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Palm Beach may be ‘hottest real estate market in the world,’ brokers say

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Mansions seen along the coast of Palm Beach, Fla.

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Home sales in Palm Beach, the exclusive island retreat of the president and countless billionaires, tripled in the third quarter as the wealthy fled the cities and higher-tax states of the Northeast, according to a new report.

“It may be the hottest real estate market in the world right now,” said Jay Phillip Parker, CEO of Douglas Elliman’s Florida brokerage. “You just can’t find homes to buy there now.”

The average home price in Palm Beach was more than $7 million during the quarter, according to a report from Douglas Elliman and Miller Samuel. The strength shows little signs of slowing as signed contracts jumped 62% in September, the report said.

Among the big recent sales in Palm Beach was the $28 million sale of a “teardown” mansion owned by telecom tycoon Donald Burns. Billionaire Jude Reyes sold his oceanfront mansion for $19 million and pulmonologist Norman Traverse sold his seven-bedroom waterfront estate for $51 million.

The inventory of homes for sale on the island fell by 79% in the third quarter compared with a year ago, according to the report. There is now less than a five-month supply.

“The demand for luxury, the perceived security, safety and pristine environment is very attractive to high net worth clients,” Parker said.

The strength in Palm Beach reflects broader demand for homes — especially at the high end — throughout southern Florida, as wealthy residents leave behind the urban density, high taxes and colder weather of the Northeast and Midwest. Prices in Miami, Ft. Lauderdale, Boca Raton and even parts of Tampa increased by a double-digit pace in the quarter.

In Miami, luxury home prices surged 42% in the quarter, with the average sale price hitting $2.8 million. Average home prices in Ft. Lauderdale increased 16%, and they were up 11% in Boca Raton.

Brokers say that while some of the demand is tied to the coronavirus pandemic, as families fled big cities for more tropical homes with yards close to the beach, the growth is also tied to longer term, structural changes. The wealthy in the Northeast are growing older and looking to retire. More are heading to Florida. The pandemic has also led to a wave of younger families moving to Florida — at first to escape New York but now to stay and put their kids in local schools.

“At a certain point, their friends are all in Florida, they’re hearing about how much they like the experience, so they want to move too,” Parker said. “It creates a snowball effect.”

The flight to low tax states is also a driver. New York, New Jersey, Connecticut and other states are facing large budget holes from the pandemic, and some expect taxes will rise for high earners. That, coupled with a potential “blue wave,” where the Democrats win the White House and both houses of Congress in the upcoming elections, have some worried about the potential combination of higher federal and state taxes. In this scenario, Florida, which doesn’t have an income tax, becomes more attractive.

“Whoever wins in November, you’re going to have to fix the budget issues on a national and state level,” Parker said. “And Florida will still have no income tax. So that’s always a big plus.


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SpaceX Starlink service priced at $99 a month, public beta test begins

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A Starlink user terminal attached to the roof of a building.

SpaceX

SpaceX is expanding the beta test of its Starlink satellite internet service, reaching out via email on Monday to people who expressed interest in signing up for the service.

Known as the “Better Than Nothing Beta” test, according to multiple screenshots of the email seen by CNBC, initial Starlink service is priced at $99 a month – plus a $499 upfront cost to order the Starlink Kit. That kit includes a user terminal to connect to the satellites, a mounting tripod and a wifi router. There is also now a Starlink app listed by SpaceX on the Google Play and Apple iOS app stores.

“As you can tell from the title, we are trying to lower your initial expectations,” the emails said, signed Starlink Team. “Expect to see data speeds vary from 50Mb/s to 150Mb/s and latency from 20ms to 40ms over the next several months as we enhance the Starlink system. There will also be brief periods of no connectivity at all.”

The emails, sent to an unspecified number of users, marks the launch of SpaceX’s public beta test of the emerging internet service. For the last few months SpaceX has conducted a limited private beta test with employees – which the company has said showed strong results in both latency and download speeds, key measures for an internet service provider.

SpaceX did not immediately respond to CNBC’s requests for comment.

Those who received the emails would have filled out a form on the Starlink website, which asked for potential subscribers’ contact information and location. Elon Musk’s company posted that form in June and, less than two months later, SpaceX said that “nearly 700,000 individuals” across the United States had indicated interest in the service.

Starlink is SpaceX’s plan to build an interconnected internet network with thousands of satellites, designed to deliver high-speed internet to anywhere on the planet. The network is an ambitious endeavor, which SpaceX has said will cost about $10 billion or more to build. But the company’s leadership estimate that Starlink could bring in as much as $30 billion a year, or more than 10 times the annual revenue of its rocket business.

A Falcon rocket launches a Starlink mission in October 2020.

SpaceX

To date, SpaceX has launched nearly 900 Starlink satellites – a fraction of the total needed for global coverage but enough to begin providing service in some areas, including in the northwest United States. The company has begun to work with a handful of organizations in rural regions which Starlink satellites in orbit currently cover, such as Washington state.

“Under Starlink’s Better Than Nothing Beta program, initial service is targeted for the U.S. and Canada in 2020, rapidly expanding to near global coverage of the populated world by 2021,” SpaceX said in the description of its Starlink mobile app.

SpaceX earlier this month announced a partnership with Microsoft, to connect the tech giant’s Azure cloud computing network to the Starlink network. SpaceX and Microsoft in recent months have been testing the software needed to connect Starlink and Azure. The partnership is especially key to Microsoft’s new mobile datacenters, which the company says are designed “for customers who need cloud computing capabilities in hybrid or challenging environments, including remote areas.”

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Eli Lilly CEO Dave Ricks still confident in Covid antibody treatment

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Eli Lilly Chairman and CEO Dave Ricks told CNBC on Tuesday that he believes the company’s coronavirus antibody treatment will still be beneficial to Covid-19 patients, despite the recent end to a study of the drug in a hospital setting.

The government-run clinical trial that was stopped looked at whether the antibody treatment helped people who are hospitalized with coronavirus. In a statement Monday, Eli Lilly said that data so far from the study indicated the drug was “unlikely” to help patients recover from the advanced stage of the disease.

“These are patients who had symptoms many, many days ago. They advanced in the hospital. Many were on supplemental oxygen,” Ricks said on “Squawk Box.” “It’s disappointing, of course. We would have liked to have shown a benefit in the hospital. It doesn’t appear that that benefit is there, so this chapter of that study will close.”

Other studies involving Eli Lilly’s antibody treatment are continuing to move forward, including another one sponsored by the National Institutes of Health that involves recently diagnosed Covid-19 patients who have mild to moderate cases of the disease. Lilly also is running a trial to see if the antibody treatment is effective on a preventative basis for residents and staff at nursing homes.

Earlier this month, Eli Lilly submitted an emergency use application to regulators at the U.S. Food and Drug Administration for its single antibody treatment, specifically for it to be used on mild-to-moderate Covid-19 patients who are at higher risk of death, such as those above age 65. The pharmaceutical company also said it hopes to submit an emergency use application in November for its combination treatment that uses two antibodies.

The company has so far seen “strong results” from the antibody studies that involve patients who are earlier in their Covid-19 diagnoses, Ricks said. “Catching the disease early, where you can reduce the viral load with an antibody, appears to be making a significant difference.”

Eli Lilly is among a handful of other companies developing coronavirus antibody drugs, which experts have viewed as a promising potential Covid-19 treatment. The goal of this class of drugs is to boost the immune system’s defenses and prevent the virus from infecting human cells.

President Donald Trump received an antibody cocktail from Regeneron Pharmaceuticals after he was diagnosed with Covid-19 in early October. Regeneron also has filed for emergency use authorization with the FDA.

Ricks said that Covid-19 has proved to be a “two-phase disease,” which can help explain why the antibody treatment doesn’t appear to provide a benefit to hospitalized patients.

“You have the initial phase, which is characterized by significant viral replication and the effects of that on your body causing symptoms.,” he said. “Then the second phase where, unfortunately, people develop their own immune storm, which causes organs to shut down and you end up in the hospital.”

By the time a patient ends up in the hospital, Ricks said, there may “not be enough viral load left to reduce” with an antibody treatment. “Instead, we might want to use anti-inflammatory drugs like steroids or our own Olumiant, which has proven [effective] in this setting,” he said. Olumiant is used to treat rheumatoid arthritis, which is a chronic inflammatory disorder.

Shares of Eli Lilly fell almost 5% early Tuesday as investors digested both the end of the hospital study and the company’s quarterly results. Adjusted per-share earnings of $1.54 missed Wall Street expectations by 17 cents, while revenue of $5.74 billion also fell short of estimates.

Eli Lilly saw weakness in its diabetes drug Trulicity, driven by higher-than-expected rebate filings and more sales into Medicaid, according to Ricks. He also noted the company’s $125 million in spending on accelerating coronavirus treatments also weighed on earnings. “That was never in our guidance,” he said.


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5 things to know before the stock market opens October 27, 2020

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