Wednesday, December 3, 2008
Million-dollar luxury homes continue selling well
While South Florida real estate inventories are still high across all price ranges, there is some good news surfacing at the upper end of the market.
According to recent Miami-Dade County MLS data, single-family home and condo inventory priced at $750,000-plus is leveling out. Real estate agents report high-end sales gaining momentum despite an overall declining market.
Case in point: Fortune International. The Key Biscayne-based real estate brokerage and property management firm recently inked two multi-million-dollar penthouse deals on the beach in one week. The projects were valued at $26 million in total.
Meanwhile, Nicole Persley, owner of Homage Real Estate of Florida in Boca Raton, reports the recent sales of an $18 million home in Highland Beach and another $1.5 million home in Boca Raton. From her perspective, "The sale of these properties was completely unaffected by the soft market conditions in 2007."
So why are million- and even multi-million-dollar home sales finding stability in what could be called a roller-coaster market that shot down so hard and fast it made stomachs drop?
There are several factors working together to create the kind of perfect storm that realtors welcome: foreign dollars, the availability of "cheap" money, and the ability of high-net-worth individuals to invest large sums up front.
"With European money, buyers are basically paying 50 cents on the dollar," says Beth Butler, a realtor with Esslinger-Wooten-Maxell Realtors in Miami Beach. "Now is a great time for Europeans to buy a $5 million condo, and many have the wealth to do it."
Robert Marley — a mortgage industry expert who's been in the field for 20 years, 11 of them working for major wholesale lenders such as Countrywide and Bear Stearns — says that upper-end home sales haven't slowed due to the availability of cheap money.
"Most people buying these homes today were not affected by new wealth tied to real estate," says Marley, president of Coral Springs-based Einstein Process, a new company that helps consumers decide what type of financing best meets their needs and how to get it. "Lenders in this Super Jumbo space are very aggressive as they are mostly tied to wealth management and can offer the lending services as a bonus to their clients."
Justin Miller, president of JB Mortgage Services in Coral Springs, credits the net worth of buyers who can afford a million-dollar-plus monthly mortgage for stabilizing the upper-end real estate market. Financing problems don't impact high-net-worth individuals the way they do middle-class Americans.
"If you are looking in the $417,000-or-less range, then you have appraisal, income and asset issues," Miller explains. "In the higher end, it isn't as big of a deal if the appraised value comes in $20,000 less than you thought because the percentage is much smaller than on a $200,000 home."
For all these economic reasons — and for all the reasons Florida attracts buyers of second and third homes — the high-end market is as healthy as it's been in years, Butler says. Meanwhile, inventory at the more affordable bottom end of the market is still swelling.
"I don't expect the market to change for multi-million-dollar homes," she adds. "We haven't seen real price increases in the market, [but] the dollar is unsteady, the value still exists, and we have beautiful winters here."