Palm Beach County, FL Cap Rates by Neighborhood

County-Wide Gross Yield: A Starting Point, Not a Conclusion

The Zillow-derived county-wide gross yield sits at 6.77%, computed from a $471,499 median home price and $2,661 monthly rent. That figure is arithmetically correct and analytically limited. It blends a tightening single-family market with a condo segment in buyer's territory, mixes sub-$400K Boynton Beach entry points with $1M+ Delray Beach and Jupiter luxury product, and ignores the insurance drag that can carve 150–250 basis points off a coastal gross yield before you account for vacancy or management. The spread between sub-markets is where cap rate decisions actually get made.

At a 14.8x price-to-rent ratio county-wide, Palm Beach sits in territory that historically rewards long-term holders more than short-term yield seekers. That ratio tightens further once you move east toward the coast, where insurance costs are steepest, and widens slightly in the western corridors where the financial services renter pool is thinner.

Segment-Level Breakdown: Single-Family vs. Condos

Single-Family Rentals

The single-family segment closed 2025 with a median of $630,000 and supply tightening to 4.5 months entering 2026. At $630,000 and the county's ZORI-implied rent of $2,661 monthly (gross annual rent of $31,932), the gross yield on a median SFR is about 5.1%. That is below the county-wide aggregate because the county-wide ZHVI of $471,499 blends in condo pricing, which is lower.

Five percent gross does not survive contact with expenses. Back out property taxes first.

Property Tax Calculation (SFR at $630,000): Non-homesteaded investment properties are assessed at full market value on purchase and capped at 10% annual increases thereafter. At the county's 1.02% effective rate, annual taxes on a $630,000 acquisition run about $6,426. That consumes roughly 20% of gross rent before insurance, vacancy, or maintenance appear.

After taxes alone, net yield on the median SFR drops to about 4.1%. Add a conservative insurance load (discussed below) and a 5% vacancy allowance, and net operating income-based cap rates on SFR transactions in the $600K–$700K range realistically settle between 3.0% and 3.5% for stabilized assets. That compresses fast on anything east of I-95 where insurance carries a coastal surcharge.

One critical underwriting note: listings will show the prior owner's tax bill, which may reflect years of Save Our Homes protection. That number is irrelevant to your pro forma. Full reassessment happens at close.

Condos and Townhomes

The condo segment is currently sitting at 8.5–10 months of supply, with a county-wide median around $315,000. That buyer-market condition gives negotiating room the SFR segment no longer offers. At $315,000 and $2,661 monthly rent (using the county ZORI as a rough proxy, though condo rents are likely lower), gross yield could approach 10.1% on paper. Reality is more constrained: condo association fees in South Florida routinely run $500–$1,200 monthly, which are not in the ZORI figure. Strip out even $600/month in HOA and the effective gross yield on rented income drops to 8.3%. After taxes ($315,000 x 1.02% = $3,213 annually) and a vacancy allowance, stabilized net yields land closer to 5.5%–6.5% for well-located, fee-controlled associations.

Condos also face a concentrated risk: the same elevated supply that gives buyers negotiating room also signals that exit liquidity, when you want to sell, will be competitive. Underwrite your hold period exit assuming buyer's market conditions persist.

Neighborhood Cap Rate Comparison

Sub-market medians from late 2025 and early 2026 data allow a direct yield comparison across named locations. Rent figures are modeled from the county ZORI as a directional proxy; individual unit rents vary by size and condition.

Gross yields at the top end (Delray, Jupiter, Palm Beach Gardens) are structurally incompatible with positive debt coverage at current financing rates. These are cash-buyer appreciation plays, consistent with September 2025 data showing 51.3% of county transactions closing all-cash. Boynton Beach and Lake Worth are where cash-flow investors have the most room to work, before insurance adjustments.

Insurance Adjustment: The Real Cap Rate Compressor

Every property in Palm Beach County carries extreme wind event exposure. That is not a coastal-only qualifier; it is a county-wide underwriting variable. Windstorm insurance is mandatory as a practical matter on any financed acquisition, and Citizens Insurance or private carrier premiums on a $500K–$700K SFR routinely run $4,000–$10,000 annually depending on construction type, elevation, and distance from coast.

On top of wind: the December 2024 FEMA flood map update added over 16,000 properties to Special Flood Hazard Areas. Federally backed mortgages on newly mapped properties now require flood coverage. NFIP premiums for newly designated SFHA parcels typically run $1,000–$5,000+ annually, before the county's CRS Class 5 discount (25%) is applied. If the county achieves its target Class 4 rating, that discount increases to 30%.

Combined Insurance Impact on Net Cap Rate (Eastern County SFR, $630,000):

That 2.33% figure on an eastern-county coastal SFR illustrates why insurance is not a footnote in Palm Beach County underwriting. It is a primary return variable. Western-county properties outside SFHAs with newer construction (lower wind premiums) can push net cap rates toward 3.5%–4.5% on the same gross yield starting point.

Cap Rate Compression vs. Decompression

Palm Beach County's ZHVI shows a -2.08% YoY price decline at the county-wide level, while rents remain elevated at $2,661 monthly. That combination should, mechanically, produce mild cap rate expansion. And it does at the aggregate level. The issue is that the county-wide ZHVI average is being pulled down by condo price softness; single-family medians in February 2026 were actually up 4.3% YoY to $675,000. In the SFR segment, prices moved faster than rents, sustaining compression rather than relief.

For condos, the opposite dynamic is more visible. Price softness at 8.5–10 months supply, combined with stable rents, is pushing gross yields toward the 7%–9% range in certain associations. Decompression is real in the condo segment, though HOA cost escalation (driven by post-Surfside recertification requirements statewide) is absorbing much of that gain before it reaches net income.

Volume data reinforces the directional picture: December 2025 single-family closed sales jumped 23% YoY, and September 2025 total sales were up 21.6% YoY. Accelerating transaction volume entering 2026 will tighten SFR inventory further, supporting prices and capping yield expansion in that segment.

Cap Rate Outlook

The structural case for Palm Beach County holding cap rates near current levels is grounded in employer concentration. NextEra Energy, Carrier Global, ADT, Goldman Sachs, BlackRock, and nearly 2,400 financial services firms anchor high-wage employment at $77,247 average annual wages. The Palm Beach County School District alone employs 22,218 people, providing a recession-resistant demand floor for mid-market rentals. Total nonfarm employment grew 1.4% in 2024, with Education and Health Services leading at 6.6%.

The Florida Atlantic University overvaluation estimate of 10–12% above historical trend does not, by itself, signal a correction. The 90,000-plus in-migrants since 2020 represent real structural demand, and the 51% all-cash transaction share means rate-driven forced selling is unlikely to create distressed inventory at scale. The overvaluation premium is a caution on entry pricing discipline, not a bear thesis.

The one catalyst that could accelerate cap rate decompression: if Citizens Insurance premium increases or private market withdrawal forces insurance costs sharply higher on eastern-county properties, sellers may need to reprice to keep NOI-based valuations viable. That process is already underway quietly in the condo market.

The Okeechobee Blvd/SR 7 light rail corridor, if funded, would create transit-oriented development premiums along a 13-mile stretch. That remains a speculative long-term position; FDOT impact study completion and funding confirmation are prerequisites before underwriting any transit premium into a purchase price.

Model your specific deal with our investment property calculator to stress-test insurance assumptions, tax step-up on acquisition, and sub-market rent variance before committing to a purchase price.