1.2B in Total Dollar Volume for the third year in a row and setting the record for Highest Year-End Average Sale Price ($9.9MM) as well as Highest Year-End Median Sale Price ($4.9MM). Thus far, it appears fears of a downturn have been misplaced, (Northern Trust, December 2019 Outlook). And when we study the differences between the first and second halves of 2018 versus those of 2019, it begs the thought that while markets sounded the alarm in late 2018, perhaps the fear of recession caused more economic damage than the uncertainties from which it stemmed.

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