In March, Forbes magazine predicted Miami would have the worst real estate market in the U.S. this year, and although South Florida’s market is on the decline, homes in the high-end market are holding up – comparatively at least. Foreign buyers are taking advantage of exchange rates and local wealthy buyers are willing to pay high prices in some communities. Ron Shuffield, president of the real estate services firm EWM and a Miami resident since 1975, talked to The Real Deal about South Florida’s high-end market.
The Real Deal: How is the high-end residential market in South Florida doing in relation to the overall market?
Ron Shuffield: We still have a lot of inventory in all price ranges, but we are seeing the values holding better at the higher end. In 2006, we sold five condos in Miami for more than $5 million. In 2007 we sold 25 in excess of $5 million and currently we’re at a rate of two per month [in that price range].
TRD: What group of buyers is the most active right now in the high-end market?
RS: We have a lot of foreign buyers executing contracts and closing on condominiums and single family homes. We also have a lot of American and local buyers who are seeing opportunities to buy choice properties at prices today that they didn’t have just a couple years ago.
TRD: How have buyers’ and sellers’ mentalities changed?
RS: Sellers are becoming more realistic in their prices, and are aggressive in reducing their prices. We’ve had significant adjustments in prices over the last 18 months. Buyers recognize that they have a lot more inventory to see today so they have many choices.
TRD: What sort of range of prices are you seeing in the high-end market?
RS: I would say $300 to $500 per square foot is typical for new construction. Waterfront properties can go as high as $1,500 to $2,000 a square foot. There’s an increase because we’re selling more expensive homes overall.
TRD: Any examples of notable deals you’ve seen that show the state of the market?
RS: We sold a house that closed [in Miami-Dade] in one of the suburban residential communities for $5.9 million. That was about 20 percent more than the owner paid just a year ago. [The seller] was a corporate executive that transferred here only a year ago and never got settled. Homes are three year projects to construct, so when buyers can find something all ready, it has additional value.
TRD: What part of South Florida is the most popular?
RS: Coral Gables [in Miami-Dade] is the ideal city to infuse new residential growth. It was always known as a single family community, but now there are people there 24-hours a day, restaurants are full, theaters have popped out and are successful. High quality shopping was becoming more and more important to all communities, and developers put in a new shopping complex with a long term lease from the city. Now there’s a Neiman Marcus, Tiffany’s and Nordstrom. Coral Gables is very centrally located within the county, only about three to five miles from downtown Miami. What we’re selling now is a lifestyle more than a structure.
TRD: Which sectors are doing the worst?
The trite saying is all about location, location, location. That applies doubly to condominiums. People purchasing condos want to be in an area that already has built in amenities, like shopping, grocery stores and restaurants. That is what separates successful projects from the ones that will continue to be challenged.
TRD: Is there an up-and-coming new area for development?
RS: I think an area we can already see [improving] is the Doral area. It got its name from the Doral Country Club, which has been in that part of Miami for years but was an oasis in the western edge of the county. It didn’t have a lot of community built around it. Over the last five years it incorporated itself into a city, and there’s a lot of development happening right now.