When one of the region’s leading luxury home brokerages starts peddling homes under $300,000, it means times have changed.
In the fourth quarter of 2008, Esslinger-Wooten-Maxwell Realtors told The Real Deal the region’s luxury market was strong. Deals were getting done at 20 to 30 percent lower than the asking price, but the highest-priced properties were still selling.
Fast forward five months and Esslinger’s deals occupy a new niche: homes in Miami-Dade and Broward counties priced under $300,000. The company launched the EWM Smart Living initiative last week to attract buyers in this price range.
Esslinger offers a search tool on its Web site that aims to make it easier for buyers to find an affordable home. Esslinger has even launched a new advertising campaign, a video blog and fliers around the initiative.
“Affordability in South Florida has increased exponentially in the past year,” said Esslinger President Ron Shuffield. “That’s really the most compelling piece of good news for this market — our newfound level of affordability with the price corrections. Prices have dropped significantly and mortgage rates are at the lowest point most of us have seen during our lifetimes.”
The luxury brokerage’s sudden shift reflects the sobering reality of the market. South Florida’s multiple listing service shows 75 percent of all Miami-Dade and Broward single-family homes and condos that have been sold in the past quarter have closed at prices less than $300,000. More than 45,000 single homes and condos in South Florida are priced under $300,000, and units under $100,000 represent 17 percent of the total home inventory.
If other luxury brokerages have targeted the sub-$300,000 market as aggressively as Esslinger, they aren’t talking about it. Salomon Bendayan, principal of Engel & Völkers Miami Real Estate and Jill Eber, a broker at the Jills, an agency under the Coldwell Banker flag in Miami Beach, did not return calls seeking comment.
But analysts said the market realities are settling in, even at the luxury end. Jack McCabe, principal of McCabe Consulting in Deerfield Beach, said luxury brokers must target buyers in the sub-$300,000 price range as a matter of survival because jumbo mortgages are difficult get. Jumbo mortgage defaults are on the rise, and McCabe said lenders are pulling back from what they suddenly see as risky business.
“There are only so many cash buyers in the world,” McCabe said. “Distressed properties selling for $300,000 or less is where the market is because that’s the price range where people can acquire mortgages to buy. Luxury brokers need to realize the demand is no longer enough to focus solely on this niche if they want to survive the recession.”
Michael Saunders & Company, a brokerage that deals in luxury properties in Sarasota, is embracing the opportunity to sell where the market is — wherever the market is. Tom Heatherman, a spokesperson for the brokerage, says focusing on the sub-$300,000 market is a common sense strategy in a period where property values are declining, credit is tight and fewer buyers are qualifying for large loans.
“Bargain hunters are chewing up the best-priced opportunities in every price range,” Heatherman said. “But with homes under $300,000 selling the most, we’d be crazy not to feature properties that are very aggressively priced below appraised values.”