Luxury Home Sales on the Rise Again in South Florida

Aug. 4, 2009 –

Confidence seems to be returning, as well as a rising tide of money from outside the country, positive signs for both the high-end housing market, and the real estate market in general.

Demand fed by foreign money has always been a critical piece of the real estate puzzle in South Florida.“We’re on our way out of the worst (of the economic downturn)” said Manny Mesa, a Doral-based trial lawyer who is hunting for a bigger home for his wife and four children.
On Thursday, he toured the digs of former Miami Heat point guard Tim Hardaway.

“People are confident that the world is not ending,” said Adam Greenberg, a managing director for BayBridge, a Miami-based brokerage and mortgage banking firm. “They were so concerned it was ending and that our financial system could falter.”When the global economy took a dive last year, real estate prices plummeted, including prices for South Florida’s toniest properties, priced at $1 million or more.

And then things got worse. As the calendar year turned, fear that the global financial system was heading off a cliff brought South Florida’s luxury home market – largely dependent on foreign wealth – to a standstill. Brokers and some analysts are sensing a collective, if tentative, sigh of relief among the very wealthy, as evidenced by the recent uptick in luxury home sales. And prices are still droopy.

Nonetheless, real estate brokers say it is evident that foreign buyers are returning to South Florida as news spreads globally that many of the region’s tropical, waterfront palaces are on sale.

Brokers and analysts say the renewed activity in high-end real estate is at least partly because of a revived interest among lenders in making very large loans, called jumbo loans.

Banks’ appetite for jumbo loans – defined as more than $423,750 in South Florida – had all but evaporated as lenders hunkered down to weather the storm.“They are marketing, inviting us to their offices to meet with them to tell us what they can do,” said Tere Bernace, a broker specializing in waterfront properties in Coral Gables and a former banker with Barclays Capital. “They say they are trying to increase their profile again in our market.”Added Delinois: “I have never had a bank calling before to say they were lending.” BayBridge’s Greenberg said banks are interested in the rich and famous because they are looking for safety.“They see values as very depressed and borrowers in the super luxury home market as a very unlikely default candidates,” he said.

Large loans require much heftier down payments – up to 50 percent of the purchase price – and stringent verification of income and assets.Those who buy in the ultra-luxury category (homes priced at $5 million or more) often aren’t looking for loans.“Most of the people who buy at this price point don’t finance, and if they do, it’s a matter of convenience,” said Audrey Ross, a senior vice president of Esslinger Wooten Maxwell.

Luxury prices have held up significantly better in the current slump than the market as a whole.

Source: The Miami Herald, Monica Hatcher.

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