Luxe resi market faces paradox of record sales, despite low deal volume

Miami Beach realtor David Solomon planned to build a $26 million spec mansion on a waterfront Venetian Islands lot that he acquired in late 2021. 

Solomon, an agent with Berkshire Hathaway HomeServices EWM Realty, paid nearly $7 million for the property at 415 East Rivo Alto Drive and hired Touzet Studio to design a new home. Solomon secured Miami Beach approvals — a lengthy process that involved getting a sewer allocation — and sold the site last month for $10.5 million. 

Even though Solomon and his partners didn’t develop a house and sell it for a bigger price, the land deal created buzz among agents for the nearly $1,000 per-square-foot price. 

Brokers, buyers and sellers across South Florida are in a paradoxical situation. Despite the continued slowdown in deal volume, high interest rates and a pricing disconnect between sellers and buyers, sales are still setting records across South Florida, including in wealthy enclaves like Miami Beach and Indian Creek. 

Luxury single-family home sales, defined as the upper 10 percent of the market, in Miami Beach and the nearby barrier island cities, fell by about 30 percent in the second quarter, year-over-year, according to Douglas Elliman. The median sale price also dropped 20 percent to $16.7 million. 

“The market is kind of quirky because it’s in transition, and we didn’t transition as fast as the rest of the country,” said Dora Puig, owner of Luxe Living Realty. “We’re still enjoying a little bit of the Covid aftermath.” That means still “digging” for off-market homes at high prices.

New condo developments at the very top of the market are also reporting strong presales. Witkoff and Monroe Capital said last month that they’ve secured presales for two-thirds of the units at the Auberge-branded Shore Club development in South Beach, totaling more than $550 million, since launching sales at the start of the year.

In June, Amazon founder and billionaire Jeff Bezos paid $68 million for the waterfront estate at 11 Indian Creek Island Road in an off-market deal that set a record for the island. Earlier this month, acclaimed DJ David Guetta entered into contract to buy the waterfront spec estate at 37 Indian Creek Island Road, which was listed for $69 million. 

“As long as you have a good product, as long as you’re sort of reasonable,” sales are still occurring, Solomon said. “There’s not 20 buyers; [now] there’s two or three buyers.” 

Price cuts are ubiquitous. Of the 98 single-family homes that sold in Miami Beach over the past six months, 91 sold at a discounted price off the asking price, according to MLS data compiled by Miami Real Estate Group, a brokerage led by Andres Asion. The houses that sold traded at an average 15 percent discount off their asking prices and spent nearly six months on the market. 

But it’s still not easy to convince sellers to “improve” their pricing or accept below-asking price offers. Successfully closing some deals is like “pulling teeth and nails,” Puig said. 

“The deals are getting fought,” she said. “The whole city is still posting record sales or very high sales, whether it’s per [square] foot or absolute price.” 

That gives sellers ammunition in fighting below-asking price offers.

Puig represented former Pepsico CEO and chair Indra Nooyi and her husband Raj Nooyi in the $11 million sale of their 18th floor unit at Grove at Grand Bay in Miami’s Coconut Grove. The 4,800-square-foot unit sold for nearly $2,300 per square foot, a record for the development. (In April, developer David Martin sold his penthouse at the same project for $1,900 per square foot.)

The Nooyis’ unit hit the market in January for $12.4 million. Puig said it “took work” to get the sellers to accept the $11 million price. 

Julian Johnston, a top Corcoran Group agent, said buyers are making offers, but “there’s a 10 percent delta between the bid and the ask.” One buyer recently made a $50 million offer on a house where the seller is looking for $65 million, he said. 

Marcelo Claure, formerly of SoftBank and WeWork, recently dropped the price on his waterfront lot at 5212 North Bay Road in Miami Beach to just under $30 million. It’s the second price cut since he listed it for nearly $40 million last year.

“Now we’re getting calls on it,” said listing agent Nelson Gonzalez, of Berkshire Hathaway HomeServices EWM Realty. “There are people out there with a lot of money, and they’re waiting for something to happen.” 

Developers Jackie Soffer and Craig Robins listed their waterfront Miami Beach mansion at 2511 Lake Avenue for $45 million in February. They reduced the price in June to $39.5 million, and it’s now in contract to sell for a price that’s reportedly above $35 million, sources say. It’s on the market with Jill Hertzberg and Jill Eber of Coldwell Banker. 

On top of Solomon’s sale of the Venetian Islands lot, other home sites and teardowns are beginning to sell. 

The waterfront house at 6640 Allison Road in Miami Beach, marketed as a teardown, traded last month for $17.6 million. It originally hit the market in late 2021 — when homes were being snapped up quickly — for $26 million. It was taken off the market and returned in April for almost $20 million. After another price drop, it sold in July.

But it’s still very much a seller’s market for vacant sites and teardowns. Many buyers don’t want to deal with the hassle and delays that come with ground-up construction. 

Agents point to a lack of quality inventory as a factor keeping deal volume down — and keeping prices up. A lack of newly built or renovated homes is likely propelling some buyers to presales of new developments. 

“We’re not seeing much inventory coming in the near future,” Johnston said. “Buyers can’t wait forever, so they’re starting to buy.” 

Puig is representing the developer of the Links Estates at Fisher Island, a group of a dozen luxury single-family homes planned or under construction. The developer, Heinrich von Hanau, went into contract this summer on an 8,000-square-foot estate that was last asking $36 million, according to an email blast sent by Puig in late July. She also represents the developer in another of the homes that is under contract, asking $38 million. 

Also on Fisher Island, Related Group and its partners are selling Six Fisher Island, a luxury condo development that could set price-per-foot and total price records. The penthouse at the planned building is asking $90 million, the developer said late last year.

Even Bezos, who had been looking for a turnkey estate, bought a house built in 1965. He purchased the teardown at 11 Indian Creek, joining other Indian Creek buyers such as Tom Brady, and Ivanka Trump and Jared Kushner, who are building new homes. Guetta, the acclaimed DJ and music producer, is buying the under-construction estate that Todd Glaser and his partners are building on the island. 

A recent report using Census data showed that Miami-Dade County’s population declined between 2020 and 2022, marking the first multi-year net loss in population in the county since at least 1970. The news upset some brokers and market proponents who say they aren’t seeing a mass exodus. Plus, the county’s population grew slightly last year. 

“People still want to come here,” said Puig. “We have oxygen in our market through this slower recessionary time. We’re going to take off when this thing turns around.” 

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