Miami’s luxury real estate market is a crystal-chandeliered world of multi-million-dollar condo deals, where prospective buyers roll up to open houses in Lamborghinis or on 70-foot-long yachts. It’s not only booming, say its mavens, it may be passed peak.
A few years ago, multi-million-dollar condo deals were unheard of in the United States because the luxury market had gone bust with the rest of the country. But now, real estate experts say the market is turning around and astronomical listings are popping up in small real estate bubbles from coast to coast. Unlike the subprime mortgage scandals, almost all of Miami’s expensive real estate is bought and paid for with cash, mostly by foreigners.
Danny Hertzberg, a member of Forbes magazine’s real estate “30 Under 30” list, gave up being a lawyer to become a real estate agent for Coldwell Banker in Miami. The 29-year-old said real estate in this tropical mainland paradise keeps getting more expensive, especially in the last couple of months.
“Top buildings are selling now, per foot, at the height of the market,” Hertzberg said. “There was a lot of inventory, maybe, 18 months ago, and then all of a sudden, there was a lot of foreign investment to the Miami market, people coming in from Brazil, Venezuela, Argentina, a lot of Russian buyers, specifically on the high end luxury.”
According to the city of Miami, the luxury condo market is hotter than at any point in history. Nearly 20 percent more million-dollar condos were sold in 2011 than in the previous peak year of 2006.
This is an “other world,” where the rest of America’s real estate metrics don’t really apply. Most of the country is still creaking into recovery, where home ownership is at a 15-year low and property values are expected to stagnate the rest of the year after prices have been plummeting for the past four years. But for the super wealthy, the mega-rich “1 percent-ers,” a luxury condo bidding war has replaced the recession, not just in Miami, but also in New York and Los Angeles.
The multi-million-dollar luxury market has become so hot, Bravo made a reality TV show about it called Million Dollar Listings, which started in L.A. and then was exported to New York.
So is this just a repeat of what happened during the 2008 housing crash, only on an accelerated level? Jonathan Miller, the president and CEO of Miller Samuel, a real estate appraising and consulting firm, said that’s not the case because luxury condos only make up a “tiny sliver” of the entire housing market.
“It’s a fraction of a percent and it’s disconnected from the market in general,” he said. “Any time you have a pick-up in activity in real estate, you’re influencing the local economy, from goods and services to taxes being paid, it’s a win for the local economy.”