Every day I hear the same refrain from clients flying in from New York, Boston, Chicago, and Palm Beach:
“The housing market is insane.”
“It’s broken.”
“When will prices finally come down?”
Let me be blunt: the market isn’t broken.
It’s rigged.
And it has been, deliberately, since 1997.
That was the year Congress turned the primary residence into the single greatest tax-advantaged wealth-building vehicle most Americans will ever own.
Section 121 of the IRS code—passed quietly in the Taxpayer Relief Act of 1997—let married couples exclude up to $500,000 in capital gains every time they sell their home (single filers $250,000). No income cap. No age limit. Use it as often as every two years.
Overnight, the American home stopped being shelter.
It became a tax-free compounding machine.
Layer on 30-year fixed mortgages, decades of restrictive zoning, and the lowest interest-rate environment in 5,000 years of recorded history, and you don’t have a “market.”
You have a wealth-preservation system for existing owners and a nearly insurmountable barrier for everyone else.
The numbers are staggering:
- 1997 median existing-home price: $124,100
- 2025 median existing-home price: ~$430,000
- Vero Beach oceanfront benchmark in 1997: ~$650,000
- Vero Beach oceanfront benchmark in 2025: $12–$28 million
That’s not an organic appreciation.
That’s policy-driven asset inflation.
The Lock-In Effect on Steroids
Nationwide, more than 60% of mortgaged homeowners sit on rates below 4%. In the luxury tier, many paid cash or locked in sub-3% jumbo loans in 2020–2021. Why would they ever sell?
Add the $500k tax-free gain incentive, and you get the “freeze” we’re living through:
- Sellers refuse to list
- Inventory collapses
- Anything exceptional that does hit the market trades instantly, usually off-market
This isn’t a Vero Beach problem.
It’s a national feature, not a bug.
But Here’s Where Vero Beach Is Different
While most of America suffers from a permission shortage (NIMBY zoning blocking new supply), Vero Beach still has three structural advantages that keep luxury inventory moving—slowly, selectively, and at a premium:
- Generational Transition
Many of the grand ocean-to-river estates along A1A and the barrier island were purchased in the 1980s and 1990s by Northern executives who are now 80+. Estates in Riomar, The Estuary, Windsor, and Orchid Island are quietly changing hands as families finally decide to sell the legacy property. These are once-in-a-generation offerings.
- No State Income Tax + 1031 Upside
Buyers relocating from New York, Connecticut, Illinois, and California can sell appreciated primary residences or investment properties, defer all capital gains via 1031 exchange into a Vero Beach trophy home, and permanently eliminate state income tax. The math is compelling.
- Relative Value vs. Palm Beach & Jupiter Island
Even at today’s elevated levels, a direct oceanfront estate in Vero Beach with 150–200 feet of frontage still trades for 40–60% less per front foot than comparable properties 75 miles south. Scarcity is national. Value is regional.
The Bottom Line for Luxury Buyers in 2025–2026
The rigged system isn’t getting un-rigged anytime soon.
Homeownership in America is no longer about shelter.
It’s about owning scarcity.
In Vero Beach, that scarcity still comes with wide beaches, no crowds, world-class private clubs, and a 90-minute drive to Palm Beach International Airport.
The properties that matter almost never appear on the public MLS.
They trade quietly between advisors, family offices, and specialists who have spent decades cultivating relationships here.
If you’ve been waiting for the national market to “correct” so you can finally buy your piece of old Florida luxury, stop waiting.
That correction isn’t coming.
The game changed in 1997.
The winners are the ones who adapt to the new rules instead of hoping they revert.
I’d love to show you what’s actually available right now—before it’s gone
Click to view Luxury Properties in Vero Beach Florida
