South American investors fueled South Florida’s residential recovery, but domestic buyers — particularly New Yorkers — are helping drive the current boom.
Residential brokers in the region are inundated with prospective buyers based in the tri-state area. South Florida has historically been an attractive second-home destination for New York families with plenty of disposable income. But the aggressive residential resurgence has increased domestic buyer urgency to lock in a vacation home purchase while pricing remains a relative bargain.
“The New York real estate market has exploded the last few years,” ISG World principal Craig Studnicky told The Real Deal. “Preconstruction prices in Manhattan range from $5,000 to $10,000 per square foot. That’s exorbitant compared to a high-end condo in Miami at $1,000 a foot, or Miami Beach at $1,500 a foot.”
The pricing gap between New York City and South Florida condos is wide enough for tri-state buyers to get comfortable with the cash-heavy deposit structure that has become ubiquitous in the region, Studnicky said. In today’s market, South Florida unit buyers are usually putting down as much as 50 percent of the purchase price up front.
While New York is not the only domestic market with a strong interest in South Florida, it is leading the charge. The Miami Association of Realtors reports that visits to its listing service from New Yorkers triple the activity from any other U.S. market outside of Florida.
Esslinger-Wooten-Maxwell Realtors president Ron Shuffield estimates a 60 percent increase in New York buyers of South Florida residences from 2012 to 2013. Encouraged by the two percent monthly price increases, more homeowners in the region are testing the market and providing desperately needed for-sale inventory for buyers to choose from.
“There has been such significant increases in value the last three years,” Shuffield said. “That has motivated people as well. The pricing needs to temper down a little but because we can’t sustain two percent monthly increases. Hopefully the increased inventory will settle the price increases.”
To date, New York buyers have targeted high-end homes and condos on the water, especially in Miami-Dade County’s coastal markets. Carlos Rosso, director of condo sales at the Related Group’s Miami office, said such investors are focusing on the company’s Miami Beach developments. Related is currently building the luxury One Ocean and Marea projects in the city.
“Certainly more Northeasterners are buying in South Beach,” Rosso said. “A lot of buyers from the Northeast are looking for a place to take residency in South Florida. There are a lot of tax advantages for those buyers.”
New Yorkers are not only acquiring South Florida residences with greater frequency. They are also paying more for what they buy, Premier Sales Group co-owner Carolyn Block-Ellert said.
Premier is currently handling sales at The Ritz-Carlton Residences, Singer Island in Palm Beach County. The 242-unit luxury project is 90 percent sold.
Block-Ellert estimates a 30-to-40 percent increase in Northeast buyers at the Ritz project over the last six months.
“We’re finding New York buyers are actually spending more on purchases,” she said. “They are also buying more finished and furnished model residences. Even those who don’t need them for two years are buying now.”
Elsewhere in Palm Beach County, Corcoran Group sales associate Geoffrey Darnell is swamped with requests from Northeast residents to book meetings and property tours before the busy holiday season commences. Based in Corcoran’s Palm Beach office, Darnell primarily arranges Palm Beach County transactions.
Darnell estimates tri-state residents make up more than half of the current buyer pool in Palm Beach and West Palm Beach, the markets he focuses on.
“In the middle of September I started receiving calls and e-mails from clients saying they would be in town to make pre-Thanksgiving purchases,” Darnell said. “They want to get good product at a better price prior to everyone else getting in here.”