The Real Deal Miami

Low rates revive lux condo interest

By Jennifer LeClaire | February 27, 2009 12:28PM

Interest rates are at a four-year low and real estate prices in Miami have rolled back to 2002 levels for brand new luxury high-rise condos. That’s music to the ears of the buyers who can qualify for mortgages.

Although an official recovery is nowhere in sight, some brokers credit low costs and low rates with a renewed interest in high-end sales. Bargain hunters with good credit are taking advantage of the deep discounts.

Florida home sales rose 27 percent in December and condo sales rose 12 percent, according to the Florida Association of Realtors. The median price of a home sits at $155,000, and $130,600 for condos.

“The prices have been dropping 30 to 50 percent, but the mortgage rates are the catalyst behind the uptick in sales,” said Craig Studnicky, president of Aventura-based International Sales Group, a real estate sales and marketing firm that works with the likes of Trump Ocean Club, the Related Group and Taylor Woodrow. “If mortgage rates continue to fall, you’ll start to hear that real estate is beginning to rebound.”

After a bad 2007 and an even worse 2008, Studnicky and his developer clients crafted a price cutting strategy. The idea was to attract cash buyers in the face of a tight credit market. It’s not fancy, just “conforming to the reality of the market” — but it’s working.

This year, Studnicky reports selling an average of one property a week at luxury condos like Atrium, Mei Miami Beach and Ocean Marine Yacht Club. That’s double what he sold in January 2008.

Of course, not all brokers are telling the same story throughout South Florida. Janice Leis, an associate broker at Prudential Florida WCI Realty in Boca Raton, sees movement but called it an unimpressive drop in the bucket.

“Many people are finding that monies down percentages have been raised, especially for condos. Many underwriters are asking for 30 percent down now,” Leis said. “Talk of lower rates and lending is just space taken to fill the newspaper. To me, it’s much ado about nothing.”

Real estate attorney Matthew Zifrony, a partner with Tripp Scott Law Firm in Fort Lauderdale, said low interest rates help the South Florida real estate market, but market conditions are minimizing the impact.

“A lot of potential buyers must first sell their existing real property before they can close on an acquisition,” Zifrony said. “Doing so is not possible in many instances since so many potential buyers are upside down in their existing loans.”

What makes Studnicky’s story different? His strategy targets investors that aren’t worried about being upside down on a loan. With the stock market tumbling, he said, deeply discounted Miami real estate — and the promise of appreciation — looks safe and large cash down payments aren’t an obstacle.

With Fannie Mae modifying a policy that allowed real estate investors to have only four financed properties, that opens up more customers for brokers like Studnicky. As of March 1, investors can finance five to 10 properties.

“There’s no way to measure the bottom, but with mortgage rates dropping and properties discounted, we are probably close,” Studnicky said. “We’re seeing product that used to trade for $600 a square foot selling for $300 a square foot. That’s attractive to first-time home buyers and investors.”