Lux market on the rebound

South Florida Luxury Real Estate Market On The Rebound

South Florida Business Journal – by Angie Francalancia

Friday, February 4, 2011

The stock market is rising.  There’s money in the bank. And the real estate deals are just too good to pass up.  All those factors have meant a rebound in South Florida’s luxury real estate market – one of the top markets worldwid

e for wealthy buyers to pick up a second, third or fourth new home.  But, they’re buying bargains – unless they’re buying trophies.  It’s a double-sided picture that shows volume increases in wealthy playgrounds includ

ing Palm Beach and Miami Beach, alongside some spectacular sales prices that have tended to skew the market, brokers say.  “We really saw recovery in Miami Beach.  Condos over $1 million at the W and the Setai – those have sold particularly well,” said Beth Butler, president of Miami Beach-based One Sotheby’s International.  “The better, more sought-after areas are quicker to come back.  And I think price was the most significant factor.”

The luxury market (over $1 million) has lost about 30 percent of its value from the peak of the market, compared with a drop of abou
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t 50 percent in the overall market.  But, data on the number of $1 million single-family homes and condos from the Multiple Listing Service shows that South Florida’s volume is up.   In Miami Dade County, brokers and agents saw the first increase in volume since the 2005 peak.   The volume was up 18 percent for single family homes and 25 percent for condos.   Broward County’s 2010 numbers were nearly equal to that of 2009, missing out on the increases seen in Miami-Dade and Palm Beach counties.  In Palm Beach County, the volume was about 20 percent higher than in 2009.   “We definitely saw an uptick in  activity,” said Chappy Adams, president of Palm Beach-based Illustrated Properties.  “Deals and the steals,” “luxury Wal-Mart prices” and “fire sales” are how some brokers describe the transactions taking place.  These buyers have cash, are ready to buy with the stock market healthy, and they want deals.

“People are definitely picking up deals,” said Ron Shuffield, president of Miami-based Esslinger Wooten Maxwell Realtors.  “The second home buyer is one of the reasons we’re seeing the increase in the market.  The affluent buyer recognizes these prices won’t be around too much longer.”  The challenge, he said, is that new inventory, coupled with foreclosures and short sales, continues to keep pressure on prices.  “Most buyers don’t have an appetite to purchase unless the prices are back to 2004, 2005 prices,” said Bill Yahn, Corcoran Group’s regional senior VP for South Florida.  “People want to go back to what they perceive to be a real value.  If we wouldn’t have had the crazy run-up, I think prices would be a little ahead of what they are today.”  But, in South Florida’s luxury home market, where most buyers own homes in multiples, there are enough buyers seeking the rare, the waterfront and the trophy properties to make for some spectacular individual sales.

“A very large percentage of the people who are looking at the double-digit millions price range own multiple homes,” said Audrey Ross of EWM.  “Which one they’re calling primary on any given day would vary.”   Late last year, Ross closed a deal on the most expensive condo ever sold in Coral Gables – the $9 million penthouse at The Gables Club.  It was the owner’s third home in South Florida alone.   “It’s a two-story condo with a high-drama ‘wow’ view of Miami and Biscayne Bay,” Ross said.  “It’s got a full-scale movie theater, billiard room, lavish master bedroom and bath.”   There’s a similar story at One Thousand Ocean, the luxury condo built adjacent to the Boca Raton Resort & Club where 32 of the 52 units have been sold for an average price of $4.5 million, or $1,100 a square foot.

“There was an immediate pent-up demand with the Boca Resort membership base,” said Jamie Telchin, president of development for LXR Luxury Resorts.  “Activity has been very good for the past several months, but the reality is this is a trophy property, and the people buying are primarily cash buyers.”

“If you want to talk luxury, we can talk farms,” said Ron Neal, a real estate agent at Palm Beach Polo Realty in Wellington.  For the equestrian set, the farm is “a necessity,” Neal said. And a location adjacent to the Wellington show grounds is, like oceanfront, limited.   “Certain farm properties in and around the horse show sell for around $1 million an acre,” he said. “It’s where you want to be. There’ve been some very good sales. People are feeling a little more hopeful, there’s more consumer confidence.”

EWM’s Shuffield said statistics showed the luxury market actually began to recover in 2009.  “This rebound really started in the summer of 2009, but we were in such a deep, dark hole it didn’t seem like we were making much progress,” he said.  “But, we’ve had some remarkable sales.”

From the South Florida Business Journal: http://www.bizjournals.com/southflorida/print-edition/2011/02/04/south-florida-luxury-market-on-the.html