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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.
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Vale SA: “Too late. That was a good time on one time, but not now.”
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CNBC’s Jim Cramer on Wednesday offered his thoughts on whether companies that recently reported their quarterly earnings are investable, leaning on his newly introduced grading system.
“There are tons of stocks that can rally now that they’ve come down hard from their highs, but we need to figure out what can make those rallies possible,” the “Mad Money” host said.
CNBC’s Jim Cramer on Wednesday offered his thoughts on whether companies that recently reported their quarterly earnings are investable, leaning on his newly introduced grading system.
“The chief reason this market has become so difficult is that we finally have not-so-hot earnings, yet Wall Street’s not adopting its usual posture of buying stocks that issue NABAF results — that’s ‘not as bad as feared,’ ” the “Mad Money” host said.
“Six months ago, you could get away with NABAF all the time. Forgiveness reigned within two or three days. Not anymore,” he added.
To keep up with this new market, Cramer created a new method of grading the stock of companies that recently reported their quarterly earnings.
“There are tons of stocks that can rally now that they’ve come down hard from their highs, but we need to figure out what can make those rallies possible,” he said.
Here is Cramer’s three-tiered system of grading stocks:
Exclamation point (!): This symbol represents “good news, meaning the stock’s entitled to go up despite the broader sell-off,” Cramer said.
Question mark (?): This means the stock is “going down pretty much no matter what,” he said.
Asterisk (*): “The earnings get an asterisk if there’s something away from the company that went wrong, something you can easily explain away. … So maybe the stock is worth buying here because it could get forgiven later,” Cramer said.
“Exclamation point? Yes. Question mark? No. Asterisk, maybe, just maybe, and that’s where the money can be made after the earnings, because they’re the decent ones that haven’t run yet,” Cramer said.
Here are the stocks he chose to highlight and his grade for each of them:
Visa: !
Microsoft: !
Meta: !
Boeing: ?
Texas Instruments: *
Alphabet: *
Disclosure: Cramer’s Charitable Trust owns shares of Alphabet, Boeing, Meta and Microsoft.
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Ford posted first-quarter results Wednesday that were in line with Wall Street’s expectations, though its net profit was dragged down by a stake in electric vehicle maker Rivian.
Rivian stock shed about 52% of its market cap during the first quarter, bringing the value of Ford’s stake down from $10.6 billion to $5.1 billion.
Despite increased costs and supply chain problems, Ford reaffirmed its pretax adjusted earnings forecast of between $11.5 billion and $12.5 billion for the year.
DETROIT – Ford Motor posted first-quarter results Wednesday that were in line with Wall Street’s expectations, though its net profit was dragged down by a stake in electric vehicle maker Rivian Automotive and reduced vehicle production.
Ford reported an unadjusted net loss of $3.1 billion, including a loss of $5.4 billion on the company’s 12% stake in Rivian. That’s compared with a net profit of $3.3 billion during the same period a year ago.
Rivian stock shed about 52% of its market cap during the first quarter, bringing the value of Ford’s stake down from $10.6 billion to $5.1 billion.
Ford executives declined to comment during the company’s earnings call on when, or if, the company plans to exit Rivian after a lock-up period for pre-IPO investors ends on May 8. Rivian’s stock has fallen roughly 60% since its IPO on Nov. 9.
“We’re not going to comment on Rivian,” Chief Financial Officer John Lawler said Wednesday during the call.
Despite increased costs and supply chain problems during the quarter, Ford reaffirmed its pretax adjusted earnings forecast of between $11.5 billion and $12.5 billion for the year.
Shares of Ford were up nearly 2% during after-hours trading to about $15.10 a share. The stock closed at $14.85 a share, up roughly 1%.
Here’s how Ford did compared with what Wall Street expected:
Adjusted EPS: 38 cents vs. 37 cents, according to Refinitiv consensus estimates
Automotive revenue: $32.1 billion vs. $31.13 billion, according to Refinitiv consensus estimates
Lawler described Ford’s first-quarter results as “mixed,” citing supply chain problems and an adjusted pretax profit of $2.3 billion that, even excluding the Rivian hit, came in lower than the $3.9 billion it reported a year ago.
Strong vehicle pricing and expectations for production to increase throughout the year allowed the company to maintain its guidance, Lawler said. He reconfirmed that the automaker expects wholesale volumes, which are closely correlated with production, to increase by 10% to 15% compared to 2021.
Ford F-150 Lightning trucks manufactured at the Rouge Electric Vehicle Center in Dearborn Michigan.
Courtesy: Ford Motor Co.
Ford’s wholesale volumes were down 9% during the first quarter from a year earlier to 966,000 units.
For the quarter, Ford earned $1.6 billion from its North American operations, a significant decline from the $2.9 billion it made in that market a year ago. Its European operations reported a $207 million pretax profit compared with $341 million a year earlier. Losses from its operations in China widened from $15 million a year ago to $53 million.
Ford’s stock has been under pressure this year, down about 30% this year. It was the top growth stock among automakers in 2021.
The company’s first-quarter results come a day after its crosstown rival, General Motors, easily beat Wall Street’s earnings expectations. GM also surprised analysts by maintaining its adjusted pretax profit guidance of $13 billion to $15 billion for 2022, despite the litany of supply chain issues and increased costs.
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Boeing has lost a total of $1.1 billion so far on costs associated with a deal to modify two 747 jumbo jets to serve as Air Force One.
CEO Dave Calhoun said Boeing “probably shouldn’t have taken” risks from the deal for the planes, which was negotiated with then-President Donald Trump in 2018.
Boeing reported a net loss of $1.2 billion for the first quarter of 2022, with a charge of $660 million associated with delays and higher costs for the Air Force One program.
Boeing’s deal for Air Force One, which was cut by then-CEO Dennis Muilenburg requires the company, not the federal government, to eat the costs of any overruns on the contract.
Boeing disclosed Wednesday that it has lost a whopping $1.1 billion in costs related to its deal with the Trump administration to modify two 747 jumbo jets to serve as Air Force One — and CEO Dave Calhoun admitted the aviation giant “probably” should not have cut the deal in the first place.
Even more losses on the Air Force One contract could be coming in future quarters, Boeing warned in a regulatory filing.
Air Force One is the official designation for any plane carrying the president of the United States.
“Air Force One I’m just going to call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn’t have taken,” Calhoun said on a call with analysts.
“But we are where we are, and we’re going to deliver great airplanes,” Calhoun said, shortly after Boeing reported a loss for the first quarter of 2022.
“And we’re going to recognize the costs associated with it.”
Boeing on Wednesday disclosed a net loss of $1.2 billion for the first quarter, with a charge of $660 million associated with delays and higher costs for the Air Force One program.
U.S. President Donald Trump arrives from a day trip to Georgia aboard Air Force One at Joint Base Andrews, Maryland, U.S. July 15, 2020.
Jonathan Ernst | Reuters
The company said the first-quarter charge on the Air Force One program brings the total loss tied to it to more than $1.1 billion.
“Risk remains that we may be required to record additional losses in future periods,” Boeing said in a securities filing.
Boeing’s deal for the Air Force One jets was cut by then-CEO Dennis Muilenburg and then-President Donald Trump in February 2018.
It requires Boeing, not the federal government, to eat any overruns in the cost of modifying the two Boeing 747 jets.
Under that fixed-price contract, Boeing is being paid about $4 billion for the work. The first of the two planes was set to be delivered in 2024, but an Air Force budget proposal from earlier this month doesn’t expect that until 2026.
CNBC Politics
Read more of CNBC’s politics coverage:
Trump in 2018 bragged that “Boeing gave us a good deal. And we were able to take that.”
Four years ago, Boeing spoke favorably about the move.
“Boeing is proud to build the next generation of Air Force One, providing American Presidents with a flying White House at outstanding value to taxpayers,” it tweeted in February 2018. “President Trump negotiated a good deal on behalf of the American people.”
Trump also told CBS News that the planes would get rid of Air Force One’s traditional baby blue color scheme in favor of “red, white and blue, which I think is appropriate.”
“Air Force One is going to be incredible,” Trump said at the time. “It’s going to be top of the line, the top of the world.”
A month after being elected president in November 2016, Trump had griped on Twitter about the “out of control” costs of Boeing’s then deal to build a new Air Force One.
“Cancel order!” Trump tweeted at the time.
He later boasted that his negotiations with Muilenburg saved $1.5 billion for taxpayers.
Boeing fired Muilenburg as CEO in December 2019 for how he handled two crashes of the company’s 737 Max jets that killed 346 people.
He was denied a severance package, but received $60 million in pension benefits and company stock, Boeing said a month after he was ousted.
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Microsoft Corporation headquarters at Issy-les-Moulineaux, near Paris, France, April 18, 2016.
Charles Platiau | Reuters
Check out the companies making headlines in midday trading.
Enphase Energy — Shares jumped 7.7% after Enphase topped earnings expectations on the top and bottom lines. The energy company reported record revenues, and said it’s setting its sights on Europe as a growth area during the ongoing war in Ukraine.
Visa — Shares of the credit card company jumped 6.5% following a stronger-than-expected quarterly report. Visa reported adjusted earnings per share of $1.79 on revenues of $7.19 billion. Analysts expected $1.65 adjusted earnings per share and $6.83 billion in revenue, according to Refinitiv. The company cheered a continued recovery in travel spending and said there’s no evident impact on its global payments volumes from inflation and supply chain disruptions.
Mastercard — Shares for Mastercard jumped 5.1% on the back of competitor Visa’s strong earnings report. The payments company is expected to disclose its own quarterly earnings on Thursday.
Microsoft — Microsoft’s stock price surged 4.8% after the company reported an earnings beat in its most recent quarter. The company’s revenue guidance for each of Microsoft’s three business segments also exceeded the expectations of analysts surveyed by FactSet’s StreetAccount.
CME Group — Shares popped 5.9% after CME Group surpassed expectations on the top and bottom lines in its most recent quarter. The company also reaffirmed guidance for the 2022 fiscal year.
F5 Inc — The app security company’s share price tumbled 12.9% despite the firm reporting earnings that topped analysts’ expectations. The company cut revenue guidance for its 2022 fiscal year.
Boeing — Shares of the aircraft maker lost 7.% after the company reported first-quarter sales and revenue that missed analysts’ estimates. Boeing also said it’s pausing production of its 777X plane, and that deliveries may not start until 2025.
Capital One Financial — Capital One’s stock price dropped 6% even after the company exceeded Wall Street’s expectations on the top and bottom lines. The company reported a pre-tax impact of $192 million from gains on partnership card portfolios, as well as weaker than expected net interest margins.
Robinhood — Shares of the brokerage firm dropped 4.9% a day after the company announced that it was reducing the number of its full-time employees by about 9%. The announcement comes shortly ahead of Robinhood’s first-quarter earnings report, which is due out on Thursday afternoon.
Juniper Networks — Shares declined 5.1% after Juniper Networks reported earnings that were a little lower than estimates. The maker of markets networking products, such as routers and switches, cited ongoing supply chain challenges.
Edwards Lifesciences — Edwards Lifesciences’ stock price tumbled 5.6%. The medical equipment maker beat revenue expectations for its most recent quarter, but the company issued weak revenue guidance.
— CNBC’s Yun Li, Tanaya Macheel and Jesse Pound contributed reporting.
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For this jackpot, the cash option — which most winners choose instead of an annuity — is $271.9 million.
Experts recommend that big lottery winners take steps right away to protect their windfall.
Here are some tips if you manage to beat the odds and land the top prize.
Justin Sullivan | Getty Images
If you play Powerball, there’s a good chance you’ve daydreamed about how you would spend the money if you hit the jackpot.
With the lottery game’s top prize at an advertised $454 million for Wednesday night’s drawing, you may also want to give thought to what you’d actually do if you were to match all six numbers drawn. Experts recommend big lottery winners take steps right away to protect their windfall.
For starters, remember that a lottery ticket is considered a “bearer instrument,” meaning whoever holds it is considered the owner. This means you need to protect it.
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You can take a picture of yourself with the winning ticket, and then put it somewhere safe — such as in a safety deposit box — until it’s time to claim your windfall.
Additionally, you may want to sign the back of the ticket. Just be aware that in some states that don’t allow you to claim your winnings anonymously, doing so could interfere with your ability to take ownership of the prize via a trust or other legal entity that would shield your identity from the public.
It’s also worth sharing the life-changing news with as few people as possible. If you won’t be able to remain anonymous, you need to consider how to avoid becoming a target for scammers as well as long-lost family and friends.
You also should turn to experienced professionals to help guide you through the claiming process and the many facets of protecting your windfall. Your team should include an attorney, financial advisor, tax advisor and insurance professional.
This group can help you determine whether to take your winnings as a lump sum or as 30 payments spread over 29 years. Most lottery winners choose the immediate, reduced cash amount. For this $454 million jackpot, the cash option is $271.9 million.
Either way, the money would face a 24% federal tax withholding before it reaches you. For this jackpot, taking the cash would mean about $65.3 million getting shaved off the top. However, additional federal taxes would likely be due at tax time, given the top rate of 37%. There also may be state taxes withheld or due.
It’s also worth giving some thought to how your life is going to change — and not just from a financial perspective. Some experts suggest seeking guidance from a financial therapist or mental health professional to help you deal with the stress that comes with winning.
Meanwhile, the Mega Millions jackpot is $43 million ($25.9 million cash) for Friday night’s drawing.
The chance of a single ticket hitting Powerball’s jackpot is 1 in 292 million. For Mega Millions’ top prize, it’s 1 in 302 million.
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Executive Edge
Just under half (49%) of investors with $1 million or more in a stock market brokerage account think the market will end the second quarter with a gain, according to a quarterly survey from Morgan Stanley’s E-Trade.
The sectors where the wealthy are willing to put their money to work remain focused on inflation, including energy, commodities, and real estate.
Millionaires have come to terms with market volatility and are now more likely to say valuations have deflated from bubble levels, but the number of those moving more assets to cash rather than back into the market has ticked higher.
It’s been a tough year to be an investor, and the wealthy are no exception. Losses in both stock and bond markets this year have made portfolio conversations between Wall Street investment advisors and clients more challenging. The most conservative portfolios have done as poorly if not worse than the riskiest portfolios, with bonds offering little in the way of protection. But if there’s a moment when the majority of wealthy, experienced investors call an all-clear on recent equities’ volatility and buy-the-dip in stocks, this isn’t looking like it.
Less than half (49%) of investors with $1 million or more in a brokerage account they self-direct think the S&P 500 will end the second quarter with a gain, according to the results of an E-Trade quarterly survey of millionaire investors conducted in April and shared exclusively with CNBC. Bullishness among this demographic dropped from 64% to 52% quarter over quarter.
“We’re coming off a really volatile quarter and as expected, bullishness took a dip in response to what was going on in the market,” said Mike Loewengart, managing director of investment strategy for Morgan Stanley’s E-Trade Capital Management.
The data points on the S&P 500 and overall sentiment are split almost right down the middle, and so they can be read as either glass half-fall or half-empty. Twenty-eight percent of investors surveyed by E-Trade expect a modest rise in stocks this quarter, and 18% think the market will end the quarter no worse than flat. But a closer look at the survey results shows that many investors remain reluctant to make a bet the bottom is in for stocks, a view this week’s selling has reinforced.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, April 6, 2022.
Brendan McDermid | Reuters
“Investors have come to grips with the new reality we collectively face as investors,” Loewengart said.
Because of what’s happening in stocks and bonds there will be opportunities to deploy capital, he says, and the survey finds there are pockets of investors seeking new opportunities, but primarily with a posture that remains defensive and geared to inflation as the dominant force in investment decisions.
“The current environment is challenging for all investors. Millionaires are a bit more seasoned and they recognize that volatility is part of the process with equities and we have to accept it. But millionaires can see through the near-term pressure and are waiting to pick their spots,” he said.
In fact, volatility is now so expected that the percentage of millionaires who said it was the biggest risk to their portfolio dropped quarter-over-quarter from 48% to 36%.
The survey was conducted during the first two weeks of April among 130 individual investors with at least $1 million in brokerage accounts, before the most recent days of deep dives in stocks, including Tuesday’s heavy selling. But it was conducted coming off what had been a brutal quarter for investors.
While the stock market was attempting a comeback on Wednesday, the first quarter declines and recent heavy days of selling have the Dow Jones Industrial Average and S&P 500 Index both more than 10% off their 52-week highs and the Nasdaq Composite off by over 20%.
The Fed and the risk of recession
A good place to begin to parse how wealthier, more experienced investors are feeling right now is with the Fed, raising interest rates to combat inflation but at the risk of pushing the economy closer to recession as a result.
More experienced investors do generally understand that the economy and the market are not the same thing, and the Fed’s hawkish shift into a rate hiking cycle is a direct byproduct of just how strong the economy is, with the Fed raising rates because the economy is overheated from a price perspective, and convinced the economy is healthy enough to handle it.
But there is a disconnect between the 38% of these wealthy investors who expect a recession and the 68% who say the economy is healthy enough for the Fed to enact rate hikes. Another finding from these investors which shows how difficult it is to assess the Fed right now is that millionaires are forecasting only two to three Fed rate hikes. This could mean one of two things: either these investors are thinking in terms of 50 basis point or 75 basis point hikes, and two to three could represent a full cycle if the Fed gets more aggressive earlier in the rate hike cycle, or they could be expecting that the Fed will push the economy into a recession after only a few rate hikes.
“That’s the key question right now for all investors, big or small, or individual or institution: will the Fed have to resort to such significant measures that the only way to tame inflation is to put the economy into a recession?” Loewengart said. “We don’t know the answer. We hear a relatively rosy sentiment from the Fed, but history doesn’t support the likelihood of a soft landing. But it is also a unique time. We are in somewhat uncharted territory right now,” he added.
While inflation, not market volatility, is the top portfolio risk cited by these investors, the 38% who cited risk of recession was a notable jump from 26% last quarter.
Raising cash at a time of inflation
As stocks have sold off, some froth has come off the top of the market, and that has led to a decrease among millionaires who think the market is in or near a bubble, from 71% last quarter to 57% in April. But this isn’t leading them to increase risk appetite.
There was a decline among investors saying they will make no changes to their portfolios, from 44% to 36%, and that is a “significant downtick,” according to Loewengart, for a group of seasoned investors who understand that markets don’t always go up. “Investors shouldn’t make rash decisions under duress in the current market, but picking their spots and making rational decisions doesn’t mean not doing anything,” he said.
At the same time, more investors indicated they were adding to cash, not in large numbers, but a notable increase given the decline in stock prices that already had been experienced, rather than to the most beat-up sectors like technology. The percentage of millionaires who said they were adding to cash as a result of rising rates went from 24% to 31%, while there was also a 7% jump in millionaires who said they were investing in treasury inflation protected securities, from 25% to 32%.
Cash is a conundrum at a time of inflation. It is not going to help in an inflationary environment, but the concerns about ongoing market volatility explain the uptick in cash positions among investors. More volatility means more downside risk for equities and cash is just perhaps the go-to place to ride it out.
Institutional investors do say that it is always critical to have cash on hand to be ready to pounce amid depressed equity valuations.
“We are in unique times and we know cash will lose its purchasing power because of inflation, but because the front-end of the yield curve and ultra-shorts bonds have not been immune from volatility, cash gets more attention,” Loewengart said.
“They still have confidence in the economy, just not in the market in the short-term and they are preparing for future rotations, even additional corrections down the road,” he said.
Inflation bets, but not defensive bets
The survey’s questioning on sector bets within the S&P 500 shows that inflation is dominating over any valuation analysis of stocks right now. Energy, real estate and utilities are the most popular sectors for this quarter, and some traditional defensives not as closely tied to inflation, such as health care and financials, have not fared as well as one might expect.
“Concerns about inflation are overpowering everything else including typical approaches to defensive positioning within equities,” Loewengart said. “That is why there is a high level of interest in energy, real estate and utilities but not in financials. But he added, “It is not surprising to see all the interest in sectors that stand to benefit from elevated prolonged inflation.”
Even after the heavy losses for tech stocks this year. the percentage of these investors who expressed a high level of interest in tech was lower quarter-over-quarter. The percentage of investors citing tech as their top bet for the quarter declined from 37% to 34%. On Wednesday, a day after the Nasdaq Composite posted a new low for the year, the tech-heavy index began trading over 1% higher as technology stocks rallied led by Microsoft’s strong earnings results, but trading was volatile. Microsoft was down roughly 18% this year headed into trading on Wednesday.
Among non-traditional investments, commodities are receiving a high level of interest among these investors, “a big jump and a meaningful increase,” Loewengart said. The percentage of millionaires who said they were increasing their investment in commodities doubled from 11% to 22%.
This does worry him as part of a portfolio planning process that could see its long-term lens lose out to short-term inflation worries. “When we see that the bright spots are commodities and energy stocks, that’s tough to point out to conservative investors because we don’t think they should necessarily be holding commodities as risk-averse investors. Having a meaningful position in commodities could cause problems down the road,” he said.
“Hopefully, some of the inflationary scare is a bit overdone, and clients with a balanced portfolio will be able to return to their traditional posture, and portions of the portfolio moving in opposite directions,” Loewengart added.
But for risk-averse investors coping with losses in both stocks and bond portfolios right now, the survey sends the message from investors that there are few places to hide. More
This oceanfront mansion in Highland Beach, FL sold for $40 million breaking a local record for the town.
Robert Stevens
The supply of luxury homes and condos in South Florida isn’t merely tight. It’s worse than that.
“This isn’t just a decline in inventory,” said Jonathan Miller, CEO of Miller Samuel, an appraisal and consulting firm that tracks 14 real estate markets in the region for brokerage Douglas Elliman. “This is a collapse.”
That’s not hyperbole, according to the numbers. In the first quarter of this year, South Florida inventory stood at a record low of 7,906 units, according to Miller’s data. That’s down from an average of 27,000 units from 2017 to 2019.
Miller doesn’t see the situation getting back to normal anytime soon, either. “Even if listing inventory doubled or even tripled, supply would be considered ‘low’ in most markets,” he said.
But sales are red hot.
Despite that low number of available properties, the first quarter saw more than $11.8 billion in total sales, topping the previous quarter by more than $1.9 billion. Some luxury markets achieved record highs, according to Miller.
The area’s top five luxury real estate markets delivered over 45% of all sales volume for the region, or almost $5.4 billion, according to data compiled by Miller for Douglas Elliman’s Elliman Report published earlier Wednesday.
Here’s a list of the top five luxury markets in South Florida by average sales price and a closer look at how headwinds like low inventory and rising mortgage rates might affect future sales.
Aerial view of the $53 million Palm Beach home that delivered the top sale for Q1 2022 in South Florida.
Douglas Elliman Realty
1. Palm Beach
For the fourth consecutive quarter, Palm Beach secured the top spot in South Florida for highest average luxury home sale price. The town accounted for over half a billion in total sales volume, according to Miller’s analysis.
The average price of a luxury single-family home in the ritzy beach town topped $21 million. (Luxury is defined in the Elliman Report as the upper 10% of sales in a market.) The average price per square foot was $3,659, down 2.7% from the record price in the previous quarter, but the number of sales closed in Q1 totaled 15, up almost 67% over the fourth quarter, according to the report.
The waterfront residence at 854 S County Rd in Palm Beach, FL sold for $53 million.
Douglas Elliman Realty
Palm Beach also had the biggest first-quarter sale in South Florida. The beachfront home at 854 S County Rd. closed at $53 million, according to public records. The 10,171-square-foot residence sits on 2 acres across the Intracoastal Waterway with 220 feet of water frontage, according to the listing. The price per square foot was a whopping $5,210.
Listing agent Gary Pohrer of Douglas Elliman told CNBC the size of the estate and water frontage set the property above the rest. When asked about his outlook on the market’s future, Pohrer told CNBC he remains “cautiously optimistic” with his biggest worry being a serious inventory problem.
“If you look at the history of active listings, we are at an all-time record low, that doesn’t change overnight,” said Pohrer.
Miller sees the inventory crisis having a significant impact on upcoming quarters.
“It will restrain sales below their potential and sustain or increase the market share of bidding wars,” he said.
2. Miami Beach, Barrier Islands
Miami Beach, Barrier Islands, was the second most expensive luxury single-family home market in the report, with 17 closings and an average price of almost $17.9 million. The average price per square foot was $2,766, down from the record of $2,835 set in the previous quarter. Total sales volume at all price levels in the market was almost $2.9 billion second only to the Miami Mainland market, which racked up $3.9 billion in sales.
Aerial view of Palazzo Della Luna, a 10-story ultra-luxury condominium on Fisher Island in Florida.
Fisher Island Holdings
According to Miller, Miami’s Fisher Island saw the Miami Beach, Barrier Island, market’s largest first-quarter transaction: a $30 million deal for a penthouse condominium in Palazzo Della Luna, a 10-story ultra-luxury condominium located at 6800 Fisher Island Dr. The listing agent, Dora Puig, told CNBC that the property known as Penthouse 3 spans almost 6,800 square feet, and has four bedrooms, 4.5 baths and an over 8,000-square-foot rooftop terrace.
A rendering of the penthouse rooftop area atop Fisher Island’s Palazzo Della Luna.
Fisher Island Holdings
Looking ahead at potential headwinds, Puig said she is less concerned about mortgage rates rising since most of her wealthy buyers in the high-end market pay in cash.
In essence, the luxury buyer’s reliance on cash mutes the effect of rising rates, but it doesn’t eliminate it. Miller told CNBC they could create “a slight increase in listing inventory and a slight reduction from the current frenzied environment.”
Puig is worried, however, about the Federal Reserve raising rates too high and too fast, potentially sending the economy into a deep recession.
“If that occurs, people in all sectors of the market will be affected and at that point, no one is immune to the economic effects that will take place,” Puig said.
3. Coral Gables
Coral Gables, which is located southwest of downtown Miami, was the third most expensive luxury home market with 15 closings and an average sale price of about $10.6 million, a record for the area. The average price per square foot also hit an all-time high of $1,609, up 33.7% over the previous quarter, according to Miller.
4. Fort Lauderdale
In fourth place is the Fort Lauderdale market, which delivered 57 luxury home sales at an average price of almost $6.9 million and an average price per square foot of $1,167, according to Miller, both are all-time records for Fort Lauderdale.
This oceanfront mansion in Highland Beach sold for $40 million and shattered a local record.
Robert Stevens
5. Boca Raton/Highland Beach
Boca Raton/Highland Beach was the fifth most expensive luxury home market, with 60 sales at an average sale price just over $5.5 million. The average price per square foot of $670 also set a record for the market.
The market achieved the fourth-highest home sale in all of South Florida, and a record-breaking price for the town of Highland Beach when the oceanfront mansion at 2455 S Ocean Blvd., sold for $40 million, according to public records. The sale of the 17,600-square-foot home was the highest price ever for Boca Raton/Highland Beach, according to Miller. The home’s listing agent, Beverly Aluise Knight of Ocean Estate Properties, told CNBC the mansion’s move-in-ready status was a plus.
“Fully designer-furnished — write a check, move right in — hard to find in this market,” she said. Knight also told CNBC the buyer paid an additional $5 million for furnishings, bringing the record-breaking sale to $45 million.
When asked about how rising rates and low inventory might impact real estate sales in South Florida, Knight said it all depends on the market. But she believes when unforeseen events negatively impact the market it’s homes on the water that have proven to be the most resilient.
“I take great stock in believing that history has shown that the oceanfront is always the last to crash and the first to recover,” said Knight.
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